Managerial Finance Test Preparation
Course Introduction
Managerial Finance explores the principles and techniques essential for effective financial decision-making within organizations. The course covers topics such as financial analysis, planning, and control, sources of financing, capital budgeting, risk assessment, and the valuation of assets. Students will learn how financial managers utilize analytical tools to evaluate business performance and investment opportunities, optimize capital structure, and align financial strategies with corporate goals. Case studies and real-world examples are used to demonstrate how financial concepts are applied in managerial contexts, equipping students with practical skills required to contribute to an organizations financial success.
Recommended Textbook
Fundamentals of Corporate Finance 4th Edition Jonathan Berk
Available Study Resources on Quizplus
26 Chapters
2360 Verified Questions
2360 Flashcards
Source URL: https://quizplus.com/study-set/3511
Page 2
Chapter 1: Corporate Finance and the Financial Manager
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/69768
Sample Questions
Q1) Which of the following types of firms generate the most revenue in the United States?
A) S corporation
B) limited partnership
C) C corporation
D) limited liability company
Answer: C
Q2) It is generally not the duty of financial managers to ensure that a firm has the cash it needs for day-to-day transactions.
A)True
B)False
Answer: False
Q3) The shares of private corporations are traded on a stock market.
A)True
B)False
Answer: False
Q4) What is the principal guiding factor for the financial manager of a firm?
Answer: Maximizing stockholder wealth is the principal guiding factor for a firm's financial manager.
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Introduction to Financial Statement Analysis
Available Study Resources on Quizplus for this Chatper
95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/69767
Sample Questions
Q1) What are the requirements of section 404 of SOX?
A) It requires that senior management return any profits or bonuses resulting from stock sales during any period covered by financial statements that must later be restated.
B) It requires that auditors do not perform any non-auditing tasks for the companies they audit.
C) It requires that audit partners rotate every five years.
D) It requires that senior management and the boards of public companies attest to the effectiveness and validity of their financial control process.
Answer: D
Q2) Gross profit is calculated as ________.
A) total sales - cost of sales - selling, general, and administrative expensesdepreciation and amortization
B) total sales - cost of sales - selling, general, and administrative expenses
C) total sales - cost of sales
D) none of the above
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Time Value of Money: an Introduction
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/69766
Sample Questions
Q1) An elderly relative offers to sell you their used 1958 Cadillac Eldorado for $52,000. You note that very similar cars are selling on the open market for $87,000. You don't care for classic cars and would rather buy a new Ford Explorer for $35,000. What is the net value of buying the Cadillac?
A) $87,000, since the Cadillac could be sold for this price.
B) $52,000, since the Cadillac could be bought for this price.
C) $35,000, since this is the difference between purchase and resale price of the Cadillac.
D) $35,000, since this is the value of the car that you really want to buy.
Answer: C
Q2) Advanced Micro Devices (NYSE: AMD) is currently trading at $20.75 on the NYSE. Advanced Micro Devices is also listed on NASDAQ. Assume it is currently trading on NASDAQ at $20.50. Does an arbitrage opportunity exist and, if so, how would you exploit it and how much would you make on a block trade of 1000 shares?
Answer: Yes, buy 1,000 shares × 20.50 ($20,500) and sell 1,000 shares × 20.75 ($20,750) = $250.00.
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Time Value of Money: Valuing Cash Flow
Streams
Available Study Resources on Quizplus for this Chatper
62 Verified Questions
62 Flashcards
Source URL: https://quizplus.com/quiz/69765
Sample Questions
Q1) Matthew wants to take out a loan to buy a car. He calculates that he can make repayments of $5000 per year. If he can get a four-year loan with an interest rate of 7.9%, what is the maximum price he can pay for the car?
A) $16,598
B) $19,918
C) $23,237
D) $26,557
Q2) What is the present value (PV) of an investment that will pay $500 in one year's time, and $500 every year after that, when the interest rate is 10%?
