The standard deviation is:
A.the square of the variance.
B.the square root of the variance.
C.one-half of the variance.
D.twice the variance.
Consumer savings equals:
A.industrial savings.
B.industrial investment.
C.financial rewards.
D.financial risk.
Overstated accounts include:
A.items that will never be realized as cash.
B.items that were recorded twice.
C.transactions that are not recorded in both assets and liabilities.
D.money that will be collected at year end.
In the MM model, the risk of bankruptcy:
A.reduces the present value of the tax shield of debt.
B.reduces the positive effect of financial leverage on firm value.
C.eliminates the possibility of a net positive effect of financial leverage on firm value.
D.has no impact on the relationship between financial leverage and firm value.
E.a and b
Which of the following phrases would not be utilized if the payments were an annuity
due?
A.End-of-period payments
B.Starting immediately
C.Starting now
D.Starting today
Antarctic Corporation currently has the following financial information:
Variable Cost = $100,000
Sales = $500,000
Fixed Cost = $200,000
Calculate the DOL for Antarctic Corporation.
A.2.0
B.3.0
C.4.0
D.5.0
Which portion of the business plan lays out the basic charter of the business and
establishes its long-term direction?
A.Mission statement
B.Market analysis
C.Financial projections
D.Contingencies section
Raider Productions has to decide whether to build its warehouse in Dallas or Houston.
This decision falls into the class of:
A.independent projects.
B.mutually exclusive projects.
C.contingent projects.
D.marginal projects.
A firm has the following investment opportunities:
If the cost of capital is 10% and the capital budget is limited to $280,000, which
project(s) should the firm undertake?
A.Project A and project B
B.Project A and project C
C.Project B and project C
D.Project A
The difference between fixed and variable costs is that:
A.variable costs move up and down with changes in sales while fixed costs remain
constant.
B.variable costs are only found in factory operations while fixed costs occur only in
expenses.
C.fixed costs are the costs of fixed assets, everything else is a variable cost.
D.Both a and b
The amount of earnings not paid as a dividend is ____.
A.always kept as cash within the firm
B.current income for the shareholders
C.deferred income and accumulated in retained earnings in the balance sheet
D.accumulated in retained earnings in the income statement
Which of the following is/are a primary market transaction(s)?
A.A company issues new stock.
B.A company issues new bonds.
C.An investor asks his broker to purchase 1,000 shares of Microsoft common stock
from another stockholder.
D.All of the above
E.a. and b.
What type of benefits is hard to quantify and lead to favorable biases when estimated by
people who want project approval?
A.Objective benefits
B.Opportunity benefits
C.Subjective benefits
D.Sunk benefits
A perpetuity has a cash flow of $18.75 and a discount rate of 6%. What is the value of
the perpetuity?
A.$318.00
B.$187.50
C.$66.67
D.None of the above
If the interest rate is 6%, which expression will determine the appropriate price to pay
for a business that you expect to earn $5,000 in each of the next ten years and be sold
for $25,000 in the eleventh year.
A.PV = $5,000[FVFA6,10] + $25,000[FVF6,11]
B.PV = $5,000[PVFA6,10] + $25,000[FVF6,11]
C.PV = $5,000[PVFA6,10] + $25,000[PVF6,11]
D.None of the above
If a firm’s degree of operating leverage is 8, what percentage change in sales revenue is
required to double the firm’s EBIT?
A.100%
B.8%
C.12.5%
D.None of the above
Which of the following will cause working capital to increase?
A.A decision to tighten credit and collections policies
B.A decision to carry higher levels of inventory
C.A decision to take increased advantage of suppliers trade credit
D.Both b. and c. above will increase permanent working capital.
E.All of the above will increase permanent working capital.
The corporate tax schedule seems not to be progressive. Which statement is correct?
A.The idea of progressive taxes refers only to individuals, the corporate schedule is
intentionally not progressive.
B.The corporate schedule is indeed not progressive because the rates do not increase
steadily as income increases.
C.Corporate Taxes are progressive because the more money a corporation makes, the
more taxes it pays.
D.Corporate taxes are conceptually progressive. The ups and downs in the schedule are
designed to take away the benefit of low early rates for companies with large incomes.
Columbia Bank & Trust has just given you a $20,000 term loan to pay for a new
concrete mixer. The loan requires five equal annual end of the year payments. If the
loan provides the bank with a 12 percent return, what will be your annual payments?
A.$5,548
B.$3,148.12
C.$6,000
D.$1,666.67
Porter Productions sells video tapes for $15.00 each. Their variable cost per unit is
$9.00. In addition, they incur $180,000 in fixed costs each year. What is the Porter’s
annual breakeven point in sales revenue?
A.$30,000
B.$180,000
C.$300,000
D.$450,000
E.$720,000