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1) firm x plans to increase its financial leverage by issuing debt and using the proceeds to repurchase equity. if you assume that the modigliani and miller assumptions hold, then the effect of this increasing financial leverage transaction should a.increase […]

1) widgetmaker has discovered that its fixed costs are $100,000 per month. if widgetmaker sells its widgets for $35 per unit based upon a cost of $15 per unit to manufacture (variable costs) then what dollar sales per year must […]

1) a firm has outstanding debt of $100 million. suppose it voluntarily agrees to pay all creditors 40 cents on the dollar. this is a.an extension b.a composition c.a combination of the two in (a) and (b) d.a cram-down 2) […]

1) narrbegin: big diesel incorporated big diesel incorporated consider the following historical returns for big diesel incorporated: narrend refer to big diesel incorporated. if we assume that these returns represent the full sample of big diesel returns, what is the […]

1) emma bonds will mature in 8 years, the coupon rate of the bond is 6% paid semiannually, if bonds currently sell for $820 what is the bonds yield to maturity? a.9.23% b.6.00% c.4.61% d.3.00% 2) you found your dream […]

1) narrbegin: bavarian merger bavarian merger bavarian brew is planning on acquiring bavarian sausage in a pure exchange merger. bavarian brews stock is currently trading at $35 and they set the exchange ratio at 0.80. bavarian sausage has 75 million […]

1) a disadvantage of the probabilistic approach to estimating an assets 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 […]

1) narrbegin: millers drugstore millers drugstore millers drugstore has an ebit of $15,000, debt with a market value of $25,000 and a required return on assets of 12%. narrend assuming a corporate tax rate of 35%, what is millers drugstores […]

1) narrbegin: miller juice miller juice miller juice is a young company that currently does not pay a dividend. the company retains all their earnings to finance their growth. however, ten years from now the company is expected to start […]

1) backward integration is a type of a.horizontal merger b.vertical merger c.market power merger d.none of the above 2) roxy international needs $200 million in new equity capital; currently shares are trading at $50 per share. morgan steely (the investment […]

1) the issue of corporate capital structure has similarities to college students’ financial situations because: a.many students use borrowed funds to finance their education b.most finance students will ultimately work for a major corporation and will make decisions as to […]

1) narrbegin: dsss corporation dsss corporation dsss corporation is considering a new project to manufacture widgets. the cost of the manufacturing equipment is $125,000. the cost of shipping and installation is an additional $10,000. the asset will fall into the […]

1) you will receive a stream of $50 payments beginning at the end of year 1 until the final payment at the end of year 5. what amount will you have at the end of year 5 if you can […]

1) bavarian sausage just issued a 10-year 12% coupon bond. the face value of the bond is $1,000 and the bond makes semiannual coupon payments. if the bond is trading at $867.25, what is the bonds yield to maturity? a.12.00% […]

1) narrbegin: needsalift, inc. needsalift, inc. you are analyzing the potential acquisition of nothing better! ice creams, inc. by your firm, needsalift, inc. the ice cream firm is a wholly owned subsidiary of grand lake investments, which has set a […]

1) you would like to retire with $1 million on your 60th birthday. if you start saving equal annual amounts on your 26th birthday, make your last deposit on your 60th birthday, and earn 10% interest on your money, how […]

1) which of the following roles does finance play in long-term planning? a.identifying problems that could develop if the firm’s strategic plans do not develop as expected b.evaluating the firm’s existing and prospective sources of funding c.risk management d.all of […]

1) ____ represents the amount of cash that would remain if a firm’s assets were sold and all liabilities were paid. a.book value b.market value c.liquidation value d.present value e.none of the above 2) if a 9%, $100,000 loan has […]

1) harder points one has just paid a dividend of $1.50, has a required return of 17% and a current stock price of $50.65. what is the expected growth rate? a.13.63% b.14.04% c.14.44% d.cannot be determined 2) a firm has […]

1) narrbegin: bavarian brew eps bavarian brew eps bavarian brew, an unlevered firm, has a perpetual ebit of $500,000. the required return on assets for the firms assets is 10%. the company has 250,000 shares outstanding, trading at $20 per […]