A) $2500
B) $4000
C) $3000
D) $5000
Q3) A growing perpetuity, where the rate of growth is greater than the discount rate, will have an infinitely large present value (PV).
A)True
B)False
Q4) Can we apply the growing perpetuity equation for negative growth as well?
Page 6
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Interest Rates
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/69764
Sample Questions
Q1) The term "opportunity" in opportunity cost of capital comes from the fact that any worthwhile opportunity for investment will have a cost: the risk to the capital invested.
A)True
B)False
Q2) A small business repairs its store. The builders charge them $130,000 which will be paid back in monthly installments over three years at 6.80% APR. The builders will reduce this rate to 6.30% APR if they pay $2600 up front. By approximately how much will this reduce the monthly loan repayments?
A) $109
B) $218
C) $164
D) $55
Q3) Can the nominal interest rate ever be negative? Can the real interest rate ever be negative? Explain.
Q4) How do we decide on opportunity cost when we have several opportunities that need to be foregone?
Q5) What is the implied assumption about interest rates when the equation to calculate the present value (PV) of perpetuity is used?
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Bonds
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/69763
Sample Questions
Q1) A bond is said to mature on the date when the issuer repays its notional value.
A)True
B)False
Q2) Which of the following statements regarding bonds and their terms is FALSE?
A) Bonds are securities sold by governments and corporations to raise money from investors today in exchange for a promised future payment.
B) By convention, the coupon rate is expressed as an effective annual rate.
C) Bonds typically make two types of payments to their holders.
D) The time remaining until the repayment date is known as the term of the bond.
Q3) Which of the following statements regarding bonds and their terms is FALSE?
A) The bond certificate typically specifies that the coupons will be paid periodically until the maturity date of the bond.
B) The bond certificate indicates the amounts and dates of all payments to be made.
C) The only cash payments the investor will receive from a zero-coupon bond are the interest payments that are paid up until the maturity date.
D) The face value of a bond is repaid at maturity.
Q4) How are the cash flows of a coupon bond different from an amortizing loan?
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Stock Valuation
Available Study Resources on Quizplus for this Chatper
64 Verified Questions
64 Flashcards
Source URL: https://quizplus.com/quiz/69762
Sample Questions
Q1) NoGrowth Industries presently pays an annual dividend of $1.20 per share and it is expected that these dividend payments will continue indefinitely. If NoGrowth's equity cost of capital is 10%, then the value of a share of NoGrowth's stock is closest to
A) $9.60
B) $14.40
C) $13.20
D) $12.00
Q2) How can the dividend-discount model handle changing growth rates?
Q3) Coolibah Holdings is expected to pay dividends of $1.20 every six months for the next three years. If the current price of Coolibah stock is $22.60, and Coolibah's equity cost of capital is 18%, what price would you expect Coolibah's stock to sell for at the end of three years?
A) $28.87
B) $31.76
C) $33.20
D) $34.64
Q4) Can the dividend-discount model handle negative growth rates?
Q5) What role do dividends play in stock investing?
Q6) What is a major assumption about growth rate in the dividend-discount model?
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Investment Decision Rules
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/69761
Sample Questions
Q1) The Net Present Value rule implies that we should compare a project's net present value (NPV) to zero.
A)True
B)False
Q2) A company buys a color printer that will cost $16,000 to buy, and last 5 years. It is assumed that it will require servicing costing $500 each year. What is the equivalent annual annuity of this deal, given a cost of capital of 8%?
A) -$3155
B) -$3606
C) -$4057
D) -$4507
Q3) Assuming that your capital is constrained, which investment tool should you use to determine the correct investment decisions?
A) profitability Index
B) incremental IRR
C) net present value (NPV)
D) internal rate of return (IRR)
Q4) Is there a unique way for calculating the MIRR to resolve the multiple IRR situation?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Fundamentals of Capital Budgeting
Available Study Resources on Quizplus for this Chatper
113 Verified Questions
113 Flashcards
Source URL: https://quizplus.com/quiz/69760
Sample Questions
Q1) If available, should MACRS be preferred to straight-line depreciation?
