Which one of the following is an intangible fixed asset?
A. Inventory
B. Machinery
C. Copyright
D. Account receivable
E. Building
Graphic Designs has 120,000 shares of cumulative preferred stock outstanding.
Preferred shareholders are supposed to be paid $1.50 per quarter per share in dividends.
However, the firm has encountered financial problems and has not paid any dividends
for the past three quarters. How much will the firm have to pay per share of preferred
next quarter if the firm also wishes to pay a common stock dividend?
A. $3.00
B. $4.50
C. $6.00
D. $7.50
E. $9.00
Which one of the following actions is indicative of a restrictive short-term financial
policy?
A. Granting increasing amounts of credit to customers
B. Expanding the number of inventory items carried
C. Increasing the firms investment in the current accounts
D. Minimizing the cash balances held by the firm
E. Investing relatively large amounts in marketable securities
Harvest generally receives three checks a month in the amounts of $46,500, $32,000,
and $63,800. On average, it takes two days for the funds from these checks to be added
to the firms available balance at the bank once they have been deposited. What is the
amount of the average daily float?
A. $4,743
B. $9,487
C. $14,209
D. $21,506
E. $56,750
Radio Shack offers credit to its customers and charges interest of 1.2 percent per month.
What is the annual percentage rate?
A. 14.40 percent
B. 14.61 percent
C. 15.10 percent
D. 15.31 percent
E. 15.53 percent
The corporate tax structure in the U.S. is based on a:
A. maximum tax rate of 38 percent.
B. minimum tax rate of 10 percent.
C. flat rate of 34 percent for the highest income earners.
D. flat-rate tax.
E. modified flat-rate tax.
You are planning an extended trip to Hong Kong. You have located some housing that
you can lease for 11,250 Hong Kong dollars per month. What is the cost per month in
U.S. dollars if the exchange rate is HK$1 = $0.1290?
A. $1,208.15
B. $1,451.25
C. $78,311.27
D. $81,395.35
E. $87,209.30
All else constant, the weighted average cost of capital for a risky, levered firm will
decrease if:
A. the firms bonds start selling at a premium rather than at a discount.
B. the market risk premium increases.
C. the firm replaces some of its debt with preferred stock.
D. corporate taxes are eliminated.
E. the dividend yield on the common stock increases.
Tauntons is an all-equity firm that has 150,000 shares of stock outstanding. Neal, the
financial vice president, is considering borrowing $220,000 at 8.25 percent interest to
repurchase 20,000 shares. Ignoring taxes, what is the value of the firm?
A. $1,260,000
B. $1,400,000
C. $1,485,000
D. $1,520,000
E. $1,650,000
Scenario analysis is best described as the determination of the:
A. most likely outcome for a project.
B. reasonable range of project outcomes.
C. variable that has the greatest effect on a projects outcome.
D. effect that a projects initial cost has on the projects net present value.
E. change in a projects net present value given a stated change in projected sales.
An unexpected decrease in market interest rates will cause a:
A. coupon bonds current yield to increase.
B. zero coupon bonds price to decrease.
C. fixed-rate bonds coupon rate to decrease.
D. zero coupon bonds current yield to decrease.
E. coupon bonds yield to maturity to decrease.
Which of the following will increase the future value of a lump sum investment?I.
Decreasing the interest rateII. Increasing the interest rateIII. Increasing the time
periodIV. Decreasing the amount of the lump sum investment
A. I and III only
B. I and IV only
C. II and III only
D. II and IV only
E. II, III, and IV only
This morning, you purchased a stock that will pay an annual dividend of $1.90 per
share next year. You require a 12 percent rate of return and the annual dividend
increases at 3.5 percent annually. What will your capital gain be on this stock if you sell
it three years from now?
A. $2.43
B. $2.51
C. $2.63
D. $2.87
E. $2.92
Which one of the following is a measure of long-term solvency?
A. Price-earnings ratio
B. Profit margin
C. Equity multiplier
D. Receivables turnover
E. Quick ratio
The Sarbanes-Oxley Act:
A. makes the officers of a public corporation personally responsible for the firms
financial statements.
B. requires all corporations to fully disclose its financial dealings to the general public.
C. places the responsibility for a firms financial statements solely on the chief financial
officer.
D. requires that the board of directors be solely responsible for the firms financial
dealings.
E. places total responsibility for the financial statements of a firm on the auditor who
certifies the statements.
Which one of the following relates to a negative change in net working capital?
A. Increase in the inventory level
B. Sale of net fixed assets
C. Purchase of net fixed assets
D. Increase in current assets and decrease in current liabilities for the period
E. Increase in current liabilities with no change in current assets for the period
Which one of the following would tend to create an unexpected increase in a firms
average collection period?
A. Increased credit sales
B. The implementation of a cash discount
C. Increased customer delinquencies
D. Increased dollar value per each sale
E. Increased collection efforts
Ginos Winery has net working capital of $29,800, net fixed assets of $64,800, current
liabilities of $34,700, and long-term debt of $23,000. What is the value of the owners
equity?
A. $36,900
B. $66,700
C. $71,600
D. $89,400
E. $106,300