1) national groceries chooses to have it local stores make payments on their own payables. national utilizes a a.centralized payment system b.fragmented payment system c.decentralized payment system d.none of the above 2) narrbegin: needsalift aprs needsalift, inc. aprs needsalift, inc. […]

1) narrbegin: silly sally silly sally, inc. silly sally, inc. forecasts the following sales levels: january, $420; february, $435; march, $450; and april, $470. historically, 40% of its sales are for cash. of the remaining sales, 80% are collected in […]

1) momoney co. wants to increase its sustainable growth rate to 10%. if it maintains its 15% profit margin, 25% retention ratio, and 0.25 liabilities to equity ratio, what must its total asset turnover value be? a.0.42 b.0.65 c.1.94 d.2.37 […]

1) which of the following is not a difficulty associated with valuing common stock? a.common stock does not have a specific expiration date b.the required rate of return is difficult to estimate c.common stock does not promise a fixed cash […]

1) if the spot rate for the yen/ dollar is ¥110.00 and the forward rate is ¥111.00 then the yen trades at a.a forward discount of .009091 to the dollar b.a forward premium of .009091 to the dollar c.a forward […]

1) narrbegin: smith credit ln -w/o comp smith enterprise credit line (w/o comp) smith enterprise has an one year credit line of $5,000,000 with second bank. on average smith uses $3,250,000 of the credit line. second bank charges a .45% […]

1) kimball johnson has just purchased a put option on reut corporation which currently trades at $58 per share. the put option has a strike price of $50, 6 months until expiration, and trades at a premium of $3. what […]

1) a root cause of firm agency costs is a.managerial carelessness b.a manager owning too much of his firms stock c.a managers concern for his personal well-being d.federal agency filing requirements 2) narrbegin: smart acquires snazzy smart acquires snazzy smart […]

1) monte corporation just paid a dividend of $4.25 and has an expected growth rate of 15% for the foreseeable future, if the discount rate is 18% what is the appropriate stock price today? a.$141.67 b.$162.92 c.$162.74 d.$146.07 2) narrbegin: […]

1) if a company issues $25,000 worth of debt and has a corporate tax rate of 40%, what is the pv of the debt tax shield? a.$25,000 b.$10,000 c.$15,000 d.$20,000 2) narrbegin: bavarian sausage scenario bavarian sausage scenario bavarian sausage […]

1) when a subsidiary of the bidder merges with the target firm a.subsidiary merger b.statutory merger c.subsidiary merger d.reverse triangle merger e.consolidation 2) shares of beech brewery, inc. trade at $35. call options with a strike price of $30 trade […]

1) if a firm increases its use of financial leverage, then what would we generally expect for the effect of that increased leverage to have on an eps that is already very low? a.eps would be lower with financial leverage […]

1) what is the market capitalization of a company? a.the market value of all outstanding debt b.the book value of the companys debt c.the market value of all outstanding shares d.the book value of the companys total equity 2) narrbegin: […]

1) narrbegin: cash budget bavarian brews schedule of projected cash disbursement all of bavarian brews sales are credit sales. the company collects 60% of its sales in the next month and the remainder in the month after that. narrend due […]

1) bavarian sausage is expected to pay a $1.57 dividend next year and investors expect that dividend to grow by 5% each year forever. if the required return on the stock investment is 14%, what should be the price of […]

1) which of the following statements is true? a.accountants measure cash flows on a cash basis rather than an accrual basis b.financial analysts focus solely on accrual basis values rather than cash flows when evaluating potential investments c.incremental cash flows […]

1) financial leverage: a.results when a firm finances a portion of its assets with debt b.can enhance a firm’s earnings if sales increase c.can impact the beta of the firm’s stock d.all of the above e.only (a) and (b) are […]

1) a share of preferred stock pays a $2 annual dividend, but pays the dividend in four equal quarterly installments. investors seek a 12% annual percentage return on the investment. what price should the preferred stock trade? a.$4.17 b.$6.67 c.$8.50 […]