Q2) What is the correct tax rate that should be used for capital budgeting decisions?
Q3) The manufacturer of a brand of kitchen knives is investigating the likely effects that an increase in the cost of the raw materials required to make these knives will have on the cost of manufacturing the knives, the selling price of the knives, the number of knives that will then be sold, and the project's net present value (NPV). Which of the following best describes what type of analysis the manager is performing?
A) scenario analysis
B) sensitivity analysis
C) break-even analysis
D) EBIT-break even analysis
Q4) Capital budgeting decisions use the Net Present Value rule so that those decisions maximize net present value (NPV).
A)True
B)False
Q5) What are sunk costs?
Q6) If available, should MACRS be preferred to straight-line depreciation?
Q7) Why does the option to abandon a project have value?
Page 11
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Stock Valuation: a Second Look
Available Study Resources on Quizplus for this Chatper
46 Verified Questions
46 Flashcards
Source URL: https://quizplus.com/quiz/69759
Sample Questions
Q1) In the method of comparables, the known values of a firm's cash flows are used to estimate the unknown cash flows of a similar firm.
A)True
B)False
Q2) Which of the following statements is FALSE?
A) The more cash a firm uses to repurchase shares, the less it has available to pay dividends.
B) Free cash flow measures the cash generated by a firm after payments to debt or equity holders are considered.
C) We estimate a firm's current enterprise value by computing the present value (PV) of the firm's free cash flow.
D) We can interpret the enterprise value of a firm as the net cost of acquiring the firm's equity, taking its cash, and paying off all debts.
Q3) If you value a stock using a range of stock valuation methods and these valuations indicate a stock price that is greater than its actual market price, it is most likely that the stock is under-valued.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Risk and Return in Capital Markets
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/69758
Sample Questions
Q1) Many former employees at AlphaEnergy, an energy trading and supply company, had a large part of their portfolio invested in AlphaEnergy's stock. These employees were bearing a high degree of ________ risk.
A) unsystematic
B) systematic
C) market-specific
D) non-diversifiable
Q2) The risk that inflation rates are likely to increase in the next year is an example of common risk.
A)True
B)False
Q3) Because investors can eliminate unsystematic risk "for free" by diversifying their portfolios, they ________.
A) do not require a risk premium for bearing it
B) require a risk premium for bearing it
C) are indifferent about credit spread and risk premium
D) do not require a credit spread
Q4) What care, if any, should be taken when selecting stocks for an investment portfolio?
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Systematic Risk and the Equity Risk Premium
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/69757
Sample Questions
Q1) As we add more uncorrelated stocks to a portfolio where the stocks are held in equal weights, the benefit of diversification is most dramatic ________.
A) after 20 stocks have been added
B) when there are more than 500 stocks
C) when there are more than 1,000 stocks
D) at the outset
Q2) Which of the following statements is FALSE?
A) Stock returns will tend to move together if they are affected similarly by economic events.
B) Stocks in the same industry tend to have more highly correlated returns than stocks in different industries.
C) Almost all of the correlations between stocks are negative, illustrating the general tendency of stocks to move together.
D) With a positive amount invested in each stock, the more the stocks move together and the higher their covariance or correlation, the more volatile the portfolio will be.
Q3) While we are using historic return to estimate a stock's beta, why can't we use historic data to forecast the expected return for the stock?
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: The Cost of Capital
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/69756
Sample Questions
Q1) Assume preferred stock of Ford Motors pays a dividend of $3.00 each year and trades at a price of $20. What is the cost of preferred stock capital for Ford?
A) 12.0%
B) 13.5%
C) 15.0%
D) 16.5%
Q2) Assume IBM just paid a dividend of $4.50 and expects these dividends to grow at 8% a year. The price of IBM is $100 per share. What is IBM's cost of equity capital?
