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1) which of the following stock exchanges has the most strict listing requirements?
a.american stock exchange
b.nasdaq
c.new york stock exchange
d.pacific stock exchange
2) bavarian sausage just issued a 10-year 12% coupon bond. the face value of the bond
is $1,000 and the bond makes semiannual coupon payments. if the bond is trading at
$1,267.25, what is the bonds yield to maturity?
a.12.00%
b.8.06%
c.14.38%
d.10.97%
3) which of the following is a valid criticism concerning the goal of firms to maximize
profits?
a.profit maximization ignores expenses
b.profit maximization is completely unrelated to shareholder wealth
c.profit maximization may ignore the timing of those profits
d.there are no valid criticisms of profit maximizing firms
4) roxy international is considering easing credit standards to increase sales, and
potentially profits. currently the firm sells 2,000,000 units at a sales price of $7 per unit
and variable cost of $5 per unit. currently the average collection period is 35 days and
the bad debt expense is 2% of sales. the required return on investment is 18%. if credit
standards are eased, the sales will increase to 2,500,000 units; the acp will increase to
65 days; and the bad debt expense will increase to 5% all else will remain the same.
what the current average in investment in accounts receivable?
a.$ 958,904.11
b.$1,342,465.75
c.$7,458,143.07
d.$ 273,972.60
5) while the npv approach offers many advantages over some other capital budgeting
techniques, several cons exist with respect to the approach. which of the following is
(are) cons of the npv method?
a.it fails to consider all of a project's relevant cash flows
b.it fails to consider the time value of money
c.it focuses on net income and not cash flow
d.it seems less intuitive to many users than other methods
e.all of the above are cons of the npv method
6) narrbegin: exhibit 12-1
exhibit 12-1
an all-equity firm has 80,000 shares outstanding worth $20 each. the firm is considering
a project requiring an investment of $500,000 and has an npv of $30,000. the company
is also considering financing this project with a new issue of equity.
narrend
refer to exhibit 12-1. what is the price at which the firm needs to issue the new shares so
that the existing shareholders capture the full benefit associated with the new project?
a.$20.48
b.$20.38
c.$20.15
d.$20.07
7) modern financial markets are:
a.competitive
b.transparent
c.efficient
d.all of the above
8) narrbegin: total cash budget
bavarian brews schedule of projected cash disbursement
all of bavarian brews sales are credit sales. the company collects 60% of its sales in the
next month and the remainder in the month after that.
the companys purchases are 75% of its sales. of those purchases 15% are paid in cash,
50% are paid in the following month and the remainder in the month after that. the
companys wages and salaries equal 15% of sales each month plus $50. taxes of $125
are due in april. the company is going to purchase new machinery worth $1000 in
march and pay 50% right away and the rest in april. in addition, the company will pay a
$175 dividend in february.
narrend
if the cash balance at the beginning of march is $250, what is bavarian brew's cash
balance at the end of the month?
a.$250
b.-$152.25
c.$652.25
d.-$652.25
9) for a typical callable bond, what is the call price for 10% coupon bond?
a.$900
b.$1,000
c.$1,100
d.there is not enough information to determine
10) what is the proper goal for management of a firm?
a.maximize shareholder wealth
b.maximize net income or earnings
c.maximize sales revenue
d.minimize expenses
11) alotacash venture capital fund wants to average a 45% return on its investments. of
the 12 total investments 3 have failed (i.e a return of -100%), and 6 generated a zero
return. what has to be the average return on the last three outstanding investment in
order for alotacash to reach its investment goal?
a.280%
b.840%
c.460%
d.625%
12) what is a fiduciary?
a.someone who performs ratio analysis for a corporation
b.someone who invest and manages money on someone elses behalf
c.someone who manages the release of a initial public offering
d.someone who evaluates the performance of individual bonds
13) the compound annual return on a project is known as its:
a.npv
b.pi
c.payback
d.irr
