Computing the present value of a future cash flow to determine what that cash flow is
worth today is called:
A. compounding.
B. factoring.
C. time valuation.
D. simple cash flow valuation.
E. discounted cash flow valuation.
Which one of the following is the best example of a raw material?
A. Set of tires for an automaker
B. Partially assembled airplane
C. Cabinets ready to be shipped
D. Can of paint waiting to be sold
E. Cell phone waiting to be encased
Which one of the following individuals is most apt to purchase a municipal bond?
A. Minimum-wage employee
B. Retired individual with minimal current income
C. Recent college graduate
D. Tax-exempt organization
E. Highly compensated business owner
If shareholders are granted a preemptive right they will:
A. be given the choice of receiving dividends either in cash or in additional shares of
stock.
B. be paid dividends prior to the preferred shareholders during the preemptive period.
C. be entitled to two votes per share of stock.
D. be able to choose the timing and amount of any future dividends.
E. have priority in the purchase of any newly issued shares.
Which one of the following terms is defined as an underwriting for which the
underwriters assume full responsibility for any unsold shares?
A. Initial public offering
B. Best efforts underwriting
C. Firm commitment underwriting
D. Rights offer
E. Private placement
Dividends are which one of the following?
A. Payable at the discretion of a firms president
B. Treated as a tax-deductible expense to the paying firm
C. Paid out of aftertax profits
D. Paid to holders of record as of the declaration date
E. Only partially taxable to high-income individual shareholders
Currently, you can exchange 100 for $133. The inflation rate in Euroland is expected
to be 2.5 percent. In one year, it is expected that 100 can be exchanged for $136.
Assume relative purchasing power parity exists. What is the expected inflation rate in
the U.S.?
A. 3.84 percent
B. 4.26 percent
C. 4.71 percent
D. 5.21 percent
E. 5.68 percent
Kims Bridal Shoppe has 15,000 shares of common stock outstanding at a price of $11 a
share. It also has 2,000 shares of preferred stock outstanding at a price of $34 a share.
There are 50 bonds outstanding that have a 7.5 percent semiannual coupon. The bonds
mature in six years, have a face value of $1,000, and sell at 96 percent of par. What is
the capital structure weight of the common stock?
A. 24.20 percent
B. 31.68 percent
C. 53.15 percent
D. 58.72 percent
E. 66.23 percent
Today, Stacy is investing $26,000 at 6.0 percent, compounded annually, for 4 years.
How much additional income could he earn if he had invested this amount at 7 percent,
compounded annually?
A. $1,043.11
B. $1,256.30
C. $1,401.16
D. $1,442.79
E. $1,484.08
On any given day, Athens Florist receives numerous checks worth an average combined
total of $6,300. The funds from the deposited checks are generally available in 1.5 days.
Every day the firm mails out checks totaling $4,600 that generally take 2 days to clear
the bank. What is the amount of the disbursement float?
A. $150
B. $6,900
C. $9,150
D. $9,200
E. $9,850
The accounts receivable turnover rate for Big Mens Wear has gone from an average of
10.8 times to 10.2 times per year. How has this change affected the firms accounts
receivable period?
A. Decrease of 1.98 days
B. Increase of 1.98 days
C. Decrease of 2.28 days
D. Increase of 2.28 days
E. Increase of 2.97 days
Which one of the following defines the terms of sale?
A. Period of time during which a discount can be taken on an invoice
B. Period of time granted to a customer to pay for the goods or services received
C. Legal documents related to the credit sale of either goods or services
D. Conditions under which a firm sells its goods or services for either cash or credit
E. Process used to determine which customers will be granted credit and which will not
Which one of the following actions will increase the current ratio, all else constant?
Assume the current ratio is greater than 1.0.
A. Cash purchase of inventory
B. Cash payment of an account receivable
C. Cash payment of an account payable
D. Credit sale of inventory at cost
E. Cash sale of inventory at a loss
Decatur Arts Center writes 158 checks a day for an average amount of $211 each. These
checks generally clear the bank 3.5 days after they are written. In addition, the firm
generally receives an average of $50,000 a day in checks. The checks that are received
are deposited immediately and the funds are generally available the following day.
What is the amount of the firms disbursement float?
A. $104,625.00
B. $116,683.00
C. $155,255.50
D. $170,450.00
E. $50,000.00
One year ago, you purchased a 7.5 percent annual coupon bond for a clean price of
$980. The bond now has seven years remaining until maturity. Today, the yield to
maturity on this bond is 6.87 percent. How does todays clean price of this bond
compare to your purchase price?
A. 4.24 percent lower
B. 4.70 percent lower
C. 5.48 percent lower
D. 5.52 percent higher
E. 6.61 percent higher
Any person who owns a license to trade on the NYSE is called a:
A. dealer.
B. floor trader.
C. DMM.
D. member.
E. proxy.
The Donut Hut has sales of $68,000, current assets of $11,300, net income of $5,100,
net fixed assets of $54,900, total debt of $23,800, and dividends of $800. What is the
sustainable growth rate?
A. 10.48 percent
B. 11.29 percent
C. 11.79 percent
D. 12.08 percent
E. 12.39 percent
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
Today is your 21st birthday and you just decided to start saving money so you can retire
early. Thus, you are going to save $500 a month starting one month from now. You plan
to retire as soon as you can accumulate $1 million. If you can earn an average of 8
percent on your savings, how old will you be when you retire?
A. 33.39 years old
B. 42.87 years old
C. 54.39 years old
D. 64.71 years old
E. 63.87 years old