Which one of the following is the name given to a registration of securities under SEC
415 which permits a firm to issue the securities over a two-year period?
A. Seasoned registration
B. Negotiated registration
C. Shelf registration
D. Extended registration
E. Delayed registration
Answer:
The Lumber Yard has the following projected sales.
The firm collects 50 percent of its sales in the month of sale, 47 percent in the month
following the month of sale, and another 2 percent in the second month following the
month of sale. The firm never collects 1 percent of its sales. What is the amount of the
July collections?
A. $169,819
B. $171,508
C. $173,215
D. $175,500
E. $176,655
Answer:
Which one of the following statements is correct concerning the taxation of dividends
and capital gains?
A. Seventy percent of capital gains derived from stock investments are tax exempt for
corporate investors.
B. Dividends are a form of tax-exempt income for individual investors.
C. All investors are subject to the same tax rate on dividend income.
D. Individual investors can defer taxation on both dividends and capital gains.
E. As of 2003, individual investors pay a 15 percent tax on both dividends and capital
gains.
Answer:
Which one of the following statements concerning the balance sheet is correct?
A. Total assets equal total liabilities minus total equity.
B. Net working capital is equal total assets minus total liabilities.
C. Assets are listed in descending order of liquidity.
D. Current assets are equal to total assets minus net working capital.
E. Shareholders’ equity is equal to net working capital minus net fixed assets plus
long-term debt.
Answer:
Which one of the following can be classified as an annuity but not as a perpetuity?
A. Increasing monthly payments forever
B. Increasing quarterly payments for six years
C. Unequal payments each year for nine years
D. Equal annual payments for life
E. Equal weekly payments forever
Answer:
The spot rate for the pound is 0.6220 = $1 and for the Canadian dollar is Can$0.9725 =
$1. What is the /Can$ cross-rate?
A. 0.6396/€1
B. 0.6627/€1
C. 1.0333/€1
D. 1.5635/€1
E. 01.8238/€1
Answer:
The stream of customer instructions to buy and sell securities is called the:
A. order flow.
B. market maker.
C. execution stream.
D. operations flow.
E. buyer’s stream.
Answer:
Which one of the following is the best example of systematic risk?
A. Discovery of a major gas field
B. Decrease in textile imports
C. Increase in agricultural exports
D. Decrease in gross domestic product
E. Decrease in management bonuses for banking executives
Answer:
What is the year 2 depreciation on equipment costing $166,000 if it is classified as
five-year property for MACRS purposes? 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. $37,620
B. $38,200
C. $41,984
D. $48,398
E. $53,120
Answer:
The accounting statement that measures the revenues, expenses, and net income of a
firm over a period of time is called the:
A. statement of cash flows.
B. income statement.
C. GAAP statement.
D. balance sheet.
E. net working capital schedule.
Answer:
Which one of the following best describes a private placement?
A. Interim financing for a new, high-risk entity
B. Long-term loan by a limited number of investors
C. Two-year direct business loan
D. Three-year loan to a firm by its original founder
E. New equity issue offered to current shareholders
Answer:
Soul Foods has a $12 million bond issue outstanding with a coupon rate of 6.75 percent
and a yield to maturity of 7.27 percent. What is the present value of the tax shield if the
tax rate is 30 percent?
A. $283,500
B. $360,000
C. $3,053,400
D. $3,560,000
E. $3,600,000
Answer:
One year ago, Debra purchased 4,200 shares of KNF stock for $177,072. Today, she
sold those shares for $48.10 a share. What is the capital gains yield on this investment if
the dividend yield is 4.1 percent?
A. 10.79 percent
B. 11.23 percent
C. 13.07 percent
D. 15.04 percent
E. 14.53 percent
Answer:
You own a $222,000,000 portfolio that is invested in Stocks A and B. The portfolio beta
is equal to the market beta. Stock A has an expected return of 18.7 percent and has a
beta of 1.42. Stock B has a beta of 0.88. What is the value of your investment in Stock
A?