A) 3.86%
B) 8%
C) 12.22%
D) 12.86%
Q3) A levered firm is one that has ________ outstanding.
A) debt
B) equity
C) preferred stock
D) equity options
Q4) What type of adjustment to debt is in practice?
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Raising Equity Capital
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/69755
Sample Questions
Q1) Valiant Industries has 30 million shares of stock outstanding at a price of $28 per share. The company wishes to raise more money and plans to do so through a rights issue. Every existing stockholder will receive one right for each share of stock held. For every four rights held by the stockholder, they can buy one share at a price of $28. If all rights are exercised, how much money will be raised in this offer?
A) $105.0 million
B) $168.0 million
C) $210.0 million
D) $252.0 million
Q2) Which of the following statements is FALSE?
A) SEO rights offers have lower costs than cash offers.
B) The decision to raise financing externally usually implies that a firm plans to pursue an investment opportunity.
C) Although not as costly as IPOs, seasoned offerings are still expensive.
D) Researchers have found that, on average, the market greets the news of an SEO with a price increase.
Q3) In a best-efforts IPO, the underwriter guarantees that all stock will be sold.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Debt Financing
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/69754
Sample Questions
Q1) What are notes?
Q2) Gepps Cross Industries issues debt with a maturity of 25 years. In the case of bankruptcy, holders of this debt may only claim those assets of the firm that are not already pledged as collateral on other debt. Which of the following best describes this type of corporate debt?
A) a note
B) a debenture
C) an asset-backed bond
D) a mortgage bond
Q3) A bond has a face value of $100 and a conversion ratio of 25. What is the conversion price?
A) $0.25
B) $2.50
C) $4.00
D) $25.00
Q4) Foreign bonds in the United States are known as ________.
A) domestic bonds
B) Yankee bonds
C) Eurobonds
D) foreign bonds
Page 17
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Capital Structure
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/69753
Sample Questions
Q1) What are indirect costs of financial distress?
Q2) What are the issues in determining the optimal leverage for a firm?
Q3) Assume that in addition to 1.25 billion common shares outstanding, Luther has stock options given to employees valued at $2 billion. After the repurchase how many shares will Luther have outstanding?
A) 1.15 billion
B) 1.2 billion
C) 0.75 billion
D) 1.1 billion
Q4) Under-investment problems refers to the problem that equity holders prefer not to invest in positive-NPV projects in highly levered firms because ________.
A) future investments are contingent on debt financing
B) projects are contingent on equity financing
C) gains are evenly shared between all stakeholders
D) most of the gains from the investment accrue to debt holders
Q5) Equity-debt holder conflicts are more likely to arise if the risk of financial distress is high.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Payout Policy
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/69752
Sample Questions
Q1) Which of the following statements is FALSE?
A) In perfect capital markets, holding fixed the investment policy of a firm, the firm's choice of dividend policy is irrelevant and does not affect the initial share price.
B) In a perfect capital market, when a dividend is paid, the share price drops by the amount of the dividend when the stock begins to trade ex-dividend.
C) In perfect capital markets, an open market share repurchase has no effect on the stock price, and the stock price is the same as the ex-dividend price if a dividend were paid instead.
D) In perfect capital markets, investors are indifferent between the firm distributing funds via dividends or share repurchases. By reinvesting dividends or selling shares, they can replicate either payout method on their own.
Q2) What are the characteristics of special dividend?
Q3) Corporations enjoy a tax advantage associated with dividends due to ________.
A) personal tax exemptions
B) the 70% exclusion rule
C) laddered tax rates
D) concave tax structure
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Financial Modeling and Pro Forma Analysis
Available Study Resources on Quizplus for this Chatper
95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/69751
Sample Questions
Q1) With the proper changes it is believed that Ideko's credit policies will extend a 60 days credit period to accounts receivables. The forecasted accounts receivable for Ideko in 2012 is closest to ________.
