1) which of the following encourages managers to act in the shareholders interests?
a.performance based compensation
b.audits
c.threat of hostile takeovers
d.all of the above
2) you are consulting for a firm that anticipates that it will sell 730,000 units this year.
the firms policy is to begin to process a new order when the inventory level is just
10,000 units. what does that imply about the amount of time it take to process and
receive an order?
a.10 days
b.5 days
c.2 days
d.more information is need to answer the question
3) louis is considering a new litter box factory with the following cash flows, what is
the irr?
a.10.56%
b.10.00%
c.10.36%
d.10.26%
4) you find that an investor purchases a put option on shares of company z stock. what
is the most likely reason that an investor would make such a purchase?
a.the investor believes that company z is an undervalued company
b.the investor believes that company z in an overvalued company
c.the investor would like to speculated that company zs stock price will randomly
increase
d.none of the above
5) if the market portfolio has an expected return of 0.12 and a standard deviation of
0.40, and the risk-free rate is 0.04, what is the slope of the security market line?
a.0.08
b.0.20
c.0.04
d.0.12
6) narrbegin: kooshy
narrend
if kooshy company forecasts a 20% sales increase, what will its pro forma cost of goods
sold be, assuming it remains at the same percent of sales?
a.$576
b.$635
c.$691
d.$720
7) if the managers of a firm have a greater aversion to risk, then
a.they are less likely to hedge
b.they are more likely to hedge
c.they are more likely to use derivatives to speculate
d.none of the above
8) within the bankruptcy process when debts are exchanged for equity or the maturity
of existing debts are extended, this is called
a.a recapitalization
b.a reprioritization
c.a refinancing
d.none of the above
9) emma is evaluating a treasury bill. it is a $1 million face value with a discount of
2.55% and maturing in 91 days. what is the dollar discount?
a.$6,445.83
b.$2,550.00
c.$1,611.46
d.$8,011.06
10) beta corp has an roe of 15%; has just paid a dividend of $1.50; a pays 10% of its
earnings out in dividends, and the appropriate discount rate is 20%; what is the current
stock price?
a.$ 7.50
b.$ 26.19
c.$ 11.35
d.$ 31.43
11) which of the following statements is (are) true?
a.companies that were financed with venture capital tend to generate more sales,
exports and investment in r&d than non-venture capital-backed companies
b.about 95% of european venture-backed companies said they would either not exist or
would not have developed as quickly without venture capital investment
c.companies that were financed with venture capital tend to generate the same level of
sales, exports and investment in r&d as non-venture capital-backed companies
d.both (a) and (b) are true