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1) the transformation of a public corporation into a private company by the employees
of the corporation itself is called a(n)
a.management buyout
b.employee stock ownership plan
c.reverse lbo
d.reverse merger
2) the chief difference(s) between european and american venture capital lies in:
a.the principal sources of funds for venture capital investing
b.the organization of the venture funds
c.the development stage of the portfolio companies able to attract venture financing
d.the principal method of harvesting venture capital investments
e.all of the above
3) lead investment banking corp. is the lead underwriter for the equity issuance of
newcorp. lead is responsible for 80% of the issue at a discount of $1.70 per share. if
lead is responsible for selling 1,300,000 shares then what is the total compensation to
the underwriting syndicate?
a.$1,768,000
b.$2,210,000
c.$2,762,500
d.none of the above
4) an unsigned check drawn on one of the firms bank accounts and deposited in another
of the firms bank accounts is
a.an automated clearinghouse debit transfer
b.a depository transfer check
c.a wire transfer
d.none of the above
5) the cash manager should seek to
a.maximize disbursement float and maximize collection float
b.minimize disbursement float and minimize collection float
c.maximize disbursement float and minimize collection float
d.minimize disbursement float and maximize collection float
6) in a fixed exchange rate system, if the demand for a currency increases
a.then the government of that country must stand ready to sell its currency
b.then the government of that country must stand ready to purchase its currency
c.then the government of that country must stand ready to sell foreign currencies
d.then the government must prepare the citizens of that country for the economic shock
that will come in the future
7) suppose the spot exchange rate is 0.5491 pounds per u.s. dollar, while the risk-free
borrowing rate is 4% in britain. if the fair exchange rate is 0.5544 pounds per u.s. dollar,
what is the risk-free borrowing rate in the united states?
a.5%
b.4%
c.3%
d.2%
8) legislation intended to prevent mergers that are deemed to have anti-competitive
effects on the business environment is termed:
a.sherman legislation
b.antitrust
c.anticompetitiveness legislation
d.tightness legislation
9) miller juice traditionally pays out 35% of its earnings as dividends. last year millers
earnings available for common stockholders were $256 million and the book value of
its equity was $678 million. what is millers growth rate?
a.24.54%
b.35.00%
c.37.76%
d.13.22%
10) narrbegin: dsss corporation
dsss corporation
dsss corporation is considering a new project to manufacture widgets. the cost of the
manufacturing equipment is $125,000. the cost of shipping and installation is an
additional $10,000. the asset will fall into the 3-year macrs class. the year 1- 4 macrs
percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. sales are expected
to be $225,000 per year. cost of goods sold will be 60% of sales. the project will require
an increase in net working capital of $10,000. at the end of three years, dsss plans on
ending the project and selling the manufacturing equipment for $25,000. the marginal
tax rate is 40% and dsss corporations appropriate discount rate is 15%.
narrend
refer to dsss corporation. what is the depreciation expense in year 2?
a.$44,996
b.$10,004
c.$60,008
d.$19,994
11) when a firm sells the assets and/or resources of a subsidiary or division of the firm
to another organization, that is called
a.a recapitalizations
b.a divestiture
c.a reverse split
d.none of the above
12) narrbegin: sooie
southern overnight overland interstate express (sooie)
suppose joe palooka bought 1000 shares of southern overnight overland interstate
express (sooie) one year ago for $45 per share. mr. palooka received a $2 per share
dividend, and sooie shares have increased to $49.50. joe needs to adjust his portfolio, so
he sells his sooie shares.
narrend
refer to sooie. what is his after tax return if he faces a 33% tax rate on dividend income
and a 5% tax rate on capital gains?
a.12.48%
b.11.35%
c.14.44%
d.13.13%
13) narrbegin: stock returns
narrend
what is the average return of a portfolio that has 10% invested in stock a, 40% invested
in stock b and 50% invested in stock c?
a.9.92%
b.15.32%
c.13.80%
d.8.92%
