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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 95% confidence interval for big diesel returns next
year?
a.between -13.86% and 26.26%
b.between -11.74% and 42.08%
c.between 6.20% and 20.06%
d.between -3.83% and 17.94%
2) which of the following is a valid criticism concerning the goal of firms to maximize
profits?
a.profit maximization ignores expenses
b.profit maximization is completely unrelated to shareholder wealth
c.profit maximization may ignore the timing of those profits
d.there are no valid criticisms of profit maximizing firms
3) the additional return offered by a more risky investment relative to a safer one is
called
a.the risk-free rate
b.the risky return
c.the risk premium
d.the insurance premium
4) for a positive r,
a.future value will always exceed present value
b.future and present will always be the same
c.present value will always exceed future value
d.none of the above is true
5) which of the following anti-takeover measures may actually help align manager and
shareholder interests?
a.super majority votes
b.pac man defense
c.golden parachutes
d.staggered director elections
6) which is true concerning preferred stock?
a.preferred stock is considered debt on the company balance sheet
b.preferred stock holders have voting rights for the company board of directors
c.preferred stock payments are variable like common stock
d.preferred stock is viewed as less risky than a firms common stock
7) the purpose of a positive pay service is to
a.reduce availability and clearing float
b.only clear checks when a firms cash balance is positive
c.reduce a firms exposure to check fraud
d.move funds to into a zero balance account
8) which factor in the z-score model will most affect the likelihood of bankruptcy
predicted?
a.working capital to total assets ratio
b.ebit to total assets ratio
c.market value of equity to book value of equity ratio
d.retained earnings to total assets ratio
9) smart products has a working capital to total assets ratio of 0.15, a retained earnings
to total assets ratio of 0.2, an ebit to total assets ratio of 0.4, a market value of equity to
book value of equity ratio of 1.3, and a sales to total assets ratio of 0.75. what is smart
products z-score?
a.2.60
b.3.31
c.5.74
d.2.79
10) a cash outlay that has already been committed whether a project is accepted or not
is known as a:
a.opportunity cost
b.terminal value
c.net cost
d.sunk cost
11) louis is evaluating a treasury bill. it is a $1 million face value with a discount of
3.25% and maturing in 182 days. what is the bond equivalent yield?
a.3.250%
b.3.250%
c.3.304%
d.3.350%
12) narrbegin: commerce company
commerce company
the commerce company is evaluating a project with the following cash flows:
narrend
what is the irr of the proposed commerce company project?
a.7.00%
b.15.24%
c.23.29%
d.42.85%
13) which answer is false regarding bond prices and interest rates?
a.bond prices and interest rates move in opposite directions
b.the price of a bond is the present value of the coupon payments and the face value
c.the prices of short-term bonds display greater price sensitivity to interest rate changes
than do the prices of long-term bonds
d.interest rate risk can be described as the risk that changes in market interest rates will
cause fluctuations in the bonds price
