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
for $7.50. the options have 1 year until expiration and the risk free rate is 4%. according
to put – call parity what should be the price of a $30 put option on beech brewery with
one year to expiration.
a.$6.15
b.$6.36
c.$1.35
d.$11.15
3) manufacturing resource planning ii (mrpii):
a.typically involves the management of a items (from the abc system)
b.uses a complex computerized system to integrate data from various departments
c.expands on material requirements planning
d.all of the above
e.(b) and (c) only
4) which of the following statements is/are true?
a.almost any functional area in the firm can affect, or be affected by, the cash budget
b.the cash budget typically only impacts the financing area of the firm
c.even if a firm’s cash budget shows that it will have a month-end cash surplus, it may
be faced with intramonth cash shortages
d.all of the above statements are true
e.only (a) and (d) are true
5) you buy 20 corn futures contracts when the futures price is $3.67 per bushel (each
contract is for 5,000 bushels). if you eventually settle the contract at $3.78, what is your
profit?
a.$11,000
b.$13,000
c.$9,500
d.$15,000
6) you are considering buying carpet for your university; grade a carpet costs $19.25 a
square yard and lasts 5 years and grade b costs $12.25 a square yard and lasts 3 years;
grade c costs $9.25 a yard and lasts 2 years; which carpet should be chosen if the
discount rate is 10%? assume that due to a large endowment given by the state’s”carpet
king” the university is committed to continued carpet use. which carpet should be
chosen?
a.grade a
b.grade b
c.grade c
7) jimmy campbell is looking to buy put options on hawkwood corporation. currently
hawkwood corp. stock is trading at $40 per share. the put options that he is considering
buying have a strike price of $45. these put options are
a.in-the-money
b.american options
c.out-of-the money
d.european options
8) which of the following conditions must be met in order for put – call parity to hold.
a.the call and put options must be on the same underlying stock
b.the call and put options must have the same expiration date
c.both options should be european options
d.all of the above
9) what is the future value at year 3 of the following set of cash flows if the discount
rate is 11%?
a.$738
b.$761
c.$789
d.$812
10) narrbegin: sawtooth eoq
sawtooth industries
sawtooth industries uses an economic order quantity (eoq) model to manage its
inventory investment. the company uses about 25,000 molded plastic assemblies each
year. order costs for these are $150 per order, while carrying costs are about $250 per
unit per year. assume a 365 day year.
narrend
using the eoq, how many orders will sawtooth place each year?
a.about 68
b.about 145
c.about 86
d.about 112
11) the percentage of shares owned that triggers a legal requirement to identify one as a
significant stockholder of a company is
a.1%
b.4.9%
c.5%
d.20%
12) what is the goal of financial management?
a.maximize corporate profits
b.maximize shareholder wealth
c.minimize costs
d.maximize earnings
13) why are treasury bills among the safest investments in the world?
a.they are short-term investments and therefore extremely sensitive to interest rate
changes
b.they are long-term investments and therefore extremely insensitive to interest rate
changes
c.they are short-term investments and therefore fairly insensitive to interest rate changes
d.they are backed by the full faith and credit of the u.s. government
e.both (c) and (d)
14) the barrell company is approached by a bank that offers to implement a lockbox
system of receipts for the firm. if the new system is implemented, it will reduce float by
6 days per year. if barrells cost of capital is 11.5% and its annual sales are expected to
be $10,00,000, then what is the maximum amount that barrell is willing to pay for the
lockbox system?
a.$1,890.41
b.$18,904.11
c.$164,438.56
d.$1,150,000.00
15) in perfect capital markets,
a.dividends are irrelevant because investors can costlessly create any payout pattern
desired
b.dividends are irrelevant because firms have more investment opportunities for free
cash flow
c.dividends are irrelevant because investors prefer certainty
d.none of the above are true
16) a firm prefers to assume a probability distribution concerning each of the major
inputs for the net present value of a project and then randomly draw those inputs over
and over again until a distribution is generated for the net present value of an entire
project. the firm is performing
a.a monte carlo analysis on its projects
b.sensitivity analysis on its projects
c.a scenario analysis on its projects
d.none of the above