The NYSE:
A. presently conducts all of its trading through SuperDOT.
B. is a dealer market.
C. is in the business of attracting order flow.
D. is solely a primary market.
E. is based on a multiple market maker system.
An all-equity firm has net income of $28,300, depreciation of $7,500, and taxes of
$2,050. What is the firms operating cash flow?
A. $17,850
B. $21,950
C. $26,250
D. $35,800
E. $36,750
Sticks and Stuff Furniture is offering a bedroom suite for $3,000. The credit terms are
60 months at $50 per month. What is the interest rate on this offer?
A. 0.00 percent
B. 1.50 percent
C. 1.65 percent
D. 1.15 percent
E. 1.30 percent
Dexter Companies has a conventional factoring arrangement with its local bank. Which
one of the following would be a common characteristic of that type of financing
arrangement?
A. Dexter Companies will receive the full amount of the accounts receivable included
in this arrangement on an agreed upon date sometime in the future.
B. The responsibility for collecting the covered receivables lies with Dexter Companies.
C. Any bad debt that results from an account receivable included in this arrangement
will be a cost to the bank.
D. Dexter Companies will pay a monthly fee to the bank and in turn will receive
payment for the full amount of its accounts receivable.
E. The arrangement keeps the receivables as an asset of Dexter Companies but places a
lien on those accounts in favor of the lending bank.
Richardson Marina has 18,000 shares of stock outstanding that were sold to the general
public last year. The firm has just decided to issue an additional 6,000 shares of
common stock and has also decided to make the shares available to the firms current
shareholders before making any offer of these shares to the general public. Which one
of the following terms best applies to this offer?
A. General cash offer
B. Rights offer
C. In-house offering
D. Private placement
E. Initial public offering
What is the group of underwriters called who share both the risks and the marketing
responsibilities for a securities offering?
A. Syndicate
B. Underwriting cartel
C. Firm commitment group
D. Dutch auction group
E. Venture capitalists
Goshen Industrial Sales has sales of $828,900, total equity of $539,200, a profit margin
of 4.6 percent, and a debt-equity ratio of 0.55. What is the return on assets?
A. 3.89 percent
B. 4.56 percent
C. 6.67 percent
D. 12.86 percent
E. 13.33 percent
Three years ago, Stock Tek purchased some five-year MACRS property for $67,400.
Today, it is selling this property for $28,000. How much tax will the firm owe on this
sale if the tax rate is 35 percent? The MACRS allowance percentages are as follows,
commencing with year 1: 20.00, 32.00, 19.20, 11.52, 11.52, and 5.76 percent.
A. -$3,006
B. -$1,480
C. $0
D. $1,480
E. $3,006
On any given day, a firm receives numerous checks worth an average combined total of
$5,900. The funds from the deposited checks are generally available after two days.
Every day, the firm mails out checks totaling $4,400 that generally take three days to
clear the bank. What is the amount of the collection float?
A. $4,400
B. $5,900
C. $11,800
D. $13,250
E. $13,400
Explain the differences between total risk, unsystematic risk, and systematic risk.
Identify which risk is measured by standard deviation and which is measured by beta.
Which one of the following statements about a limited partnership is correct?
A. All partners have their losses limited to their capital investment in the partnership.
B. All partners are treated equally.
C. There must be at least one general partner.
D. Equity financing is easy to obtain and unlimited.
E. Any partner can transfer his or her ownership interest without ending the partnership.
Which one of the following is a primary benefit of implementing zero-balance accounts
into a cash management system?
A. Increased disbursements float
B. Total elimination of all safety stocks
C. Additional cash availability
D. Decreased collection float
E. Elimination of all float
A firms float management policy is most apt to include which one of the following
statements?
A. All invoices are to be paid the same day they are received.
B. All outgoing checks are to be delivered by the fastest means possible.
C. The depository bank needs to process all deposits in accordance with the Check
Clearing Act for the 21st Century.
D. Any check received is to be held until the customers account has been updated to
record the payment.
E. Accounts payable processing should be given priority over accounts receivable
processing.
Which one of the following statements is correct concerning dividends in the U.S.?
A. The total amount of dividends paid by the S&P 500 companies has increased steadily
every year since 1985.
B. Only financial sector firms decreased dividends in 2008.
C. Dividend amounts tend to react quickly to changes in the economy.
D. Firms tend to quickly adjust their dividends to changes in the firms earnings per
share.
E. There are less than 75 companies in the U.S. that have consistently increased their
dividends for at least the past 25 years.
Which one of the following statements correctly applies to a sole proprietorship?
A. The business entity has an unlimited life.
B. The ownership can easily be transferred to another individual.
C. The owner enjoys limited liability for the firms debts.
D. Debt financing is easy to arrange in the firms name.
E. Obtaining additional equity is dependent on the owners personal finances.
Adell Furniture has a profit margin of 8.2 percent and a dividend payout ratio of 40
percent. What is the plowback ratio?
A. 8.20 percent
B. 27.33 percent
C. 54.60 percent
D. 60.00 percent
E. 68.20 percent
Which one of the following methods of analysis ignores cash flows?
A. Profitability index
B. Net present value
C. Average accounting return
D. Modified internal rate of return
E. Internal rate of return