A) $14,525
B) $16,970
C) $22,710
D) $19,690
Q2) Assuming that Ideko has an EBITDA multiple of 8.5, then the continuation EV/Sales ratio of Ideko in 2015 is closest to ________.
A) 1.7
B) 1.9
C) 1.6
D) 1.8
Q3) Assuming that Ideko has an EBITDA multiple of 8.5, then the continuation levered price-earnings ratio of Ideko in 2015 is closest to ________.
A) 19.0
B) 17.2
C) 16.4
D) 14.5
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Working Capital Management
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/69750
Sample Questions
Q1) A firm's credit terms specify "1/10 net 30" and the accounts receivable days outstanding is 32 days. Which of the following can be concluded on the basis of this information?
A) Most customers pay on time.
B) The average customer pays two days late.
C) All customers have paid within 32 days of purchase.
D) All customers pay late.
Q2) If a supplier is offering trade credit of 1/10 net 30, and a buyer chooses not to take the discount, when should they pay, assuming that they wish to stay on good terms with the supplier?
A) any time before day 10
B) on day 10
C) on day 30
D) any time after day 30
Q3) Can a firm's cash cycle be longer than a firm's operating cycle?
Q4) The three steps in establishing a credit policy are establishing credit standards, establishing credit terms, and establishing a collection policy.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Short-Term Financial Planning
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/69749
Sample Questions
Q1) Which of the following statements regarding lines of credit is FALSE?
A) The line of credit agreement may also stipulate that at some point in time the outstanding balance must be zero. This policy ensures that the firm does not use the short-term financing to finance its long-term obligations.
B) A revolving line of credit is an uncommitted line of credit that involves an informal agreement from the bank for a longer period of time, typically two to three years.
C) The line of credit may be uncommitted, meaning it is an informal agreement that does not legally bind the bank to provide the funds.
D) A revolving line of credit with no fixed maturity is called evergreen credit.
Q2) Which of the following best describes a conservative financing policy?
A) financing part or all of the permanent working capital with short-term debt
B) financing part or all of the permanent working capital with long-term debt
C) financing part or all of the temporary working capital with short-term debt
D) financing part or all of the temporary working capital with long-term debt
Q3) An uncommitted line of credit is obtained through a nonbinding, informal agreement.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
22
Chapter 21: Option Applications and Corporate Finance
Available Study Resources on Quizplus for this Chatper
102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/69748
Sample Questions
Q1) How many of the December 2010 put options are in-the-money?
A) 1
B) 2
C) 3
D) 4
Q2) ________ options allow the holder to exercise the option only on the expiration date.
A) Canadian
B) American
C) European
D) None of the above
Q3) What is the short position of an options contract?
Q4) The payoff to the holder of a put option is ________.
A) strike price minus stock price if stock price is more than strike price
B) strike price minus stock price if stock price is less than strike price
C) stock price minus strike price if stock price is less than strike price
D) stock price minus strike price if stock price is more than strike price
Q5) What is the long position of an options contract?
Q6) What effect does volatility of the underlying asset have on the price of the option?
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Mergers and Acquisitions
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/69747
Sample Questions
Q1) Consider two firms, Thither and Yon. Both companies will either make $30 million or lose $10 million every year with equal probability. The companies' profits are perfectly negatively correlated. What are the expected after-tax profits of the combined company (Thither and Yon) in any year, assuming a corporate tax rate of 35% and no tax loss carry back or carry forward?
A) $19.5 million
B) $6.5 million
C) $4.75 million
D) -$6.5 million
Q2) An extremely lucrative severance package that is guaranteed to a firm's senior managers in the event that the firm is taken over and the managers are let go is called a
A) golden parachute
B) white knight
C) poison pill
D) classified board
Q3) Assume that Martin pays no premium to acquire Luther. Calculate Martin's price-earnings (P/E) ratio both pre and post merger.