1) which of the following statements is false? a.bidders almost always offer target firm shareholders a premium price for their stock b.the average premium for completed u.s. mergers for the last 30 years has averaged about 20% c.premiums exist for […]

1) elroy investors is interested in purchasing the bonds of the judy company. judys bonds are currently priced at $1,100.00 and have 14 years to maturity. if the bonds have a 6% coupon rate what is the yield-to-maturity of these […]

1) a fund that attempts to mimic the s&p 500 a.an efficient portfolio b.a passive portfolio c.an active portfolio d.an index portfolio 2) choc-lattes corp. earned $5.00 per share in 2006, and paid a dividend of $2.00 per share. if […]

1) a portfolio has 40% invested in asset 1, 50% invested in asset 2 and 10% invested in asset 3. asset 1 has a beta of 1.2, asset 2 has a beta of 0.8 and asset 3 has a beta […]

1) narrbegin: bavarian credit terms bavarian brew credit terms bavarian brew is producing and selling brewery equipment to microbreweries nationwide. bavarian is charging $15,000 per unit and all of their sales are on credit. under the current credit policy bavarian […]

1) which of the following investment opportunities has the highest present value if the discount rate is 10%? a.investment a b.investment b c.investment c d.the present value of investments a and c are equal and higher than the present value […]

1) narrbegin: efn 1 narrend if smith pays out 75% of net income as dividends and sales are expected to grow by 25%, what are the external funds required? a.$133.06 b.$66.88 c.$121.88 d.$225.58 2) if company x intends to distribute […]

1) an investor put 40% of her money in stock a and 60% in stock b. stock a has a beta of 1.2 and stock b has a beta of 1.6. if the risk-free rate is 5% and the expected […]

1) smith enterprises stock currently sells for $17.50. a put option on the stock has a strike price of $15 and currently sells at $4.50. what is the time value of the option? a.$0 b.$2.50 c.$4.50 d.$2.00 2) narrbegin: bavarian […]

1) omega corp has an roe of 15%; has just paid a dividend of $1.55; a pays 0% of its earnings out in dividends, and the appropriate discount rate is 20%; what is the current stock price? a.$ 7.75 b.$ […]

1) narrbegin: bavarian brew float bavarian brew float bavarian brew receives about 350 checks a day with an average check size of $550. currently customers payments spend 2 days in the mail. once a check is received it takes about […]

1) which type of bond has the highest daily trading volume in our economy? a.treasury bonds b.agency bonds c.corporate bonds d.municipal bonds 2) if a company strictly adheres to a constant payout ratio policy, its dividend amount will a.remain constant […]

1) you are the manager of a company that has an equal chance of earning either $20,000 or $40,000 before taxes. your firm is subject to a 20% tax rate on the first $30,000 and 35% on all income earned […]

1) narrbegin: exhibit 17-2 exhibit 23-2 coffee; 37,500 lbs per contract, $ per lb. may 2004 narrend refer to exhibit 23-2. for purposes of marking to market, what is the current price of coffee futures for december? a.$41,625 b.$53,625 c.$41,250 […]

1) the minimum dollar amount required by an investor when taking a position in a futures contract is called the a.initial margin b.maintenance margin c.margin account d.none of the above 2) a firm is considering investing $10 million today to […]

1) the right but not the obligation to produce oil from one of your existing oil wells can be described as a.a real option b.a stock option c.an interest rate option d.a future 2) a bond is priced such that […]

1) roxy is considering a new cat food factory with the following cash flows, if the discount rate is 10% what is the pi? a.0.960 b.0.956 c.0.938 d.0.917 2) a put option with a $35 strike price on bavarian sausage […]

1) if the board of directors of a target seeks an alternative, friendly, acquirer, then it is said to be using which takeover defense? a.just say no b.standstill c.white squire d.white knight 2) the risk that a firms value will […]

1) narrbegin: bavarian credit terms bavarian brew credit terms bavarian brew is producing and selling brewery equipment to microbreweries nationwide. bavarian is charging $15,000 per unit and all of their sales are on credit. under the current credit policy bavarian […]

