Fin 162 Quiz

subject Type Homework Help
subject Pages 8
subject Words 792
subject Authors Edgar A. Norton, Ronald W. Melicher

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Using the DuPont system of analysis and holding other factors constant, an increase in
the net profit margin will result in ________ in the return on equity.
a. an increase
b. a decrease
c. no change
d. an undetermined change
Functions of money include all of the following EXCEPT:
a. Money serves as a medium of eXchange.
b. Money may be held as a store of value.
c. Money serves as a standard of value.
d. All of the above are functions of money.
The internal rate of return concept is best explained by which of the following?
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a. rate where NPV is equal to zero
b. point where initial investment has been returned
c. marginal cost of capital
d. average book value
In the statement of cash flows, changes in retained earnings are reported as two separate
line items, which are __________ and ___________.
a. revenues and expenses
b. assets and liabilities
c. depreciation and amortization
d. net profits and dividends
e. none of the above
A loan that is repaid in equal payments over a specified time period is called a (n)
a. discount loan
b. balloon loan
c. amortized loan
d. none of the above
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Which of the following are required to file annual reports with the Securities and
Exchange Commission?
a. proprietorships
b. partnerships
c. public corporations
d. all the above
A decrease in the supply for loanable funds accompanied by a decrease in demand will
cause interest rates to:
a. increase
b. decrease
c. stay the same
d. not enough information to tell
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Insider trading laws regulate the behavior of
a. corporate officers only
b. investment bankers only
c. anyone with nonpublic information about a firm
d. none of the above.
The _______________ established the Public Company Accounting Oversight Board
(PCAOB).
a. Smoot-Hawley Act
b. Sarbanes-Oxley Act
c. Gram-Harkins Act
d. McKean-Obama Act
e. none of the above
Agency problems may result from a manager's concerns about any of the following
except
a. job security
b. personal wealth
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c. corporate goals
d. company provided perquisites
e. none of the above
Shanghai Shipping is considering investing in a project that requires an after-tax initial
investment of 156 million and is expected to produce after-tax cash inflows of $40
million for each of the next five years. The firm's cost of capital is 8%. Based on this
information, the IRR of the project is _________ percent and the firm should
_________ the project.
a. 9.9; accept
b. 9.9, reject
c. 8.9, accept
d. 8.9, reject
e. none of the above
Sources of short-term financing such as accounts payable, notes payable, and accruals
should be used to finance:
a. all current assets
b. all fixed assets
c. a portion of the current assets needed to support nonseasonal sales levels plus all of
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the seasonal build-up in current assets
d. a portion of the fixed assets plus all of the seasonal build-up in current assets
The primary goal of the financial manager of a profit-seeking organization is to:
a. maximize market share
b. maximize the owners'wealth
c. increase sales and profit
d. have healthy cash flow
A business should begin with a vision or mission statement that is consistent with the
planned overall strategy.
The firm's unadjusted cost of debt financing equals the yield to maturity on new debt
issues.
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Aggregate demand refers to total spending in the economy.
All public offerings are regulated by the Securities and Exchange Commission (SEC).
Monetizing the deficit occurs when the Fed increases the money supply by purchasing
government securities.
37. The term "ex-ante" refers to expected or forecasted information.
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Short-term financing sources include bank loans, trade credit, and commercial paper.
When applied to the analysis of independent projects, NPV and IRR never provide
conflicting accept or reject decisions.
Standard deviation is stated in the same units of measurement (e.g., dollars, percent) as
those of the data from which they were generated.

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