Q4) What is a white knight?
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: International Corporate Finance
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/69746
Sample Questions
Q1) A ________ exchange rate is the rate that a firm can tie in for a future transaction date.
A) fixed
B) forward
C) floating
D) none of the above
Q2) Which of the following statements is FALSE?
A) When the foreign tax rate is less than the U.S. tax rate, deferral can provide significant benefits.
B) The U.S. tax liability is not incurred until the profits are brought back home if the foreign operation is set up as a foreign branch rather than as a separately incorporated subsidiary.
C) If a company chooses not to repatriate £12.5 million in pretax earnings, for example, it effectively reinvests those earnings abroad and defers its U.S. tax liability.
D) When the foreign tax rates exceed the U.S. tax rates, there are no benefits to deferral because in such a case there is no additional U.S. tax liability.
Q3) What are internationally integrated capital markets?
Q4) What are the timings of the foreign exchange market?
To view all questions and flashcards with answers, click on the resource link above.
Page 25
Chapter 24: Leasing
Available Study Resources on Quizplus for this Chatper
46 Verified Questions
46 Flashcards
Source URL: https://quizplus.com/quiz/69745
Sample Questions
Q1) Suppose that instead of leasing the bulldozer, the company is considering purchasing a bulldozer outright by borrowing the purchase price using a four-year annuity loan. The monthly loan payments for a four year loan to purchase the Bulldozer are closest to ________.
A) $2,115
B) $1,825
C) $1,870
D) $1,750
Q2) Which of the following statements regarding leases and taxes is FALSE?
A) In a nontax lease, the lessee can deduct the interest portion of the lease payments as an interest expense.
B) In a true tax lease, the lease payments are treated as revenue for the lessor.
C) In a true tax lease, the lessee receives the depreciation deductions associated with the ownership of the asset.
D) The IRS separates leases into two broad categories: true tax leases and nontax leases.
Q3) If St. Martin purchases the CT scanner, what is the amount of the lease-equivalent loan?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 25: Insurance and Risk Management
Available Study Resources on Quizplus for this Chatper
38 Verified Questions
38 Flashcards
Source URL: https://quizplus.com/quiz/69744
Sample Questions
Q1) The value of insurance comes from its ability to reduce the cost of ________ for the firm.
A) adverse selection
B) vertical integration
C) overhead
D) market imperfections
Q2) Which of the following statements is FALSE?
A) Firms generally do not possess better information than outside investors regarding the risk of future commodity price changes, nor can they influence that risk through their actions.
B) Cash flows are exchanged on a monthly basis, rather than waiting until the end of the contract, through a procedure called marking to market.
C) The firm may speculate by entering into contracts that do not offset its actual risks.
D) When a firm authorizes managers to trade contracts to hedge, it opens the door to the possibility of speculation.
Q3) Assuming that your firm will purchase insurance, what is the minimum-size deductible that would leave your firm with an incentive to implement the new safety policies?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 26: Corporate Governance
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/69743
Sample Questions
Q1) Which of the following statements is FALSE?
A) A board is said to be classified when its monitoring duties have been compromised by connections or perceived loyalties to management.
B) Even the most active independent directors spend only one or two days per month on firm business, and many independent directors sit on multiple boards, further dividing their attention.
C) On a board composed of insider, gray, and independent directors, the role of the independent director is really that of a watchdog.
D) Because independent directors' personal wealth is likely to be less sensitive to performance than that of insider and gray directors, they have less incentive to closely monitor the firm.
Q2) The costs and benefits of a corporate governance structure ________.
A) are the same in all countries
B) are the same for all companies within a country
C) depend on cultural norms
D) are not important in maximizing shareholder wealth
Q3) What is the role of takeovers in corporate governance?
Q4) Describe the main requirements of the Sarbanes-Oxley Act of 2002.
To view all questions and flashcards with answers, click on the resource link above.
Page 28