1) narrbegin: needsalift aprs needsalift, inc. aprs needsalift, inc. has $10 million in funds to distribute to its unsecured creditors. two sets of possible claims are presented below. narrend for case ii, what settlement will the accounts payable holders receive? […]

1) louis international is considering easing credit standards to increase sales, and potentially profits. currently the firm sells 200,000 units at a sales price of $125 per unit and variable cost of $103 per unit. currently the average collection period […]

1) for a stock pricing model, an analyst selects 10% as the sustainable growth rate in dividends for a firm. given that the firm pays out 40% of net income as dividends each year, what is the return on shareholder […]

1) you are introduced to an investment that has an expected return of 20% equal to the standard deviation of the distribution of returns. what is the probability that the investment will have a return less than 20% in the […]

1) suppose you bought 10 smith enterprise put options with a strike price of $52 at $2.75 per option. if the price of smith stock is $56, what is your net profit (or loss)? ignore transaction costs. a.$40 b.$0 c.-$27.50 […]

1) which of the following statements is true? a.generally the ipo market collectively raises about half as much external capital as very large corporations in the u.s b.ipos generally represent less than 10% of all new common equity raised yearly […]

1) when a corporation offers shares to the public for the first time that is an: a.ipo b.ppo c.npo d.lbo 2) narrbegin: far corporation far corporation far corporation is considering a new project to manufacture widgets. the cost of the […]

1) narrbegin: panama city panama city beach company panama city beach company needs to raise $60 million of new equity capital. its common stock is currently selling for $70 per share. the investment bankers require an underwriting spread of 5 […]

1) which of the following is not a difference between entrepreneurial finance and ordinary finance? a.entrepreneurial companies generally have faster growth than ordinary companies b.most of the assets of entrepreneurial companies are often intangible assets c.entrepreneurial companies must attract, motivate, […]

1) which of the following encourages managers to act in the shareholders interests? a.performance based compensation b.audits c.threat of hostile takeovers d.all of the above 2) you are consulting for a firm that anticipates that it will sell 730,000 units […]

1) what is the present value of an operating lease that involves payments of $8,000 per year (at the end of each year) for 12 years with no possibility of purchase at the end of the lease term. assume that […]

1) suppose you have a chance to buy a treasury strip. the strip is from a government bond with a 6% coupon rate (face value of $1,000). you will receive this strip in one year and have a discount rate […]

1) one of the main reasons for the name derivatives is that a.the value of the underlying instrument derives its value from the derivative instrument b.the instruments derive their value from the value of other instruments c.calculus is required to […]

1) bavarian sausage just paid a $1.57 dividend. if the required return on the stock investment is 14%, and the stock currently sells for $34.37, what is the implied dividend growth rate for this company? a.9.02% b.6.39% c.12.68% d.9.43% 2) […]

1) narrbegin: exhibit 15-1 exhibit 15-1 you are working to forecast the cash disbursements for a manufacturing company. sales are forecasted to be $175,000, $200,000, $225,000, and $250,000 for january, february, march, and april, respectively. the firm purchases 25% of […]

1) suppose a firm experiences a seasonal pattern in its sales, in addition to a long-term upward trend. which of the following financing plans has the potential to be less costly to the firm? a.a conservative strategy b.an aggressive strategy […]

1) a firms dividend policy refers to all of the following except to its choice of a.whether to pay shareholders a cash dividend b.how large the cash dividend should be c.how frequently a cash dividend should be distributed d.who should […]

1) capital budgeting: a.is the area in which managers have the greatest scope to create (or destroy) value for shareholders b.involves identifying potential investments, analyzing those investments and identifying which of those will create shareholder value and implement and monitor […]

1) a voluntary reorganization of debts whereby a firms debt obligations are reorganized according to a creditors pro-rata share of the debting firms total debt, is called a.a composition b.an extension c.creditor control d.none of the above 2) narrbegin: exhibit […]

1) narrbegin: running shoes, inc. running shoes, inc. running shoes, inc. has 2 million shares of stock outstanding. the stock currently sells for $12.50 per share. the firms debt is publicly traded and was recently quoted at 90% of face […]

