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1) if you deposit $10,000 today in an account that pays 5% interest compounded
annually for five years, how much interest will you earn?
a.$2,500.00
b.$2,762.82
c.$3,400.96
d.$12,762.82
2) which of the following is not considered a type of an institutional venture capital
fund?
a.small business investment companies
b.financial venture capital funds
c.corporate venture capital funds
d.all of the above are types of institutional venture capital funds
3) narrbegin: dilly deli
dilly deli, inc.
dilly deli, inc., a nation-wide chain of deli-style restaurants, has built a $34,000 balance
in one of its regional bank accounts. it wishes to move $30,000 to its main
concentration account. a dtc cost $1.50 and requires 3 days to clear; an edt costs $3.00
but requires only 1 day to clear; and a wire transfer costs $15 and clears the same day.
dilly deli, inc. can earn 7% on short term investments.
narrend
refer to dilly deli. again assume short term investments can earn 7%. what is the
minimum amount that needs to be transferred in order to make the wire transfer more
cost effective than the edt?
a.$62,751
b.$78,214
c.$70,393
d.$66,482
4) which is not a duty of a financial manager?
a.budgeting
b.financial forecasting
c.product research
d.investment analysis
5) narrbegin: cboe
cboe
use the following information on cboe 13-week t-bill rate options to answer the
following question(s).
narrend
refer to cboe. suppose you want to cap your interest rate before a planned october
borrowing. what is the cost of using the oct 35 option to hedge?
1. $110 per contract
2. $1.10 per contract
3. $120 per contract
d. $1.20 per contract
6) which country shows a great potential for future private equity investment?
a.canada
b.china
c.india
d.japan
7) equal, inc. is financed with equal portions of debt and equity. the after-tax cost of
debt is 6% and the cost of equity is 8%. if equal expects next years free cash flow to be
$25,000,000 with growth of 3% thereafter, what is the value of equal, inc. to the nearest
dollar? equals marginal tax rate is 35%.
a.$357,142,857
b.$625,000,000
c.$833,333,333
d.none of the above
8) a rapidly growing source of new money for institutional venture capital funds is
a.bank loans
b.pension funds
c.individuals
d.government grants
9) your firm is evaluating a project that should generate revenue of $4,600 in year 1,
$5,200 in year two, $5,900 in year three, and $5,700 in year four. the firm receives each
cash flow at the end of each year. if your firm's required return is 12%, what is the
future value of these cash flows at the end of year four?
a.$16,074.51
b.$22,583.53
c.$25,293.55
d.$28,328.77
10) the right to invest additional resources in investments that enjoy early success is
known as a(n):
a.expansion option
b.abandonment option
c.follow-on investment option
d.flexibility option
11) a one-year bond offers a yield of 6% and a two year bond offers a yield of 7.5%.
under the expectations theory what should be the yield on a one year bond next year?
a.13.50%
b.4.52%
c.7.38%
d.9.02%
12) with respect to the company that has issued a callable bond,
a.the value of the call increases as the stock price increases
b.the value of the call increases as interest rates increase
c.the value of the call increases as interest rates decrease
d.none of the above
13) debtco. has $100,000,000 of perpetual debt outstanding with a cost of 9%. debtco.
is currently subject to a 30% marginal tax rate. if a new president is elected who
surprisingly announces that firms like debtco. will now be subject to a 35% marginal
tax rate, what should be the effect of the immediate value change on debtco.?
a.-$35,000,000
b.-$5,000,000
c.$5,000,000
d.$35,000,000
