Given the following information, what is the standard deviation of the returns on this
stock?
A. 19.90 percent
B. 20.52 percent
C. 22.41 percent
D. 23.79 percent
E. 25.52 percent
Which one of the following will result from a stock repurchase?
A. Increase in the number of shares outstanding
B. Decrease in the earnings per share
C. Decrease in the market price per share
D. Increase in the market value of equity per share
E. Decrease in the PE ratio
Fred is the owner of a local feed store. Which one of the following ratios should he
compute if he wants to know how long the store can pay its bills given the amount of
cash the store currently has?
A. Current ratio
B. Debt ratio
C. Cash coverage ratio
D. Quick ratio
E. Cash ratio
ACE, Inc. incurred depreciation expenses of $21,900 last year. The sales were $811,400
and the addition to retained earnings was $14,680. The firm paid interest of $9,700 and
dividends of $10,100. The tax rate was 40 percent. What was the amount of the costs
incurred by the firm?
A. $665,200.00
B. $689,407.67
C. $742,306.08
D. $738,500.00
E. $780,400.21
The interest rate used to compute the present value of a future cash flow is called the:
A. prime rate.
B. current rate.
C. discount rate.
D. compound rate.
E. simple rate.
The capital asset pricing model:
A. assumes the market has a beta of zero.
B. rewards investors based on total risk.
C. considers the time value of money.
D. applies to portfolios but not to individual securities.
E. assumes the market risk premium is constant over time.
Stadford, Inc. is financed with 40 percent debt and 60 percent equity. This mixture of
debt and equity is referred to as the firms:
A. capital structure.
B. capital budget.
C. asset allocation.
D. working capital.
E. risk structure.
Which one of the following correctly defines a common chain of command within a
corporation?
A. The controller reports directly to the corporate treasurer.
B. The treasurer reports directly to the board of directors.
C. The chief financial officer reports directly to the board of directors.
D. The credit manager reports directly to the controller.
E. The controller reports directly to the chief financial officer.
You want to purchase a new condominium that costs $329,000. Your plan is to pay 20
percent down in cash and finance the balance over 25 years at 6.25 percent. What will
be your monthly mortgage payment?
A. $1,736.25
B. $1,833.33
C. $1,908.16
D. $2,221.43
E. $2,406.11
Baugh & Essary has net income of $149,200, sales of $936,800, a capital intensity ratio
of 0.74, and an equity multiplier of 1.5. What is the return on equity?
A. 6.67 percent
B. 15.93 percent
C. 32.25 percent
D. 42.21 percent
E. 44.09 percent
Which one of the following statements is correct concerning the taxation of dividends
and capital gains?
A. Seventy percent of capital gains derived from stock investments are tax exempt for
corporate investors.
B. Dividends are a form of tax-exempt income for individual investors.
C. All investors are subject to the same tax rate on dividend income.
D. Individual investors can defer taxation on both dividends and capital gains.
E. As of 2003, individual investors pay a 15 percent tax on both dividends and capital
gains.
You have $5,000 you want to invest for the next 45 years. You are offered an
investment plan that will pay you 6 percent per year for the next 15 years and 10
percent per year for the last 30 years. How much will you have at the end of the 45
years? How much will you have if the investment plan pays you 10 percent per year for
the first 15 years and 6 percent per year for the next 30 years?
A. $201,516.38; $201,516.38
B. $209,092.54; $201,516.38
C. $209,092.54; $119,959.94
D. $209,092.54; $209,092.52
E. $221,408.97; $119,949.94
Consider the following information:
What is the variance of a portfolio invested 30 percent each in Stocks A and B and 40
percent in Stock C?
A. 0.000065
B. 0.000163
C. 0.000289
D. 0.000528
E. 0.001740
Use the following financial information to answer this question.
What are the values of the three components of the DuPont identity? Use ending
balance sheet values.
A. 0.15; 1.02; 0.35
B. 0.15; 2.02; 0.35
C. 0.15; 0.98; 2.86
D. 0.16; 0.98; 0.35
E. 0.16; 1.02; 2.86