Managerial Finance Test Questions https://quizplus.com/study-set/3321 23 Chapters 2315 Verified Questions
Managerial Finance Test Questions Course Introduction Managerial Finance introduces students to the principles and techniques essential for effective financial management within organizations. The course covers topics including financial analysis, planning and control, capital budgeting, valuation, cost of capital, risk assessment, and the sources of financing. Emphasis is placed on the decision-making processes managers use to maximize firm value and achieve organizational objectives, integrating both theoretical foundations and real-world applications. Students learn to interpret financial data, develop strategies for managing assets and liabilities, and understand the impact of financial decisions on the overall strategic direction of a business.
Recommended Textbook Introduction to Corporate Finance 3rd Edition by John Graham
Available Study Resources on Quizplus 23 Chapters 2315 Verified Questions 2315 Flashcards Source URL: https://quizplus.com/study-set/3321
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Chapter 1: The Scope of Corporate Finance Available Study Resources on Quizplus for this Chatper 92 Verified Questions 92 Flashcards Source URL: https://quizplus.com/quiz/65935
Sample Questions Q1) Which of the following would disqualify a corporation from electing the S Corporate form? A) There are 82 shareholders B) The corporation only has one class of stock C) The corporation is a holding company D) The corporation eventually expects to be a C Corporation Answer: C Q2) What is a fiduciary? A) Someone who performs ratio analysis for a corporation. B) Someone who invest and manages money on someone else's behalf. C) Someone who manages the release of a initial public offering. D) Someone who evaluates the performance of individual bonds. Answer: B Q3) Which agency oversees fair reporting of financial information to investors of publicly traded stocks? A) SEC B) IRS C) NYSE D) NASDAQ Answer: A To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Financial Statement and Cash Flow Analysis Available Study Resources on Quizplus for this Chatper 104 Verified Questions 104 Flashcards Source URL: https://quizplus.com/quiz/65936
Sample Questions Q1) Roxy Corp has an operating profit of $15,000 produced from $12,000 in sales.If Roxy has no interest expense and currently pays 35% of its operating profits in taxes,what is Roxy's net profit margin? A) 81.25% B) 12.50% C) 1.25% D) 65.00% Answer: A Q2) If a company's net profit margin is 5% and its total asset turnover is 3.5,what is its ROA? A) 17.50% B) 1.43% C) 70.00% D) 12.53% Answer: A To view all questions and flashcards with answers, click on the resource link above.
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Chapter 3: The Time Value of Money Available Study Resources on Quizplus for this Chatper 145 Verified Questions 145 Flashcards Source URL: https://quizplus.com/quiz/65937
Sample Questions Q1) A $200 investment in an account that pays 7% continuous interest would be worth how much in twenty years? A) $774 B) $792 C) $811 D) $819 Answer: C Q2) Last national bank offers a CD paying 7% interest (compounded annually).If you invest $1,000 how much will you have at the end of year 5. A) $712.99 B) $1,402.55 C) $1,350.00 D) $1,000 Answer: B To view all questions and flashcards with answers, click on the resource link above.