1) if you deposit $10,000 today in an account that pays 5% interest compounded annually for five years, how much interest will you earn? a.$2,500.00 b.$2,762.82 c.$3,400.96 d.$12,762.82 2) which of the following is not considered a type of an […]

1) virtually all finance jobs require: a.teamwork b.good communication skills c.proficiency with computers d.all of the above e.both (a) and (c) 2) you are evaluating a perpetuity. the first payment is $100, and it arrives in one year. each subsequent […]

1) 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 firms customers are concentrated locally d.when the firm collects with ach transfers 2) […]

1) for which of the following would missing (that is, not taking) the discount be the least costly? a.2/10 net 40 b.1/15 net 60 c.3/10 net 70 d.1/10 net 50 2) what is meant by the term double taxation as […]

1) if a company has a liabilities to equity ratio of 0.5, then its assets to equity ratio is a.0.5 b.1.0 c.1.5 d.2.0 2) consider the cash receipts projections of emma inc. that is developing a cash budget for october […]

1) an unsecured bond that only creditworthy firms can issue is called a a.mortgage bond b.collateral trust bond c.debentures d.junk bond 2) a firm has a capital structure containing 40 percent debt, 10 percent preferred stock, and 50 percent common […]

1) suppose that over the last 30 years, company abc has averaged a return of 10%. over the same period, the treasury bond rate has averaged 3%. the current estimate of the treasury bond rate is 5%. using the historical […]

1) great lakes christmas tree co. expects to pay an annual dividend of $2 per share in perpetuity on its preferred shares starting one year from now. the firm is committed solely to its steady north american christmas tree business […]

1) bankruptcy filings in the united states: a.are mostly personal bankruptcies b.are mostly business bankruptcies c.are evenly divided between personal and business bankruptcies d.none of the above 2) which of the following firms is most likely to pay out a […]

1) narrbegin: exhibit 22-1 liquidation exhibit 23-1 narrend if the company has $3,000,000 in funds to distribute to unsecured creditors, what is the settlement that is received by the holders of the notes payable in case i? a.$1,764,706 b.$2,500,000 c.$735,250 […]

1) near-cash assets in the form of short-term investments are often called a.marketable securities b.corporate bonds c.treasury notes d.treasury bonds 2) you are considering the purchase of a business that produces net cash flows of $350,000 per year in perpetuity. […]

1) what type of corporation allows shareholders to be taxed as partners while retaining their limited liability status? a.j corporation b.llp corporation c.s corporation d.series 6 corporation 2) a firm that tends to finance permanent assets with long-term debt and […]

1) which type of institution is in a unique position to bear exchange rate risk by creating a natural hedge? a.national banks b.multinational corporations c.large corporations d.international banks 2) the irr is analogous to: a.a bonds current yield b.a stocks […]

1) bavarian sausage just issued a 10-year 12% coupon bond. the face value of the bond is $1,000 and the bond makes annual coupon payments. if the bond is trading at $967.25, what is the bonds yield to maturity? a.12.00% […]

1) markus needman, inc. just paid a 30% stock dividend to its shareholders. if the price of the companies shares was $100 before the dividend, what should the price of the shares be now? if helpful, assume that the company […]

1) consider the following set of cashflows to be received over the next 3 years: if the discount rate is 10%, how would we write the formula to find the future value of this set of cash flows at year […]

1) roxy international needs $200 million in new equity capital; currently shares are trading at $50 per share. morgan steely (the investment banker) requires a 6% spread of the offer price which will be $45 per share and is fully […]

1) one benefit of external expansion is: a.acquirers are able to purchase the firm at a substantial discount from market value b.it slows down the expansion compared to a greenfield entry and allows the firm more time to evaluate the […]

1) narrbegin: efn 1 narrend what is smiths sustainable growth rate if the company has a dividend payout ratio of 75%? a.21.70% b.25.00% c.17.44% d.13.58% 2) roxy international has earnings per share of $4.05; just paid dividend $2.03 and expects […]

1) if a bond has a sinking fund provision then the actual maturity of the bond will probably be a.greater than the stated maturity on the bond b.exactly equal to the state maturity on the bond c.less than the stated […]

