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1) which of the following is considered a direct cost of bankruptcy?
a.diversion of managements time
b.constrained capital investment spending
c.lost sales
d.none of the above
2) the holding period yield (hpy) calculation differs from the yield to maturity (ytm)
calculation in that:
a.the future value for the hpy calculation is always the par value of the bond
b.the future value for the hpy calculation is the sale price of the bond
c.the time period for the hpy calculation is the number of time periods until the bond
matures
d.the time period for the hpy calculation is the number of time periods the bond was
actually held
e.both (b) and (d)
3) you plan to buy a 2 year zero coupon bond one year from today. if the risk free rate is
5.6% and the forward price for the bond is $843.25, what should be the current price of
a three year zero-coupon bond?
a.$943.25
b.$893.23
c.$996.07
d.$798.53
4) place the following dates related to dividend payments in proper order:
a.record date, announcement date, payment date, ex-dividend date
b.announcement date, ex-dividend date, record date, payment date
c.announcement date, record date, ex-dividend date, payment date
d.record date, announcement date, ex-dividend date, payment date
5) the intercept of the security market line is:
a.e(rm) - rf
b.1/(e(rm) - rf)
c.rf - e(rm)
d.rf
6) which of the following is a weakness of a sole proprietorship?
a.unlimited life
b.easy to form
c.limited liability
d.limited access to capital
7) you are a venture capitalist who is approached by a firm that is willing to sell you
30% of the firms common stock. you believe the firm will be worth $800 million
dollars when it ipos in 5 years. if you require a 50% return on investments with this
firms risk characteristics, what amount will you have to invest today in order to
purchase 30% of the firms common shares?
a.$240.000 million
b.$105.350 million
c.$31.605 million
d.none of the above
8) zeta corp has an roe of 15%; has just paid a dividend of $1.55; a pays 110% of its
earnings out in dividends, and the appropriate discount rate is 20%; what is the current
stock price?
a.$ 8.80
b.$ 10.51
c.$ 8.00
d.$ 7.10
9) generally speaking, the return associated with acquisitions are higher for
a.debt financed transactions
b.equity financed transactions
c.cash transactions
d.the acquirer than for the target
10) discounting is:
a.calculating the future value of present cash flows
b.calculating the present value of future cash flows
c.is necessary in order to pull present values to the future
d.none of the above
11) what are the broad types of capital?
a.equity
b.debt
c.assets
d.both (a) and (b)
12) standard deviation measures:
a.systematic risk
b.unsystematic risk
c.total risk
d.beta risk
13) which of the following describes taking a position in a currency to increase risk?
a.speculating
b.hedging
c.put-call parity
d.insurance
e.fixed exchange rate
14) a bonds coupon rate
a.equals its annual coupon payment divided by the bonds current market price
b.varies during the life of the bond
c.equals its annual coupon payment divided by its par value
d.both a and b are correct