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Chapter 4: Valuing Bonds Available Study Resources on Quizplus for this Chatper 114 Verified Questions 114 Flashcards Source URL: https://quizplus.com/quiz/65938
Sample Questions Q1) Louis Bonds have 14 years to maturity,with a coupon rate of 8%,paid ANNUALLY; if the appropriate discount rate is 12% what is the CURRENT yield of Louis Bonds? A) 8.33% B) 9.00% C) 10.84% D) 12.00% Q2) You are looking up bond prices in the newspaper and you find the following quote for a $1,000 face value treasury bond: 103:26.What is the price of this bond? A) $103.26 B) $1,038.13 C) $1,032.60 D) $1,000 Q3) A zero coupon bond has a yield to maturity of 5%; what is the bond's taxable capital gain in last year of the bonds existence? A) $ 47.61 B) $ 1,000.00 C) $ 0.00 D) $ 45.26 To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Valuing Stocks Available Study Resources on Quizplus for this Chatper 109 Verified Questions 109 Flashcards Source URL: https://quizplus.com/quiz/65939
Sample Questions Q1) The largest stock exchange in the world is A) the London Stock Exchange. B) the New York Stock Exchange. C) the NASDAQ. D) the Paris Bourse. Q2) If the required return on the stock investment is 13%,what should be Miller's stock price immediately after the first dividend was paid? A) $6.24 B) $19.69 C) $16.28 D) $21.19 Q3) MeFirst Corporation has a cumulative preferred share issue that is suppose to pay a quarterly dividend of $2.MeFirst failed to pay 3 consecutive dividends to investors and then managed to pay a common share dividend the very next quarter.How much cash must MeFirst have paid to each preferred share holder at that time? A) $2 per share B) $6 per share C) $8 per share D) $10 per share To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: The Trade-Off Between Risk and Return Available Study Resources on Quizplus for this Chatper 91 Verified Questions 91 Flashcards Source URL: https://quizplus.com/quiz/65940
Sample Questions Q1) A stock was purchased two years ago for $20.The stock does not pay dividends and sells today for $26.00.If sold today,what was the annual realized return on your investment? A) 9% B) 12% C) 14% D) 15% Q2) What is the standard deviation of returns for stock A? A) 8.09% B) 8.08% C) 7.79% D) 6.53% Q3) What is the risk premium? A) It is the risk associated with investing in Treasury bonds. B) It is the difference in annual returns between common stocks and Treasury bills. C) It is the annual return associated with investing in Treasury bonds. D) It is the variance in stock market returns over the last fifty years. To view all questions and flashcards with answers, click on the resource link above.
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Chapter 7: Risk,return,and the Capital Asset Pricing Model Available Study Resources on Quizplus for this Chatper 88 Verified Questions 88 Flashcards Source URL: https://quizplus.com/quiz/65941
Sample Questions Q1) Given Exhibit 7-4,if the expected return on the portfolio is 9.7%,what is the expected return for Security 3? A) 10% B) 11% C) 12% D) 13% Q2) A disadvantage of the probabilistic approach to estimating an asset's returns is: A) history always repeats itself. B) it does not require one to assume that the future will look like the past. C) recent history is more important than future risk. D) that the range of possible outcomes is often broader than the scenarios used. Q3) Given Exhibit 7-7,what is the portfolio beta? A) 0.4987 B) 0.9273 C) 0.3791 D) 1.2667 To view all questions and flashcards with answers, click on the resource link above.
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Chapter 8: Capital Budgeting Process and Decision Criteria Available Study Resources on Quizplus for this Chatper 94 Verified Questions 94 Flashcards Source URL: https://quizplus.com/quiz/65942
Sample Questions Q1) You must know all the cash flows of an investment project to compute its A) NPV,IRR,PI,and discount payback period B) NPV,IRR,PI,payback period,and discount payback period, C) NPV,PI,IRR D) NPV,accounting rate of return,IRR,PI Q2) If Gamma Electronics has a 15% cost of capital,what's the IRR of the investment? A) 23.4% B) 15.0% C) 34.9% D) 100.0% Q3) What is the discounted payback period of the proposed Commerce Company project if the discount rate is 7%? A) 3.09 years B) 3.19 years C) 3.39 years D) 3.59 years To view all questions and flashcards with answers, click on the resource link above.
