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1) The accounts receivable turnover rate for Big Men’s Wear has gone from an average of 10.8 times to 10.2 times per year. How has this change affected the firm’s accounts receivable period? A.Decrease of 1.98 days B.Increase of 1.98 […]

1) Martin & Martin, Inc. stock is currently selling for $19 per share. The firm just made an offer to one of its major shareholders to repurchase all the shares owned by that shareholder for $25 per share. What type […]

1) The specific location on the floor of an exchange where a particular security is traded is called a: A.box office B.figure 6 C.DMM’s post D.trading booth E.seat 2) The spot exchange rate is the exchange rate that applies to […]

1) A note is a(n): A.unsecured debt that is generally payable within the next 10 years B.formal type of loan that is secured by real estate C.long-term debt secured by part, or all, of the assets of the borrower D.debt […]

1) Stock A comprises 28 percent of Susan’s portfolio. Which one of the following terms applies to the 28 percent? A.Portfolio variance B.Portfolio standard deviation C.Portfolio weight D.Portfolio expected return E.Portfolio beta 2) Which one of the following is a […]

1) Jericho Snacks is an all-equity firm with estimated earnings before interest and taxes of $826,000 annually forever. Currently, the firm has no debt but is considering borrowing $650,000 at 6.75 percent interest. The tax rate is 34 percent and […]

1) Galaxy Sales has sales of $746,700, cost of goods sold of $603,200, and inventory of $94,300. How long on average does it take the firm to sell its inventory? A.6.40 days B.7.23 days C.48.68 days D.57.06 days E.61.10 days […]

1) Cash flow to creditors is defined as: A.interest paid minus net new borrowing B.interest paid plus net new borrowing C.the operating cash flow minus net capital spending minus change in net working capital D.dividends paid plus net new borrowing […]

1) In a typical month, River City Tours received 60 checks totaling $144,000. These are delayed 3 days on average. What is the average daily float? Assume 30 days in a month. A.$12,500 B.$13,333 C.$14,400 D.$16,217 E.$16,667 2) Jenny needs […]

1) Currently, you can exchange $100 for 97.25. The inflation rate in Euroland is expected to be 3.8 percent as compared to 2.1 percent in the U.S. Assuming that relative purchasing power parity exists, what should the exchange rate be […]

1) Which one of the following formulas illustrates the mechanics of covered interest arbitrage? Assume the $1 is borrowed and S0 = spot rate; F1 = one-year forward rate; RF = foreign country risk-free rate; and RUS = U.S. risk-free […]

1) Donegal’s Industrial Products wishes to maintain a growth rate of 6 percent a year, a debt-equity ratio of 0.45, and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at 1.25 . […]

1) The spot rate between Japan and the U.S. is 100.37 = $1, while the one-year forward rate is 99.97 = $1. A one-year risk-free security in the U.S. is yielding 3.8 percent. What is the rate of return on […]

1) To be a member of the NYSE, you must: A.be a primary dealer B.buy a seat C.own a trading license D.be registered as a floor trader E.be a DMM 2) Which one of the following is contained in the […]

1) Dividends are best defined as: A.cash payments to shareholders B.cash payments to either bondholders or shareholders C.cash or stock payments to shareholders D.cash or stock payments to either bondholders or shareholders E.distributions of stock to current shareholders 2) Which […]

1) Shoe Box Stores is currently an all-equity firm with 28,000 shares of stock outstanding. Management is considering changing the capital structure to 40 percent debt. The interest rate on the debt would be 9 percent. Ignore taxes. Jamie owns […]

1) Which one of the following is a speculative motive for holding cash? A.Buying extra inventory because a key supplier offered a special one-time discount B.Paying a $100 bonus to all employees at year-end C.Paying the annual insurance premium on […]

1) Assume a firm has positive net earnings. The operating cash flow of this firm: A.ignores both depreciation and taxes B.is unaffected by the depreciation expense C.must be negative D.increases when tax rates decrease E.is equal to net income minus […]

