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 banker) requires a 6% spread of
the offer price which will be $45 per share and is fully subsribed at that price. the fixes
costs (legal, accounting, etc.) are estimated at $750,000. how many shares must be sold
for the $200 million?
a.4,255,319
b.4,728,132
c.4,761,905
d.4,444,444
3) narrbegin: extruded elements
extruded elements
extruded elements had net income of $25,000,000 last year, and $26,250,000 this year
(in line with its long-term earnings growth rate). there are 4,000,000 shares outstanding,
and the firm follows a policy of paying 30% of its earnings out as dividends
narrend
what is extruded elements expected dividend next year?
a.$2.07 per share
b.$1.97 per share
c.$4.59 per share
d.$4.82 per share
4) you checked the /$ exchange rate a week ago and you found that one dollar cost you
0.8214. when you checked the /$ exchange rate again yesterday one dollar was trading
at 0.8026. by how much did the value of the euro appreciate (depreciate)?
a.depreciated by 3.56%
b.appreciated by 3.56%
c.appreciated by 2.29%
d.depreciated by 2.29%
5) an option that gives the holder the right to purchase an underlying security only at
the end of a fixed period for a fixed price is an
a.american call option
b.american put option
c.european call option
d.european put option
6) the appropriate cost of capital for a project depends on . . .
a.the type of assets used in the project (that is, whether they are current or fixed assets)
b.the interest rate on the firm’s outstanding long-term bonds
c.the type of security issued to finance the project
d.the risk associated with the project
7) narrbegin: miller venture capital
miller venture capital
miller venture capital made a $5 million investment in bavarian sausage technology
(bst) 8 years ago and in return received 1 million shares of convertible preferred stock
that can be converted into 2 shares of common stock. after all stock has been converted
bst will have 15 million shares outstanding. in addition, the company is planning on
issuing an additional 3 million shares in an ipo.
narrend
refer to miller venture capital. if the value of bst stock is $25 at the end of the first
trading day, what is the value of millers investment?
a.$50 million
b.$25 million
c.$30 million
d.$5 million
8) roxy is evaluating a treasury bill. it is a $1 million face value with a discount of
2.75% and maturing in 182 days.what is the dollar discount?
a.$13,902.78
b.$2,750.00
c.$3,475.69
d.$8,639.38
9) the merger wave of the 1980s was different from other merger waves because
a.of the availability of low quality debt financing
b.of the need for further conglomerates during that time
c.of the highly scrutinized process by the department of justice during that time
d.none of the above
10) you are looking at the open interest on a futures contract and notice that there are
500 contracts open. if none of the holders of these contracts are willing to take delivery
then what is the minimum number of contracts that must be bought or sold by the
expiration date of the contract?
a.0 contracts
b.250 contracts
c.500 contracts
d.1,000 contracts
11) cash flows that occur if and only if a project is accepted are:
a.sunk costs
b.terminal costs
c.incremental cash flows
d.current cash flows
12) 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