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Chapter 9: Cash Flow and Capital Budgeting Available Study Resources on Quizplus for this Chatper 98 Verified Questions 98 Flashcards Source URL: https://quizplus.com/quiz/65943
Sample Questions Q1) You are considering buying carpet for your university; Grade A carpet costs $17.10 a square yard and lasts 5 years and Grade B costs $12.50 a square yard and lasts 3 years; Grade C costs $8 a yard and lasts 2 years; which carpet should be chosen if the discount rate is 10%? Assume that due to a large endowment given by the state's"carpet king" the university is committed to continued carpet use.Which carpet should be chosen? A) Grade A B) Grade B C) Grade C Q2) Cash flows on an alternative investment that a firm decides not to make are a(n): A) opportunity cost. B) sunk cost. C) terminal value. D) incremental cash flow. Q3) Refer to DSSS Corporation.What is the operating cash flow for year 1? A) $54,797 B) $64,798 C) $70,803 D) $10,487 To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Risk and Capital Budgeting Available Study Resources on Quizplus for this Chatper 97 Verified Questions 97 Flashcards Source URL: https://quizplus.com/quiz/65944
Sample Questions Q1) What is the WACC for Running Shoes,Inc.? A) 7.97% B) 9.15% C) 9.58% D) 9.80% Q2) You are the owner of a natural gas well that can produce exactly (at today's prices)$1,000,000 worth of gas per year for exactly 5 years.You also know (with certainty)that the correct discount rate for these revenues is 10%.An oil and gas production firm offers you $5,000,000 today for the natural gas well.What is the implied value of the real option to not produce or not to produce natural gas? A) $0 B) $604,607 C) $1,209,213 D) $2,418,426 Q3) What is the percentage of equity used by Running Shoes,Inc.? A) 74.63% B) 73.53% C) 72.46% D) 68.97% To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Raising Long-Term Financing Available Study Resources on Quizplus for this Chatper 101 Verified Questions 101 Flashcards Source URL: https://quizplus.com/quiz/65945
Sample Questions Q1) Emma International recently conducted an IPO,Emma received $52 per share and the offer price was $54 per share and the stock price rose to $59 per share.What was the total percentage cost of the IPO? A) 9.62% B) 12.96% C) 9.26% D) 13.46% Q2) Bavarian Brewhouse is planning on going public.Under the underwriting agreement the underwriting discount is $1.30.Legal and other expenses amount to $1,350,000.If the offering price of the stock is set at $12.50 per share,how many shares does the company have to issue to raise $75 million? A) 6,696,429 B) 6,816,964 C) 6,000,000 D) 5,769,345 To view all questions and flashcards with answers, click on the resource link above.
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Chapter 12: Capital Structure Available Study Resources on Quizplus for this Chatper 101 Verified Questions 101 Flashcards Source URL: https://quizplus.com/quiz/65946
Sample Questions Q1) Emma International has an EBIT of $35 million,debt with a market value of $30 Million and a required return on assets of 13%.Assuming no taxes,what is the firm 's value? A) $269,230,769 B) $230,769,231 C) $265,769,231 D) $161,538,462 Q2) A situation where shareholders refuse financing a "good" investment,because they think that only the bondholders will benefit will lead to ... A) asset substitution B) underinvestment C) overinvestment D) none of the above Q3) Refer to Bavarian Brew.What is the PV of bankruptcy costs for which the company is indifferent about the proposed change in capital structure? A) $450,000 B) $750,000 C) $340,000 D) $275,000 To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Long-Term Debt and Leasing Available Study Resources on Quizplus for this Chatper 103 Verified Questions 103 Flashcards Source URL: https://quizplus.com/quiz/65947
Sample Questions Q1) An instrument that gives the holder the right to purchase a certain number of shares of a firm's common stock at a specified price over a certain period is known as a(n): A) Eurocurrency loan B) Treasury bill C) syndicated loan D) term loan E) stock purchase warrant Q2) Wuzzy,Inc.is evaluating the acquisition of a new car for deliveries.Automobile leases are A) typically operating leases. B) typically financial (capital)leases. C) either operating or financial,depending on the firm. D) not covered by these categories. Q3) Refer to BLEC.What is the present value of the five years of after-tax cash flows from purchasing the machine? A) $92,504 B) $108,120 C) $77,351 D) $123,273 To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Payout Policy Available Study Resources on Quizplus for this Chatper 103 Verified Questions 103 Flashcards Source URL: https://quizplus.com/quiz/65948
Sample Questions Q1) The free cash flow hypothesis predicts that A) dividend increases should be viewed as good news by investors. B) firms in industries that generate large amount of cash flow should also have the highest dividend payout ratios. C) managerial compensation should be designed to pursue value-maximizing dividend policies. D) all of the above. Q2) In perfect capital markets, A) dividends are irrelevant because investors can costlessly create any payout pattern desired. B) dividends are irrelevant because firms have more investment opportunities for free cash flow. C) dividends are irrelevant because investors prefer certainty. D) none of the above are true. Q3) The agency cost model of dividends suggests A) dividends should be smaller for slowly growing firms with large free cash flow. B) dividend payments reduce managers' opportunity to spend free cash flow. C) dividends are a "cost" of the corporate form of organization. D) managers seeking to increase share value should never pay dividends. To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Financial Planning Available Study Resources on Quizplus for this Chatper 95 Verified Questions 95 Flashcards Source URL: https://quizplus.com/quiz/65949