1) For the past year, LP Gas, Inc. had cash flow from assets of $38,100 of which $21,500 flowed to the firm’s stockholders. The interest paid was $2,300. What is the amount of the net new borrowing? A.-$14,300 B.-$9,700 C.$12,300 […]

1) Aaron’s Rentals has 58,000 shares of common stock outstanding at a market price of $36 a share. The common stock just paid a $1.64 annual dividend and has a dividend growth rate of 2.8 percent. There are 12,000 shares […]

1) Over the past four years, a stock produced returns of 15 percent, 6 percent, 11 percent, and 22 percent, respectively. Based on these four years, what range of returns would you expect to see 95 percent of the time? […]

1) Which one of the following is an ordinary annuity, but not a perpetuity? A.$75 paid at the beginning of each monthly period for 50 years B.$15 paid at the end of each monthly period for an infinite period of […]

1) Which one of the following is the best definition of Eurocurrency? A.Any paper money used by a country that has adopted the euro as its common currency B.Money deposited in a financial institution outside the country whose currency is […]

1) Which one of the following is the agreed-upon exchange rate that is to be used when currencies are exchanged at some point in the future based on an agreement made today? A.Spot rate B.ADR rate C.London Interbank Offer Rate […]

1) Which one of the following is a primary benefit of implementing zero-balance accounts into a cash management system? A.Increased disbursements float B.Total elimination of all safety stocks C.Additional cash availability D.Decreased collection float E.Elimination of all float 2) Your […]

1) Hometown Builders is borrowing $150,000 today for five years. The loan is an interest-only loan with an APR of 8.5 percent. Payments are to be made annually. What is the amount of the first annual payment? A.$12,750.00 B.$20,610.90.00 C.$30,029.18 […]

1) Which one of the following best defines a regular cash dividend? A.Distribution by a firm to its shareholders B.Payment from any source by a firm to its owners C.One-time payment of cash by a firm to its shareholders D.Cash […]

1) A firm has net income of $114,000, a return on assets of 12.6 percent, and a debt-equity ratio of 0.60 . What is the return on equity? A.17.11 percent B.18.98 percent C.20.16 percent D.22.20 percent E.24.60 percent 2) An […]

1) You are analyzing a project and have developed the following estimates. The depreciation is $19,800 a year and the tax rate is 34 percent. What is the best-case operating cash flow? A.$60,456 B.$62,333 C.$64,011 D.$65,650 E.$66,240 2) Which one […]

1) Kris will receive $800 a month for the next five years from an insurance settlement. The interest rate is 4 percent, compounded monthly, for the first two years and 5 percent, compounded monthly, for the final three years. What […]

1) Julie wants to create a $5,000 portfolio. She also wants to invest as much as possible in a high risk stock with the hope of earning a high rate of return. However, she wants her portfolio to have no […]

1) Marcos Enterprises has three separate divisions. The firm allocates each division $1.5 million per year for capital purchases. Which one of the following terms applies to this allocation process? A.Soft rationing B.Hard rationing C.Opportunity cost D.Sunk cost E.Strategic planning […]

1) Cindy is taking out a loan today. The cash amount that she will receive today is equal to the present value of the lump sum payment that she will be required to pay two years from today. Which type […]

1) Which one of the following will increase the operating cash flow as computed using the tax shield approach? A.Decrease in depreciation B.Decrease in sales C.Increase in variable costs D.Decrease in fixed costs E.Increase in the tax rate 2) A […]

1) Sugar and Spice stock is expected to produce the following returns given the various states of the economy. What is the expected return on this stock? A.7.89 percent B.8.56 percent C.9.43 percent D.10.05 percent E.10.50 percent 2) Healthy Foods […]

1) Consider a three-year project with the following information: initial fixed asset investment = $770,000; straight-line depreciation to zero over the three-year life; zero salvage value; price = $34.99; variable costs = $23.16; fixed costs = $245,000; quantity sold = […]

