A negative cash flow to stockholders indicates a firm:
A. had a negative cash flow from assets.
B. had a positive cash flow to creditors.
C. paid dividends that exceeded the amount of the net new equity.
D. repurchased more shares than it sold.
E. received more from selling stock than it paid out to shareholders.
Which one of the following must be significantly eliminated if interest rate parity is to
exist?
A. Absolute purchasing power parity
B. Short-run exposure to exchange rate risk
C. Covered interest arbitrage opportunities
D. Relative purchasing power parity
E. Translation exposure
Bakers Supply imposes a payback cutoff of 3.5 years for its international investment
projects. If the company has the following two projects available, should it accept either
of them?
A. Accept both Projects A and B
B. Accept Project A but not Project B
C. Accept Project B but not Project A
D. Both Project A and B are acceptable but you can select only one project
E. Reject both Projects A and B
Which one of the following qualifies as an annuity?
A. Weekly grocery bill
B. Clothing purchases
C. Car repairs
D. Auto loan payment
E. Medical bills
World United stock currently plots on the security market line and has a beta of 1.04.
Which one of the following will increase that stocks rate of return without affecting the
risk level of the stock, all else constant?
A. An increase in the risk-free rate
B. Decrease in the securitys beta
C. Overpricing of the stock in the marketplace
D. Increase in the market risk-to-reward ratio
E. Decrease in the market rate of return
Currently, you can exchange $1 for 100.37 yen or 0.7538 in New York. In Tokyo, the
exchange rate is 1 = 0.0077. If you have $1,200, how much profit can you earn
using triangle arbitrage?
A. $18.08
B. $25.27
C. $30.32
D. $31.50
E. $33.14
Over the period of 1926-2011, which one of the following investment classes had the
highest volatility of returns?
A. Large-company stocks
B. U.S. Treasury bills
C. Small-company stocks
D. Long-term corporate bonds
E. Long-term government bonds
Westover Products has the following estimated monthly sales.
The accounts receivable period is 45 days. What is the amount of the collections in
May? Assume each month has 30 days.
A. $13,800
B. $11,700
C. $8,350
D. $9,050
E. $9,500
Kris will receive $800 a month for the next five years from an insurance settlement. The
interest rate is 4 percent, compounded monthly, for the first two years and 5 percent,
compounded monthly, for the final three years. What is this settlement worth to him
today?
A. $36,003.18
B. $38,219.97
C. $41,388.71
D. $43,066.22
E. $45,115.16
Which type of financing is generally used by new car dealers to finance their
inventories?
A. Blanket inventory lien arrangement
B. Trust receipt loans
C. Committed line of credit
D. Trade credit financing
E. Field warehousing financing
Home Supply, Inc. has compiled the following information:
For 2014, the cash flow from assets is _____ and the cash flow to shareholders is
______.
A. $49,100; $62,500
B. $49,100; $76,800
C. $49,100; $81,100
D. $56,400; $76,800
E. $56,400; $79,300
The one-year forward rate between the U.S. and Japan is 122.47 = $1. A one-year
risk-free security in Japan is yielding 5.3 percent while it is 4.6 percent in the U.S.
Assume interest rate parity exists. What is the spot rate between the U.S. and Japan?
A. 120.41
B. 121.08
C. 121.66
D. 121.94
E. 122.03