A 5.5 percent $1,000 bond matures in seven years, pays interest semiannually, and has a
yield to maturity of 6.23 percent. What is the current market price of the bond?
A. $945.08
B. $947.21
C. $959.09
D. $959.60
E. $962.40
Which one of the following has nearly the same meaning as free cash flow?
A. Net income
B. Cash flow from assets
C. Operating cash flow
D. Cash flow to shareholders
E. Addition to retained earnings
Which of the following are participants in the foreign exchange market?I. U.S.
importersII. U.S. exportersIII. U.S. travelers to EuropeIV. U.S. portfolio manager who
purchases foreign securities
A. I and III only
B. II and IV only
C. I, III, and IV only
D. II, III, and IV only
E. I, II, III, and IV
Which one of the following statements is correct concerning a firms fixed assets?
A. The market value is the expected selling price in todays economy.
B. The market value is affected by the accounting method selected.
C. The market value is equal to the initial cost minus the depreciation to date.
D. The book value is equal to the market value minus the accumulated depreciation.
E. The book value is the greater of the initial cost or the current market value.
A firm has two open positions on its board of directors. How many shares do you need
to own to guarantee your own election to the board if the firm has 12,500 shares of
stock outstanding and uses cumulative voting? Each share is granted one vote.
A. 3,334 shares
B. 4,168 shares
C. 5,251 shares
D. 5,501 shares
E. 6,251 shares
The Tree House has a pretax cost of debt of 7.9 percent and a return on assets of 11.7
percent. The debt-equity ratio is 0.50. Ignore taxes. What is the cost of equity?
A. 11.87 percent
B. 12.33 percent
C. 12.47 percent
D. 12.98 percent
E. 13.60 percent
You are analyzing a project and have developed the following estimates: unit sales =
1,320, price per unit = $79, variable cost per unit = $43, fixed costs = $24,900. The
depreciation is $11,300 a year and the tax rate is 40 percent. What effect would an
increase of $1 in the selling price have on the operating cash flow?
A. $792
B. $1,249
C. $1,320
D. $1,406
E. $1,433
An American Depositary Receipt is defined as a security:
A. that has been deposited in an interest-bearing account at a U.S. bank.
B. issued outside the U.S. that represents shares of a U.S. stock.
C. issued in the U.S. that represents shares of a foreign stock.
D. that has a guarantee of payment from a U.S. bank.
E. issued in multiple countries but denominated in U.S. currency.
An agreement to exchange currencies sometime in the future is referred to as which one
of the following?
A. Forward trade
B. Hedge
C. Gilt
D. Forward exchange rate
E. Spot trade
If your nominal rate of return is 14.38 percent and your real rate of return is 4.97
percent, what is the inflation rate?
A. 8.47 percent
B. 8.96 percent
C. 9.44 percent
D. 19.35 percent
E. 19.92 percent
A U.S. firm has total assets valued at 890,000 located in London. This valuation did
not change from last year. Last year, the exchange rate was 0.62 = $1. Today, the
exchange rate is 0.68 = $1. By what amount did these assets change in value on the
firms U.S. financial statements?
A. -$126,660.34
B. $-113,511.03
C. $-87,248.91
D. $113,511.03
E. $126,660.34
The Pretzel Factory has net sales of $821,300 and costs of $698,500. The depreciation
expense is $28,400 and the interest paid is $8,400. What is the amount of the firms
operating cash flow if the tax rate is 34 percent?
A. $87,620
B. $89,540
C. $91,220
D. $93,560
E. $95,240
Which one of the following categories has the widest frequency distribution of returns
for the period 1926-2011?
A. Small-company stocks
B. U.S. Treasury bills
C. Long-term government bonds
D. Inflation
E. Large-company stock
Which one of the following is the positive square root of the variance?
A. Standard deviation
B. Mean
C. Risk-free rate
D. Average return
E. Real return
Which one of the following statements is correct?
A. All Chapter 7 bankruptcy filings must include a “workout” agreement.
B. Firms must remain in bankruptcy for at least 18 months.
C. Key employee retention plans (KERPs) are no longer legal.
D. Labor contracts cannot be modified through the bankruptcy process.
E. A firm can file for Chapter 11 bankruptcy even if the firm is solvent.
University Furniture sells 2,500 sofas a year at an average price per sofa of $1,250. The
carrying cost per unit is $11.60. The company orders 80 sofas at a time and has a fixed
order cost of $55 per order. The sofas are sold out before they are restocked. What is the
economic order quantity?
A. 154 sofas
B. 172 sofas
C. 181 sofas
D. 198 sofas
E. 211 sofas