Sample Questions Q1) If a company prefers to finance its required assets with a small portion of short-term borrowings,then that firm is utilizing a(n) A) conservative financing strategy. B) aggressive financing strategy. C) matching strategy. D) none of the above. Q2) A sales forecast that relies heavily on macroeconomic and industry forecasts is called a A) top-down forecast B) bottom-up forecast C) plug figure D) none of the above Q3) DigIt! Corporation has the following financial characteristics: its profit margin is 10%,its total asset turnover is 1.75,its asset to equity ratio is 1.5 and its sustainable growth rate is 20.6%.What dividend payout ratio is consistent with these values? A) 45% B) 55% C) 65% D) 35% To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Cash Conversion, inventory, and Receivables Management Available Study Resources on Quizplus for this Chatper 105 Verified Questions 105 Flashcards Source URL: https://quizplus.com/quiz/65950
Sample Questions Q1) Roxy International is considering easing credit standards to increase sales,and potentially profits.Currently the firm sells 2,000,000 units at a sales price of $7 per unit and variable cost of $5 per unit.Currently the average collection period is 35 days and the bad debt expense is 2% of sales.The required return on investment is 18%.If credit standards are eased,the sales will increase to 2,500,000 units; the ACP will increase to 65 days; and the bad debt expense will increase to 5% All else will remain the same.What the current average in investment in accounts receivable? A) $ 958,904.11 B) $1,342,465.75 C) $7,458,143.07 D) $ 273,972.60 Q2) Bavarian Brew has an average age of inventory of 35 days,an average collection period of 27 days,and an average payment period of 16 days.What is the company's cash conversion cycle? A) 62 days B) 46 days C) 51 days D) 43 days To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Cash, payables, and Liquidity Management Available Study Resources on Quizplus for this Chatper 104 Verified Questions 104 Flashcards Source URL: https://quizplus.com/quiz/65951
Sample Questions Q1) You are contemplating purchasing a $1,000,000 181 day T-Bill that is selling at a discount of 4.25%.What is the bond market yield of the T-Bill? A) 4.25% B) 4.34% C) 4.40% D) 4.15% Q2) In which situation below would a lock-box system likely produce greater benefits? A) when interest rates are very low B) when interest rates are very high C) when the firm's customers are concentrated locally D) when the firm collects with ACH transfers Q3) Which of the following is not an advantage of cash concentration? A) It creates a large pool of funds for use in making short-term cash investments. B) Concentrating the firm's cash in one account improves the tracking and internal control of the firm's cash. C) It results in having fewer investment opportunities to choose from. D) All of the above are advantages. To view all questions and flashcards with answers, click on the resource link above.
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Chapter 18: International Financial Management Available Study Resources on Quizplus for this Chatper 99 Verified Questions 99 Flashcards Source URL: https://quizplus.com/quiz/65952
Sample Questions Q1) Which of the following is an example of macro political risk? A) the current government is overthrown by a radical militia group B) restricting the amount of assets that steel companies may control in their territories C) raising the level of taxes for oil firms D) removing tax subsidies received by paper manufacturer's Q2) Assuming that current currencies are currently in equilibrium and the exchange rate is €/$ = 0.721 and that the U.S.expects inflation over the next year to be 4% while in Europe there is an expectation of 2.3%; what must the exchange rate be in one year? (€/$) A) 0.709 B) 0.750 C) 0.738 D) 0.705 Q3) Refer to Smith Enterprises International Investment.What is the 3-year $/€ forward exchange rate? A) .7861 B) .7719 C) 1.2955 D) 1.2721 To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Options Available Study Resources on Quizplus for this Chatper 98 Verified Questions 98 Flashcards Source URL: https://quizplus.com/quiz/65953
Sample Questions Q1) Shares of Beech Brewery,Inc.trade at $35.Call options with a strike price of $30 trade for $7.50.The options have 1 year until expiration and the risk free rate is 4%.According to put - call parity what should be the price of a $30 put option on Beech Brewery with one year to expiration. A) $6.15 B) $6.36 C) $1.35 D) $11.15 Q2) A call option with a $50 strike price on Bavarian Sausage stock will expire in one year.If you know that the risk free rate is 4%,that the stock currently sells at $47 and the put on the same stock has a value of $2.75,what is the price of the call? A) $2.75 B) $3.56 C) $1.67 D) $5.36 To view all questions and flashcards with answers, click on the resource link above.