1) choc-lattes corp. earned $5.00 per share in 2006, and paid a dividend of $2.00 per share. if it earns $5.50 in 2007 and follows a constant nominal payout policy, its dividend will be a.$3.30 b.$3.00 c.$2.20 d.$2.00 2) the […]

1) what percentage of publically held firms in the u.s after experiencing financial distress delist? a.100% b.57% c.19% d.24% 2) roxy is buying a house and the mortgage terms are 30 years, monthly payments. if the interest rate is 7% […]

1) narrbegin: big diesel incorporated big diesel incorporated consider the following historical returns for big diesel incorporated: yearreturn 19995% 20009% 2001-8% 20025% 200320% narrend refer to big diesel incorporated. what is the standard deviation of the returns over the five […]

1) which of the following is considered a direct cost of bankruptcy? a.diversion of managements time b.constrained capital investment spending c.lost sales d.none of the above 2) the holding period yield (hpy) calculation differs from the yield to maturity (ytm) […]

1) quiz company has a 12 year lease, with payments of $250,000 made at the beginning of each year. if no purchase option exists, and the company is in the 40% tax bracket, what is the annual after-tax cash outflow […]

1) you are trying to determine the appropriate risk-adjusted rate, in venus sun-dollars for a project on venus. you know that the correct risk-adjusted discount rate in u.s. dollars is 15% and the risk-free rate in dollars is 8%. if […]

1) private debt can take the form of a.a private debt agreement arranged between corporate borrowers and financial institutions b.an unregistered security offering sold directly to accredited investors c.both a and b d.none of the above 2) narrbegin: bavarian brew […]

1) which type of venture capital fund has the ability to borrow from the u.s. treasury? a.financial venture capital funds b.corporate venture capital funds c.small business investment companies d.venture capital limited partnerships 2) which of the following is not a […]

1) if the canadian dollar is worth $1.50, and the swiss franc is worth $1.30, then how many canadian dollars does it take to purchase a swiss franc? a.1.1538 b.0.8667 c.1.5000 d.none of the above 2) gizmo co. has a […]

1) bill henricksen, purchased a put option on cycle inc. for $4. the put option has a strike price of $40 and currently cycle inc. shares trade for $44. the expiration date of the option is 6 months from today. […]

1) suppose david can borrow and lend at the risk-free rate of 5%. which of the following three risky portfolios should he hold in combination with a position in the risk-free asset? a.portfolio with a standard deviation of 16% and […]

1) narrbegin: silly sally silly sally, inc. silly sally, inc. forecasts the following sales levels: january, $420; february, $435; march, $450; and april, $470. historically, 40% of its sales are for cash. of the remaining sales, 80% are collected in […]

1) the quote for a euro in terms of u.s. dollars is $1.1232/. how many euros equals one u.s. dollar($)? a.1 equals $1 since there exchange rates are fixed to one another b.0.8903 is equal to $1 c.1.1232 is equal […]

1) emma international is considering easing credit standards to increase sales, and potentially profits. currently the firm sells 500,000 units at a sales price of $22 per unit and variable cost of $13 per unit. currently the average collection period […]

1) narrbegin: exhibit 22-1 liquidation exhibit 23-1 narrend if the company has $578,000 in funds to distribute to unsecured creditors, what percentage of their claims are going to be satisfied if case iii occurs? a.24.86% b.75.14% c.100% d.56.35% 2) narrbegin: […]

1) you checked the /$ exchange rate today and you found that one dollar cost you 0.8214. when you checked the one year /$ forward exchange rate one dollar was trading at 0.8026. what is the forward premium (discount) for […]

1) today, the price of an october oil futures contract closed at $49.50 per barrel. yesterday, the contract closed at $50. when margin accounts are marked to market, a.long positions will have $0.75 per barrel added b.long positions will have […]

1) when evaluating a potential capital budgeting decision, fixed asset expenditures a.should be ignored b.often appear as the initial cash outflow for a project c.can be significantly increased due to the costs of installing the equipment d.all of the above […]

1) 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 $50 per share, how many shares […]

