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1) quiz company has a 12 year lease, with payments of $250,000 made at the beginning
of each year. if no purchase option exists, and the company is in the 40% tax bracket,
what is the annual after-tax cash outflow on the lease?
a.$416,667
b.$250,000
c.$150,000
d.$100,000
2) whose responsibility is it to serve as the watchdog on behalf of the bondholders?
a.custodian
b.trustee
c.wall street
d.none of the above
3) which type of venture capital firms dominate the industry?
a.small business investment companies
b.financial venture capital funds
c.corporate venture capital funds
d.venture capital limited partnerships
4) narrbegin: coyote valley
coyote valley products
coyote valley products has daily cash collections of $500,000. the cash management
staff has determined (1) customers payments are in the mail an average of 3 days; (2)
processing after receipt averages 1 day; and (3) after deposit funds are cleared on
average in 2 days. assume a 365 day year.
narrend
if coyote valley products faces an 8% opportunity cost of funds, what is the most it
would pay to implement a lock-box system that reduces collection float by 2 days?
a.$40,000
b.$60,000
c.$80,000
d.$100,000
5) you just bought a 5-year zero coupon bond with a $1,000 face value for $735.67.
what is the yield to maturity of this bond?
a.10.36%
b.6.33%
c.4.69%
d.8.18%
6) the risk that movements in exchange rates will adversely affect the value of a
particular transaction.
a.transactions exposure
b.translation exposure
c.economic exposure
d.political risk
7) a zero coupon bond has a yield to maturity of 8%; what is the bonds taxable capital
gain in last year of the bonds existence?
a.$ 74.07
b.$ 1,000.00
c.$ 80.00
d.$ 920.00
8) capital budgeting is the single most important activity of the firms financial manager.
which of the following is not a part of the capital budgeting process?
a.identifying potential investments
b.identifying investments that create shareholder value
c.developing new products
d.implementing and monitoring the selected investments
9) when a parent company creates a new company with its own shares by issuing shares
of that company which used to be a division or subsidiary of the parent company, the
transaction is called
a.a divestiture
b.a reverse split
c.a spin-off
d.none of the above
10) which agency oversees fair reporting of financial information to investors of
publicly traded stocks?
a.sec
b.irs
c.nyse
d.nasdaq
11) yen-denominated bonds issues by non-japanese corporations are known as:
a.yankee bonds
b.samurai bonds
c.eurobonds
d.japanese bonds
e.tokyo bonds
12) the 1933 law that prohibited commercial banks from underwriting corporate
security issues, as well as a host of other things is
a.the glass-steagall act
b.the mcfadden act
c.the gramm-leach-bliley act
d.none of the above
13) consider the following: the market value of roxy stock is $17 a share (with
3,000,000 shares outstanding and the next annual dividend is expected to be $1.00), the
bonds are currently selling for $1020 (semi-annual coupon payments of $25; maturing
in 20 years; 20,000 bonds in the market), the preferred stock currently is $30 per share
(paying dividends of $3 in perpetuity, 100,000 shares outstanding); if the tax rate is
40%, what is the firms wacc?
a.5.76%
b.5.23%
c.5.88%
d.6.91%
14) consider the adjusted closing prices for ma stock
what is the holding period return for ma?
a.1.53%
b.2.35%
c.-1.20%
d.3.25%