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Chapter 20: Entrepreneurial Finance and Venture Capital Available Study Resources on Quizplus for this Chatper 94 Verified Questions 94 Flashcards Source URL: https://quizplus.com/quiz/65954
Sample Questions Q1) Which of the following statements is false concerning the profitability of venture capital investments? A) The average compound annual return during the mid 1990s was around 30%. B) A weak correlation exists between venture returns and returns on small stock mutual funds. C) Venture returns are quite volatile,ranging from negative returns to 150% in 1999. D) A strong positive correlation exists between venture returns and returns on small stock mutual funds. Q2) A study by the National Venture Capital Association found that the sales of venture firms during the 1970 - 2005 period was A) half that of non-venture backed companies. B) equal to that of non-venture backed companies. C) twice that of non-venture backed companies. D) three times that of non-venture backed companies. To view all questions and flashcards with answers, click on the resource link above.
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Chapter 21: Mergers, acquisitions, and Corporate Control Available Study Resources on Quizplus for this Chatper 100 Verified Questions 100 Flashcards Source URL: https://quizplus.com/quiz/65955
Sample Questions Q1) What is the control premium being offered by Milner Manufacturing? A) $3.875 per share B) $18.75 per share C) $8.50 per share D) $14.875 per share Q2) After the drop in the stock price for Bavarian Brew,what is the control premium? A) 252.0% B) 189.6% C) 52.6% D) 124.4% Q3) A mixed offering is a merger that is financed with A) debt and equity. B) cash and securities. C) debt and trade credit. D) none of the above. Q4) Which Act requires public disclosure of ownership levels beyond 5 percent? A) Sherman Antitrust Act B) Williams Act C) Herfindahl Act D) Herfindahl-Hirschman Act Page 23 To view all questions and flashcards with answers, click on the resource link above.
Chapter 22: Bankruptcy and Financial Distress Available Study Resources on Quizplus for this Chatper 97 Verified Questions 97 Flashcards Source URL: https://quizplus.com/quiz/65956
Sample Questions Q1) Liquidation is seen as a means A) of providing breathing space to viable firms that are in temporary financial distress. B) of winding up the operations of firms that are not economically viable. C) of punishing management of firms that have defrauded shareholders. D) all of the above Q2) Which of the following is (are)legally mandated subsidies to corporations in bankruptcy? A) the ability to reject collective bargaining agreements B) the right to cease the obligation to pay interest to prebankruptcy creditors C) the right to terminate underfunded pension plans D) all of the above Q3) The section of the Bankruptcy Reform Act of 1978 that outlines the procedures for reorganizing a failed or failing firm is A) chapter 7 B) chapter 11 C) chapter 13 D) none of the above To view all questions and flashcards with answers, click on the resource link above.
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Chapter 23: Risk Management Available Study Resources on Quizplus for this Chatper 83 Verified Questions 83 Flashcards Source URL: https://quizplus.com/quiz/65957
Sample Questions Q1) The spot rate on the British pound is 0.5491 per U.S.dollar,while the risk-free borrowing rates are 4% in Britain and 3% in the United States.What is the "fair" forward exchange rate? A) 0.5438 pounds per dollar B) 0.7321 pounds per dollar C) 0.4118 pounds per dollar D) 0.5544 pounds per dollar Q2) You are a financial manager with JCN,Co.and you have used a forward contract to hedge a yen 100,000,000 payment the company expects to receive in 90 days.Your contract calls for you to deliver yen at 109.75 yen per U.S.dollar.Suppose the spot rate at that time is 111.25 yen per U.S.dollar.Did you gain or lose on the hedge? How much? A) Gain,$66,666.67 B) Loss,$66,666.67 C) Gain,$12,285.33 D) Loss,$12,285.33 To view all questions and flashcards with answers, click on the resource link above.
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