1) which of the following is a valid concern for an investor who is considering purchasing a bond which has been issued under rule 144a? a.rule 144a issues are less liquid than public issues b.rule 144a issues are traded in […]

1) financial planning encompasses all but the following: a.setting long-run strategic goals b.investing the firms long-term cash c.preparing quarterly and annual budgets d.all of the above 2) a firm may be unable to accept all projects that are expected to […]

1) by the ftc definition, the merger between exxon and mobil is a(n) a.vertical merger b.horizontal merger c.integrated merger d.all of the above 2) which of the following is also referred to as asset-backed lending? a.term loans b.syndicated loans c.project […]

1) what is the money market yield for a one-year treasury bill that is priced at a 4% discount? a.3.83% b.4% c.4.17% d.4.22% 2) capital budgeting: a.is the area in which managers have the greatest scope to create (or destroy) […]

1) the suggestion that poorly monitored managers will pursue mergers to maximize their corporations asset size because managerial compensation is usually based on firm size is called a.the managerialism theory of managers b.the concept of unintended consequences c.the untrustable manager […]

1) narrbegin: “flip” shares 1 “flip” shares 1 three companies went public last month with initial public offerings (ipo). the offer price and first day closing price are shown below for the three firms. an investor was able to purchase […]

1) which of the following securities poses the greatest financial risk for the investor? a.common equity b.preferred equity c.debt d.convertible debt 2) you purchase a call option and a put option on the shares of a company. the sticker price […]

1) narrbegin: coyote valley coyote valley products coyote valley products has daily cash collections of $500,000. the cash management staff has determined (1) customers payments are in the mail an average of 3 days; (2) processing after receipt averages 1 […]

1) retained earnings represents a.a pool of cash that the firm can use should a need for cash arise b.the increased market value, due to managements efforts, of all of the firms equity securities issued c.earnings that a firm reinvested […]

1) big deal, inc. wants to grow 30% next year. if it maintains its 40% dividend payout ratio, liabilities to equity ratio of 1, and total asset turnover of 2, what must its profit margin be to achieve this growth? […]

1) the transformation of a public corporation into a private company by the employees of the corporation itself is called a(n) a.management buyout b.employee stock ownership plan c.reverse lbo d.reverse merger 2) the chief difference(s) between european and american venture […]

1) flaws of the accounting rate of return method include: a.the choice of accounting g hurdle return rate is essentially arbitrary b.depreciation method has a large impact on the accounting rate of return c.this method makes no adjustment for project […]

1) for accounts receivable, with respect to cost trade-offs the costs that must be evaluated are: a.the cost of investment in accounts receivable and bad debts and the opportunity cost of lost sales due to overly restrictive credit policy and/or […]

1) the globe incorporated has ebit of $20 million for the current year. on the firm balance sheet, there is $80 million of debt outstanding that carries a coupon rate of 8 percent. investors seek a return of 12 percent […]

1) what is the present value of an operating lease that involves payments of $25,000 per year (the end of the year) for 10 years with no possibility of purchase at the end of the lease term. assume that the […]

1) narrbegin: dsss corporation dsss corporation dsss corporation is considering a new project to manufacture widgets. the cost of the manufacturing equipment is $125,000. the cost of shipping and installation is an additional $10,000. the asset will fall into the […]

1) an investor who employs a short straddle strategy is hoping that the underlying stock price a.is extremely volatile b.is stable c.trends above the strike price of the options d.trends below the strike price of the options 2) molotov cranberry […]

1) according to the mckinsey study the percentage of merger synergies that meet incremental revenue expectations. a.less than 25% b.25-50% c.50-75% d.more than 75% 2) which country has been the largest recipient of vc financing as a percentage of gdp? […]

1) agreements giving the venture capitalists the right to participate in any sale of stock that companys manager might arrange for themselves a.repurchase rights b.stock option plans c.demand registration rights d.participation rights 2) the short-term financing strategy where a company […]

1) if the canadian dollar is worth $1.50, and the swiss franc is worth $1.30, then how many swiss francs does it take to purchase a canadian dollar? a.1.1538 b.0.8667 c.1.300 d.none of the above 2) which of the following […]