1) Western Steer purchased some three-year MACRS property three years ago. What is the current book value of this equipment if the original cost was $58,000? The MACRS allowance percentages are as follows, commencing with year 1: 33.33, 44.45, 14.81, […]

1) The goal of financial management is to increase the: A.future value of the firm’s total equity B.book value of equity C.dividends paid per share D.current market value per share E.number of shares outstanding 2) Boyertown Industrial Tools is considering […]

1) The manager of Gloria’s Boutique has approved Carla’s application for credit. The maximum payment that has been approved is $65 a month for 24 months. The APR is 15.7 percent. What is the maximum initial purchase that Carla can […]

1) In the process of liquidation, some types of claims receive preference over other claims. Which one of the following determines which type of claim is paid first? A.Technical insolvency definition B.Absolute priority rule C.Accounting insolvency definition D.Chapter 7 of […]

1) A bond has a $1,000 face value, a market price of $1,045, and pays interest payments of $80 every year. What is the coupon rate? A.6.76 percent B.7.00 percent C.7.12 percent D.8.00 percent E.8.14 percent 2) Larry’s Gun Shop […]

1) Charles Henri is considering investing $36,000 in a project that is expected to provide him with cash inflows of $12,000 in each of the first two years and $18,000 for the following year. At a discount rate of zero […]

1) The net present value profile illustrates how the net present value of an investment is affected by which one of the following? A.Project’s initial cost B.Discount rate C.Timing of the project’s cash inflows D.Inflation rate E.Real rate of return […]

1) Which one of the following is the primary advantage of payback analysis? A.Incorporation of the time value of money concept B.Ease of use C.Research and development bias D.Arbitrary cutoff point E.Long-term bias 2) Alpha Industries is considering a project […]

1) Today, you are buying a $1,000 face value bond at an invoice price of $987. The bond has a 6 percent coupon and pays interest semiannually. There are two months until the next coupon date. What is the clean […]

1) Doris’ Boutique has 4,000 shares of stock outstanding at a price per share of $15. What will the price per share be if the firm pays a $1.30 per share dividend? Ignore taxes and market imperfections. A.$13.70 B.$15.40 C.$15.80 […]

1) The dividend growth model can be used to value the stock of firms that pay which type of dividends? I. Constant annual dividend II. Annual dividend with a constant increasing rate of growth III. Annual dividend with a constant […]

1) The modified internal rate of return is specifically designed to address the problems associated with which one of the following? A.Mutually exclusive projects B.Unconventional cash flows C.Long-term projects D.Negative net present values E.Crossover points 2) The common stock of […]

1) A 5.5 percent $1,000 bond matures in seven years, pays interest semiannually, and has a yield to maturity of 6.23 percent. What is the current market price of the bond? A.$945.08 B.$947.21 C.$959.09 D.$959.60 E.$962.40 2) Which one of […]

1) The Good Life Store has sales of $79,600. The cost of goods sold is $48,200 and the other costs are $18,700. Depreciation is $8,300 and the tax rate is 34 percent. What is the net income? A.$2,904 B.$8,382 C.$11,204 […]

1) If Treasury bills are currently paying 3.2 percent and the inflation rate is 2.8 percent, what is the approximate real rate of interest? The exact real rate? A.0.40 percent; 3.89 percent B.0.40 percent; 3.98 percent C.6.00 percent; 5.67 percent […]

1) On which one of the following dates are dividend checks mailed? A.Date of record B.Ex-dividend date C.Payment date D.Declaration date E.Public announcement date 2) The spot rate between the UK and the U.S. is £0.6789 = $1, while the […]

1) Which one of the following best defines legal bankruptcy? A.Negotiating new payment terms with a firm’s creditors B.A temporary technical insolvency C.A legal proceeding for liquidating or reorganizing a business D.The internal process of revising the capital structure of […]

1) The common stock of The Garden of Eden is selling for $42 a share. The company pays a constant annual dividend and has a total return of 5.8 percent. What is the amount of the dividend? A.$1.02 B.$2.04 C.$2.44 […]