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1) which type of venture capital fund has the ability to borrow from the u.s. treasury?
a.financial venture capital funds
b.corporate venture capital funds
c.small business investment companies
d.venture capital limited partnerships
2) which of the following is not a true capital-raising event for the firm?
a.primary market transaction
b.secondary market transaction
c.initial public offering
d.a corporate loan from a bank
3) before how many days have passed must the creditors hold a meeting after a firm has
been adjudged bankrupt?
a.180
b.40
c.90
d.20
4) miller juice traditionally retains 65% of its earnings for future investments. last year
millers return on equity was 15%. what is millers growth rate?
a.15.00%
b.9.75%
c.5.25%
d.18.38%
5) suppose that a united states firm is considering an investment that will yield cash
flows in canadian dollars. the projects cash flows will be the following: initial cost =
c$-1,000,000, year 1 = c$550,000, year 2 = c$340,000, year 3 = c$125,000. the u.s. firm
plans to evaluate the project by discounting the cash flows at the canadian cost of
capital of 7% and then converting the npv back to u.s. dollars at the current spot rate
which is $0.8213/c$. what is the npv of the project in u.s. dollars?
a.$-71,433
b.$-86,975
c.c$-86,975
d.c$-71,433
6) a bank is offering a new savings account that pays 8% per year. which formula below
shows the calculation for determining how long it will take a $100 investment to
double?
a.n =
b.n = 1.08ln(2)
c.n = 2ln(1.08)
d.n =
7) a buy-and-hold strategy:
a.typically earns higher returns, after expenses, than an active stock picking strategy
b.always earns the lowest returns
c.always have the lowest risk
d.typically outperforms most market indexes
8) which of the following qualifies as a eurobond?
a.a dollar-denominated bond issued by a u.s. corporation and sold to western european
investors
b.a dollar-denominated bond issued by a u.s. corporation and sold to u.s. investors
c.a euro-denominated bond issued by a german corporation and sold to u.s. investors
d.a euro-denominated bond issued by a german corporation and sold to european
investors
9) the time from the receipt of raw materials to the collection of the cash of the sale of
the finished good is called a firms
a.operating cycle
b.cash conversion cycle
c.inventory period
d.accounts receivables period
10) you are introduced to an investment that has an expected return of 20% equal to the
standard deviation of the distribution of returns. what is the probability that the
investment will lose some of your initial investment in the first year?
a.50%
b.34%
c.16%
d.unable to determine from the information given
11) 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 a 9% opportunity cost of funds, what is the value of
reducing float by 2 days?
a.$1,000,000
b.$45,000
c.$49,315
d.$90,000
12) roxy is evaluating a lock-box system that will reduce float by 6 days. the firm has
annual sales of $180 million and an opportunity cost of 12%. if the lock-box system is
adopted, what is the amount of funds released?
a. $ 355,068.49
b. $ 493,150.68
c. $ 59,178.08
d. $ 2,958,904.11
