1) the suggestion that poorly monitored managers will pursue mergers to maximize
their corporations asset size because managerial compensation is usually based on firm
size is called
a.the managerialism theory of managers
b.the concept of unintended consequences
c.the untrustable manager theory of managers
d.none of the above
2) if you believed a stock was going to fall in price, a strategy to profit from the stock
decline is known as:
a.buying long
b.buying short
c.selling long
d.selling short
3) narrbegin: exhibit 6-3
exhibit 6-3
consider the following information concerning stock returns and bond returns over the
last 75 years:
narrend
refer to exhibit 6-3. currently, investors want a 12% return on stocks as a whole. based
on this information, what is a good estimate for the current return on treasury bills?
a.4.10%
b.4.40%
c.7.20%
d.7.60%
4) louis is evaluating a treasury bill. it is a $1 million face value with a discount of
3.25% and maturing in 182 days. what is the dollar discount?
a.$10,210.18
b.$4,107.64
c.$3,250.00
d.$16,430.56
5) a limited liability company:
a.combines the pass-through taxation feature of a partnership with the limited liability
feature of an s corporation
b.will probably decline as a form of organization due to its undesirable features
c.are allowed in only a very few states in the u.s.
d.results in personal liability for all partners if one (or more) partner(s) commit
malpractice
e.can only be formed if more than one person is a partner (i.e., no one-person llcs are
allowed)
6) which of the following is a problem with the internal rate of return?
a.appropriate adjustment for the time value of money
b.focus on cash flows
c.multiple irrs
d.all of the above are problems with the internal rate of return
7) what is considered the leading cause(s) of the death of young entrepreneurial firms?
a.not enough customers
b.too many customers
c.too much cash
d.both (a) and (b)
8) the legal document stating the conditions under which a bond is issued is called the
a.indenture
b.trustee
c.covenant
d.call provision
9) which of the following industries would you expect to have the highest degree of
operating leverage?
a.financial consulting
b.investment banking
c.electrical utility
d.internet publishing
10) emma is considering a new cat nip factory with the following cash flows, if the
disoucnt rate is 7%, what is the pi?
a.1.067
b.1.050
c.0.943
d.1.008