A. $38,600
B. $42,333
C. $44,500
D. $49,333
E. $47,200
Answer:
Faith wrote a check for $22 on Friday, May 6. The check cleared the bank on
Wednesday, May 11. There were no other checks or deposits outstanding during the
month. Given this, which one of the following statements is correct?
A. On May 6, the available balance decreased by $22.
B. On May 11, the available balance was $22 less than the ledger balance.
C. On May 12, the ledger balance was $22 less than the available balance.
D. On May 14, the available balance increased by $22.
E. On May 10, the ledger balance was $22 less than the available balance.
Answer:
As of this morning, your firm had a ledger balance of $775 with no outstanding
deposits or checks. Today, your firm deposited six checks in the amount of $79 each
and wrote a check in the amount of $330. What is the amount of the collection float as
of the end of the day?
A. $115
B. $240
C. $330
D. $474
E. $775
Answer:
Which one of the following will increase the operating cycle?
A. Decreasing the accounts payable period
B. Increasing the accounts payable turnover rate
C. Increasing the cash cycle
D. Decreasing the accounts receivable turnover rate
E. Decreasing the inventory period
Answer:
You place an order for 800 units of Good Y at a unit price of $33. The supplier offers
terms of 1/15, net 45. The supplier is offering you a discount of _____ if you pay within
____ days.
A. $264; 15
B. $264; 30
C. $264; 45
D. $1,600; 15
E. $1,600; 45
Answer:
Brickhouse is expected to pay annual dividends of $1.90 and $2.10 over the next two
years, respectively. After that, the company expects to pay a constant dividend of $2.30
a share. What is the value of this stock at a required return of 16 percent?
A. $12.44
B. $13.30
C. $13.89
D. $14.08
E. $14.60
Answer:
Tessler Farms has a return on equity of 12.71 percent, a debt-equity ratio of 0.75, and a
total asset turnover of 0.9. What is the return on assets?
A. 7.26 percent
B. 8.06 percent
C. 13.67 percent
D. 15.24 percent
E. 17.41 percent
Answer:
Keyser Materials has 8 percent coupon bonds on the market with 19 years to maturity.
The bonds make semiannual payments and currently sell for 102 percent of par. What is
the current yield on Keyser Materials bonds? The YTM? The effective annual yield?
A. 7.84 percent; 7.80 percent; 7.95 percent
B. 7.84 percent; 7.92 percent; 7.95 percent
C. 7.84 percent; 7.92 percent; 7.97 percent
D. 7.80 percent; 7.84 percent; 7.92 percent
E. 7.80 percent; 7.92 percent; 7.95 percent
Answer:
Kennedy’s has the following estimated quarterly sales for next year.
The accounts receivable period is 70 days. What is the expected accounts receivable
balance at the end of the second quarter? Assume each month has 30 days.
A. $4,400
B. $5,600
C. $10,267
D. $12,000
E. $13,200
Answer:
A U.S. firm has total assets valued at €687,000 located in Germany. This valuation
did not change from last year. Last year, the exchange rate was €0.94 = $1. Today, the
exchange rate is €.0.75 = $1. By what amount did these assets change in value on the
firm’s U.S. financial statements?
A. -$185,148.94
B. -$162,311.19
C. $162,311.19
D. $185,148.94
E. $0
Answer:
Assume you are comparing two firms that are identical in every aspect, except one is
levered and one is unlevered. Which one of the following statements is correct
regarding these two firms?
A. The levered firm has higher EPS (earnings per share) than the unlevered firm at the
break-even point.
B. The levered firm will have higher EPS than the unlevered firm at all levels of EBIT.
C. The unlevered firm will have higher EPS than the levered firm at relatively high
levels of EBIT.
D. The EPS for the unlevered firm will always exceed those of the levered firm.
E. The unlevered firm will have higher EPS at relatively low levels of EBIT.
Answer: