Miller Farm Products is issuing a 15-year, unsecured bond. Based on this information,
you know that this debt can be described as a:
A. note.
B. bearer form bond.
C. debenture.
D. registered form bond.
E. call protected bond.
The balance sheet for Oasis, Inc. is shown here in market value terms. There are 30,000
shares of stock outstanding.
The company has announced it is going to repurchase $40,000 worth of stock. What
will the price per share be after the repurchase?
A. $36.29
B. $38.17
C. $38.67
D. $39.42
E. $39.89
The owners equity accounts for Boats and More are shown here:
Assume Boats and More stock currently sells for $38 per share and a 10 percent stock
dividend is declared. What will be the new common stock account value?
A. $40,909
B. $45,000
C. $47,000
D. $48,511
E. $49,500
Five years ago, you purchased 600 shares of stock. The annual returns have been 7.2
percent, -19.4 percent, 3.8 percent, 14.2 percent, and 27.9 percent, respectively. What is
the variance of these returns?
A. 0.029889
B. 0.030021
C. 0.030068
D. 0.030133
E. 0.030284
Jeffries, Inc. has 6 percent coupon bonds on the market that have 11 years left to
maturity. The bonds make annual payments. If the YTM on these bonds is 7.4 percent,
what is the current bond price?
A. $895.88
B. $897.08
C. $903.14
D. $921.42
E. $933.33
Which one of the following bonds is most apt to have the smallest liquidity premium?
A. Treasury bill
B. Corporate bond issued by a new firm
C. Municipal bond issued by the State of New York
D. Municipal bond issued by a rural city in Alaska
E. Corporate bond issued by General Motors (GM)
Which one of the following statements is correct?
A. Bonds are generally called at par value.
B. A current list of all bondholders is maintained whenever a firm issues bearer bonds.
C. An indenture is a contract between a bonds issuer and its holders.
D. Collateralized bonds are called debentures.
E. A bondholder has the right to determine when his or her bond is called.
Western Electric has 23,000 shares of common stock outstanding at a price per share of
$57 and a rate of return of 14.2 percent. The firm has 6,000 shares of 7 percent
preferred stock outstanding at a price of $48 a share. The preferred stock has a par value
of $100. The outstanding debt has a total face value of $350,000 and currently sells for
102 percent of face. The yield to maturity on the debt is 8.49 percent. What is the firms
weighted average cost of capital if the tax rate is 34 percent?
A. 12.69 percent
B. 13.44 percent
C. 14.19 percent
D. 14.47 percent
E. 14.92 percent
Shareholders equity is equal to:
A. total assets plus total liabilities.
B. net fixed assets minus total liabilities.
C. net fixed assets minus long-term debt plus net working capital.
D. net working capital plus total assets.
E. total assets minus net working capital.
It takes The Crossroads Boutique an average of 61 days to sell its inventory and 30 days
to collect its accounts receivable. The firm has sales of $568,700 and costs of goods
sold of $398,800. What is the accounts receivable turnover rate?
A. 5.98
B. 11.41
C. 12.17
D. 12.23
E. 12.55
Youve worked out a line of credit arrangement that allows you to borrow up to $55
million at any time. The interest rate is 0.55 percent per month. In addition, 3 percent of
the amount you borrow must be deposited in a non-interest-bearing account. Assume
that your bank uses compound interest on its line-of-credit loans. Suppose you need $12
million today and you repay it in six months. How much interest will you pay?
A. $387,567
B. $413,902
C. $421,028
D. $441,414
E. $442,886
Lisa has $1,000 in cash today. Which one of the following investment options is most
apt to double her money?
A. 6 percent interest for 3 years
B. 12 percent interest for 5 years
C. 7 percent interest for 9 years
D. 8 percent interest for 9 years
E. 6 percent interest for 10 years
Kelsos Pharmacy generates $2 in sales for every $1 the firm has invested in total assets.
Which one of the following ratios would reflect this relationship?
A. Receivables turnover
B. Equity multiplier
C. Profit margin
D. Return on assets
E. Total asset turnover
The Saw Mill has a return on assets of 6.1 percent, a total asset turnover rate of 1.8, and
a debt-equity ratio of 1.6. What is the return on equity?
A. 4.26 percent
B. 9.76 percent
C. 12.28 percent
D. 15.86 percent
E. 19.03 percent
Kelsey International declared a dividend on Friday, November 13, that is payable on
Friday, December 4, to holders of record on Monday, November 30. What is the latest
date that you can purchase this stock if you wish to receive this dividend? Assume there
are no banking holidays within this period of time.
A. Tuesday, November 24
B. Wednesday, November 25
C. Thursday, November 26
D. Friday, November 27
E. Monday, November 30
What is the advertisement, commonly found in financial newspapers, that announces a
public offering of securities and provides the name of the underwriters called?
A. Prospectus
B. Red herring
C. Tombstone
D. Green Shoe
E. Underwriters ad
Smith and Weston has 55,000 shares of common stock outstanding at a price of $31 a
share. It also has 3,000 shares of preferred stock outstanding at a price of $62 a share.
The firm has 8 percent, 12-year bonds outstanding with a total face value of $400,000.
The bonds are currently quoted at 101.2 percent of face and pay interest semiannually.
What is the capital structure weight of the firms preferred stock if the tax rate is 35
percent?
A. 8.10 percent
B. 15.20 percent
C. 15.67 percent
D. 16.84 percent
E. 17.63 percent
Sarah earned a 2.9 percent real rate of return on her investments for the past year.
During that time, the risk-free rate was 4.1 percent and the inflation rate was 3.6
percent. What was her nominal rate of return?
A. 5.30 percent
B. 6.06 percent
C. 6.60 percent
D. 6.67 percent
E. 6.91 percent