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1) which type of bond has the highest daily trading volume in our economy?
a.treasury bonds
b.agency bonds
c.corporate bonds
d.municipal bonds
2) if a company strictly adheres to a constant payout ratio policy, its dividend amount
will
a.remain constant period by period
b.vary as earnings vary
c.steadily increase over time
d.move up in a stair step pattern over time
3) if you were the shareholder in a firm that became the target of an acquisition bid,
which method of payment would stock market evidence suggest signals a better deal?
a.stock swap
b.stock/cash mixture
c.cash for stock
d.all, if the price is right
4) which of the following statements is true?
a.it is important to adjust for the differences in the timing of benefits and costs
b.a dollar received today is worth more than a dollar received in the future, assuming a
positive interest rate
c.many fund transfers occur over long periods of time and the time frame needs to be
adjusted for
d.all of the above statements are true
e.only (a) and (b) are true
5) in order to protect the rights and the investment of the venture capital firm, the
entrepreneur is usually subject to
a.a covenant spelling out what the entrepreneur must do
b.a covenant spelling out what the entrepreneur cannot do
c.a gentlemans agreement
d.both (a) and (b)
6) assume that you purchase shares of a company that recently executed an ipo at the
post-offering market price of $32 per share, and you hold the shares for one year. you
then sell your shares for $36 per share. the company does not pay dividends, and you
are not subject to capital gains taxation. what net return did you earn on your share
investment?
a.11.11%
b.12.00%
c.12.50%
d.13.00%
7) winding up a firms operations, selling off its assets, and distributing the proceeds to
creditors is called
a.reorganization
b.liquidation
c.dissolution
d.none of the above
8) narrbegin: cash budget
bavarian brews schedule of projected cash disbursement
all of bavarian brews sales are credit sales. the company collects 60% of its sales in the
next month and the remainder in the month after that.
narrend
what is the value of bavarian brew's receivables account at the end of february?
a.$1074
b.$306
c.$204
d.$348
9) with respect to inventory:
a.more is better as it will lead to happier customers
b.the larger the level, the faster the total asset turnover and the higher the return on total
assets
c.additional investment in inventory must be justified by additional returns.
d.all of the above
e.(b) and (c) only
10) kelley industries is evaluating two investment proposals. the scale of project 1 is
roughly 4 times that of the project 2. the following data is provided for the two
investment alternatives.
if the two projects are mutually exclusive, and the firms hurdle rate is 18%, which
project should the firm choose?
a.project 1
b.project 2
c.the incremental project
d.both projects
