1) which of the following is not a difference between entrepreneurial finance and
ordinary finance?
a.entrepreneurial companies generally have faster growth than ordinary companies
b.most of the assets of entrepreneurial companies are often intangible assets
c.entrepreneurial companies must attract, motivate, compensate, and retain highly
skilled technical and entrepreneurial talent with minimal cash flow
d.none of the above
2) narrbegin: stock returns
narrend
what is the average return of a portfolio that has 45% invested in stock a, 35% invested
in stock b and the rest invested in stock c?
a.9.92%
b.11.62%
c.10.62%
d.12.48%
3) operating leverage measures
a.the effect of variable costs on the responsiveness of the firms earnings before interest
and taxes to changes in the level of sales
b.the effect of fixed operating costs on the responsiveness of the firms earnings before
interest and taxes to changes in the level of gross income
c.the effect of fixed operating costs on the responsiveness of the firms earnings before
interest and taxes to changes in the level of sales
d.none of the above
4) bavarian brewhouse is planning on going public. under the underwriting agreement
the underwriting discount is $1.30. if the offering price of the stock is set at $12.50 per
share, how many shares does the company have to issue to raise $75 million?
a.6,000,000
b.5,789,452
c.5,000,000
d.6,696,429
5) what is the proper goal for management of a firm?
a.maximize shareholder wealth
b.maximize net income or earnings
c.maximize sales revenue
d.minimize expenses
6) diversifying among different suppliers is an example of:
a.capital budgeting
b.financial management
c.external financing
d.risk management
e.corporate governance
7) narrbegin: bavarian brew
bavarian brew
bavarian brew, an unlevered firm, has an expected ebit of $500,000. the required return
on assets for the firms assets is 10%. the company has 250,000 shares outstanding. the
company is considering raising $1 million in debt with a required return of 6% and
would use the proceeds to repurchase outstanding stock.
narrend
what is the value of bavarian brew before restructuring? assume a corporate tax rate of
34%.
a.$5,000,000
b.$500,000
c.$3,300,000
d.$1,000,000
8) consider the cash receipts projections of roxy inc. that is developing a cash budget
for october , november and december; sales in august and september were $600,000 and
$500,000 respectively. the forecast sales are $400,000, $300,000 and $200,000 for
october, november and december respectively. 20 % of sales are cash sales and 80% are
credit sales; collects about 70% of each months sales in the next month but waiting until
the following month for the remaining 10% of sales. bad debts are negligible. the firm
is expectsing cash dividend of $10,000 in december from a subsidiary. what are the total
cash receipts in november? (in thousands)
a.$330
b.$490
c.$255
d.$ 60
9) you are considering the purchase of production volume of 100,000 widgets per year.
you can purchase either a single 100,000 widget per year machine that costs $1,000,000
or first buy a 50,000 per year machine and then if sales volume permits, purchase
another machine later. if widget production volume costs the same per unit to produce,
what should the cost of the 50,000 per year machine be (to you) if there is a real option
to expand production?
a.less than $500,000
b.$500,000
c.greater than $500,000
d.it is impossible to tell from the information given
10) a normal distribution is ____.
a.skewed
b.symmetrical
c.uniform
d.all of the above
e.none of the above
11) emma internationa is considering retiring a $150 million bond issue sold to the
public 10 years ago. the original maturity was 30 years. if the bonds were initially sold
at 97, then what is the dollar amount of the unamortized discount that would be
accelerated at retirement?
a.$3,000,000
b.$150,000
c.$4,500,000
d.$4,650,000
12) which of the following does not apply to a partnership?
a.limited life
b.limited access to capital
c.a single owner
d.unlimited personal liability
13) bavarian sausage just issued a 10 year 7% coupon bond. the face value of the bond
is $1,000 and the bond makes annual coupon payments. if the required return on the
bond is 10%, what is the bonds price?
a.$815.66
b.$923.67
c.$1,000.00
d.$1,256.35
14) which statement best describes the capital structure decision process for a firm?
a.the firm finds the least expensive debt to finance its projects
b.the firm finds the mix of debt and equity to maximize firm value
c.the firm purchases the mix of debt and equity to match the guidelines of the company
charter
d.the firm makes the necessary filings for an initial public offering