1) the exim company has entered into a 3 month, $250 million notional principal forward rate agreement (fra) with what-a-bank. the terms are such that exim will pay what-a-bank if libor is above 2%, but what-a-bank will pay exim if […]

1) narrbegin: exhibit 22-1 liquidation exhibit 23-1 narrend if the company has $2,456,000 in funds to distribute to unsecured creditors, what is the settlement that is received by the holders of the notes payable in case i? a.$1,444,706 b.$2,500,000 c.$1,055,294 […]

1) a contractual clause that requires a borrower to pay taxes and other liabilities when due is an example of a a.positive covenant b.negative covenant c.lien d.term loan 2) if you were to invest $120 for two years, while earning […]

1) the fico score: a.was developed by fair isaac & company b.is based on a person’s income and overall indebtedness, the type of debt outstanding and the monthly payment amounts c.can have a large impact on the interest rate a […]

1) you just bought a 5-year zero coupon bond with a $1,000 face value for $735.67. what is the taxable capital gain on this bond next year? a.$274.33 b.$68.51 c.$169.47 d.$46.64 2) narrbegin: bavarian credit terms bavarian brew credit terms […]

1) a zero coupon bond has a yield to maturity of 5%; what is the bonds taxable capital gain in last year of the bonds existence? a.$ 47.61 b.$ 1,000.00 c.$ 0.00 d.$ 45.26 2) roxy botanicals forecasts the following […]

1) what recent act has attempted to reduce the possibility of more accounting scandals in our economy? a.tax relief act of 2003 b.internal accounting standards act of 2002 c.mccain-feingold act of 2003 d.sarbanes-oxley act of 2002 2) narrbegin: gamma electronics […]

1) a call option on dani corp. is trading for $4.50. the strike price of the option is $25 and it has an expiration of 3 months. if the stock of dani corp. is trading at $28, how much of […]

1) narrbegin: bavarian brewhouse div. bavarian brewhouse dividend bavarian brewhouse had earnings per share of $2.50 in 2004 and paid out a dividend per share of $1.45 that same year. earnings per share are expected to be $3.25 in 2005. […]

1) a bond issued by an international borrower and sold to investors in countries with currencies other than the currency in which the bond is denominated is called a.a eurobond b.an alien bond c.a cross-currency bond d.none of the above […]

1) if a bond issue has a sinking fund provision then a.the corporation makes payments, based upon a preconceived schedule, to a trustee who uses these funds to retire bonds by purchasing them in the marketplace b.the indenture allows the […]

1) alwaysaround co. has just issued a preferred stock that pays an annual $4 dividend. the first dividend will be received one year from today. if the required rate of return on this stock is 5%, then what is the […]

1) narrbegin: stock returns narrend what is the average return of a portfolio that has 30% invested in stock a, 30% invested in stock b and 40% invested in stock c? a.9.92% b.12.6% c.7.59% d.13.8% 2) what was the key […]

1) the amount of time that it takes for a check to clear through the banking system is called a.mail float b.processing float c.clearing float d.delivery float 2) emma bonds have 14 years to maturity, with a coupon rate of […]

1) which of the following characteristics would disqualify a firm from being an s corporation? a.a firm with 51 different individual shareholders b.the controlling majority shareholder is a fortune 500 corporation c.one of the shareholders of the proposed s corporation […]

1) which of the following stock exchanges has the most strict listing requirements? a.american stock exchange b.nasdaq c.new york stock exchange d.pacific stock exchange 2) bavarian sausage just issued a 10-year 12% coupon bond. the face value of the bond […]

1) a standard fixed for floating interest rate swap contract is effectively a.a series of call options on the interest rate b.a series of put options on the interest rate c.a series of forward rate agreements d.none of the above […]

1) what is a key provision regarding ceos in the sarbanes-oxley act of 2002? a.ceos cannot hold options in the firms they direct b.ceos total compensation cannot exceed a limit set by the sec c.ceos are personally liable for any […]

1) john smith seeks $15 million from a vc fund. john and the vc agree that the company should be ready to go public in 8 years. at that time the company should have a net income of $6.75 million. […]