Which one of the following is the abbreviation for the U.S. government coding system
that classifies a firm by its specific type of business operations?
A. BEC
B. SED
C. BID
D. SIC
E. SBC
You are analyzing a project and have developed the following estimates. The
depreciation is $19,800 a year and the tax rate is 34 percent. What is the best-case
operating cash flow?
A. $60,456
B. $62,333
C. $64,011
D. $65,650
E. $66,240
Donovan Brothers, Inc. would like to increase its internal rate of growth. Decreasing
which one of the following will help the firm achieve its goal?
A. Return on assets
B. Net income
C. Retention ratio
D. Dividend payout ratio
E. Return on equity
A person who executes customer orders to buy and sell securities on the floor of the
NYSE is called a:
A. floor trader.
B. DMM.
C. runner.
D. commission broker.
E. market maker.
A preferred stock sells for $48.20 a share and has a market return of 15.65 percent.
What is the dividend amount?
A. $6.93
B. $6.80
C. $7.25
D. $7.42
E. $7.54
Molly is considering a project with cash inflows of $918, $867, $528, and $310 over
the next four years, respectively. The relevant discount rate is 10 percent. What is the
net present value of this project if it the start-up cost is $2,100?
A. $59.50
B. $131.83
C. $148.08
D. $210.45
E. $229.50
The written agreement that contains the specific details related to a bond issue is called
the bond:
A. indenture.
B. debenture.
C. document.
D. registration statement.
E. issue paper.
A cost that should be ignored when evaluating a project because that cost has already
been incurred and cannot be recouped is referred to as which type of cost?
A. Fixed
B. Forgotten
C. Variable
D. Opportunity
E. Sunk
Joseph Schmidt and Co. has the following estimated sales.
Purchases are equal to 64 percent of the following quarters sales. What is the cash
outlay for accounts payable for quarter 3 if the firm has a 30-day accounts payable
period? Assume each month has 30 days.
A. $9,938
B. $10,539
C. $3,488
D. $6,977
E. $7,503
Which of the following characteristics apply to U.S. Treasury bills?I. Income taxed at
both the federal and state levelII. Minimal, if any, default riskIII. Marketable, but not
liquidIV. Short maturities
A. I and III only
B. II and IV only
C. I, II, and IV only
D. II, III, and IV only
E. I, II, III, and IV
Which one of the following had the lowest standard deviation of returns for the period
of 1926-2011?
A. U.S. Treasury bill
B. Inflation
C. Long-term corporate bonds
D. Large-company stocks
E. Long-term government bonds
Which one of the following states that a firms cost of equity capital is a positive linear
function of the firms capital structure?
A. Static theory of capital structure
B. M&M Proposition I
C. M&M Proposition II
D. Homemade leverage theory
E. WACC
Which one of the following terms is most commonly used to describe the cash flows of
a new project that are simply an offset of reduced cash flows for a current project?
A. Opportunity cost
B. Sunk cost
C. Erosion
D. Replicated flows
E. Pirated flows
The spot rate on the Hong Kong dollar is 7.75. Interest rates in Hong Kong are expected
to be 6 percent while they are anticipated to be 3 percent in the U.S. What is the
expected exchange rate two years from now?
A. HK$7.9825
B. HK$8.1808
C. HK$8.2220
D. HK$8.3778
E. HK$8.4141
Municipal bonds are:
A. generally purchased by tax-exempt investors.
B. risk-free.
C. issued by federal, state, and local governmental bodies.
D. zero coupon bonds.
E. generally callable.
Childrens Place has a market-to-book ratio of 2.9, net income of $68,400, a book value
per share of $37, and 45,000 shares of stock outstanding. What is the price-earnings
ratio?
A. 24.34
B. 28.16
C. 55.10
D. 63.25
E. 70.59
Which one of the following is included in net working capital?
A. Land
B. Accounts payable
C. Equipment
D. Depreciation
E. Dividend