Which one of the following increases the number of shares outstanding but does not
increase the value of owners equity?
A. Stock repurchase
B. Reverse stock split
C. Stock split
D. Cash distribution
E. Liquidating dividend
A firm grants credit with terms of 2/5, net 20. The firms customers have ___ days to
pay in order to receive a _____ percent discount.
A. 2; 5
B. 5; 2
C. 15; 2
D. 20; 2
E. 30; 5
Percentage returns:I. are easy to understand.II. relay information about a security more
easily than dollar returns do.III. are not affected by the amount of the investment.IV.
can be easily separated into dividend yield and capital gain yield.
A. II and III only
B. I and III only
C. I, II, and III only
D. I, II, and IV only
E. I, II, III, and IV
Alderson Metals is compiling a cash balance projection by quarter for next year. Which
one of the following adjustments to this projection will decrease the cumulative
surplus?
A. Reducing payroll costs from its current projection amount
B. Decreasing the accounts receivable period by changing the firms credit policy
effective the first of next year
C. Receiving more favorable credit terms from the firms suppliers
D. Increasing the dividend per share on the firms outstanding common stock
E. Refinancing the firms long-term debt at a lower interest rate
Global Trade, Inc. has $1,000 face value bonds outstanding with a market price of
$1,013. The bonds pay interest annually, mature in 11 years, and have a yield to
maturity of 5.34 percent. What is the current yield?
A. 5.39 percent
B. 5.43 percent
C. 5.50 percent
D. 5.61 percent
E. 5.77 percent
The historical record for the period 1926-2011 shows that the annual nominal rate of
return on:
A. risk-free securities has averaged around 5 percent.
B. the Consumer Price Index has been positive every year.
C. U.S. Treasury bills have had a positive rate of return for every year in the period.
D. U.S. Treasury bills is constant.
E. large company stocks has averaged around 9 percent.
Martha is investing $5 today at 6 percent interest so she can have $10 later. The $10 is
referred to as the:
A. true value.
B. future value.
C. present value.
D. discounted value.
E. complex value.
If a firm has a 100 percent dividend payout ratio, then the internal growth rate of the
firm is:
A. zero percent.
B. 100 percent.
C. equal to the ROA.
D. negative.
E. infinite.
Jefferson International is trying to choose between the following two mutually
exclusive design projects:
The required return is 12 percent. If the company applies the profitability index (PI)
decision rule, which project should the firm accept? If the company applies the NPV
decision rule, which project should it take? Given your first two answers, which project
should the firm actually accept?
A. Project A; Project B; Project A
B. Project A; Project B; Project B
C. Project B; Project A; Project A
D. Project B; Project A; Project B
E. Project B; Project B, Project B
Through which of the following can a firm can reduce its number of outstanding
shares?I. Open market purchaseII. Rights offerIII. Tender offerIV. Targeted repurchase
A. IV only
B. I and IV only
C. II, III, and IV only
D. I, III and IV only
E. I, II, III, and IV
Jennifer has annual sales of $367,200 and cost of goods sold of $198,600. The average
accounts receivable balance is $20,400. How many days on average does it take the
firm to collect its accounts receivable?
A. 16.08 days
B. 16.30 days
C. 17.27 days
D. 18.00 days
E. 20.28 days
Which one of the following statements is correct concerning both the dollar return and
the percentage return on a stock investment?
A. The dollar return is dependent on the size of the investment while the percentage
return is not.
B. The dollar return is more accurate than the percentage return because the dollar
return includes dividend income while the percentage return does not.
C. The dollar return considers the time value of money while the percentage return does
not.
D. Dollar returns are based on capital gains while percentage returns are based on the
total rate of return.
E. Dollar returns must either be zero or a positive value while percentage returns can be
negative, zero, or positive.
What is the IRR of the following set of cash flows?
A. 12.93 percent
B. 14.90 percent
C. 15.81 percent
D. 16.33 percent
E. 17.78 percent
Jamie is employed as a commercial loan officer for a regional bank centered in the
midwestern section of the U.S. Her job falls into which one of the following areas of
finance?
A. International finance
B. Financial institutions
C. Corporate finance
D. Capital management
E. Investments