Heidi owns 400 shares of Boyd Enterprises stock, which is valued at $17 a share. Boyd
Enterprises just declared a 10 percent stock dividend. How many shares will Heidi own
and what will the price per share be after the dividend?
A. 360; $15.45
B. 360; $18.70
C. 440; $15.45
D. 440; $17.00
E. 440; $18.70
The Rainbow Company has total sales of $713,200 and a profit margin of 8.5 percent.
Currently, the firm has 12,500 shares outstanding. What are the earnings per share?
A. $2.98
B. $3.31
C. $3.56
D. $4.58
E. $4.85
What is the effective annual rate of 6.5 percent compounded quarterly?
A. 6.02 percent
B. 6.29 percent
C. 6.54 percent
D. 6.66 percent
E. 6.83 percent
The dividend yield is defined as:
A. the current annual cash dividend divided by the current market price per share.
B. the current annual cash dividend divided by the current book value per share.
C. next years expected cash dividend divided by the current market price per share.
D. next years expected cash dividend divided by the current book value per share.
E. next years expected cash dividend divided by next years expected market price per
share.
What is the principal amount of a bond that is repaid at the end of the loan term called?
A. Coupon
B. Market price
C. Accrued price
D. Dirty price
E. Face value
Generally speaking, which of the following situations will occur if a seasonal company
adopts a compromise financial policy?I. periods where short-term financing is
requiredII less long-term debt than if the firm followed a restrictive financial policyIII.
periods of excess funds which can be invested in short-term marketable securitiesIV.
lower investment in fixed assets than if the firm adopted a flexible financial policy
A. I only
B. II only
C. I and III only
D. II and IV only
E. I, III, and IV only
The Tattle Teller has a printing press sitting idly in its back room. The press has no
market value to another printer because the machine utilizes old technology. The firm
could get $250 for the press as scrap metal. The press is six years old and originally cost
$148,000. The current book value is $2,570. The president of the firm is considering a
new project and feels he can use this press for that project. What value, if any, should be
assigned to the press as an initial cost of the new project?
A. $0
B. $250
C. $2,245
D. $2,570
E. $2,495
Suppose a U.S. firm builds a factory in China, staffs it with Chinese workers, uses
materials supplied by Chinese companies, and finances the entire operation with a loan
from a Chinese bank located in the same town as the factory. This firm is most likely
trying to greatly reduce, or eliminate, which one of the following?
A. Interest rate disparities
B. Short-run exposure to exchange rate risk
C. Long-run exposure to exchange rate risk
D. Political risk associated with the foreign operations
E. Translation exposure to exchange rate risk
The accounting statement that measures the revenues, expenses, and net income of a
firm over a period of time is called the:
A. statement of cash flows.
B. income statement.
C. GAAP statement.
D. balance sheet.
E. net working capital schedule.
Black Stone Furnaces wants to build a new facility. The cost of capital for this
investment is primarily dependent on which one of the following?
A. Firms overall source of funds
B. Source of the funds used to build the facility
C. Current tax rate
D. The nature of the investment
E. Firms historical average rate of return
Which one of the following is a use of cash?
A. Issuing new shares of stock
B. Increasing accounts payable
C. Decreasing inventory
D. Decreasing fixed assts
E. Increasing accounts receivable
The exchange rates in New York for $1 are Can$1.2381 and 0.6789. In Toronto,
Can$1 will buy 0.5487. How much profit can you earn on $10,000 using triangle
arbitrage?
A. $6.56
B. $6.88
C. $6.97
D. $7.03
E. $7.11
Which of the following characteristics apply to a perpetuity?I. Constant cash flow
dollar amountII. Unequal cash flow dollar amountIII. Limited time periodIV. Infinite
time period
A. I and III only
B. I and IV only
C. II and III only
D. II and IV only
E. I plus either III or IV
Burkes Corner currently sells blue jeans and T-shirts. Management is considering
adding fleece tops to its inventory to provide a cooler weather option. The tops would
sell for $49 each with expected sales of 3,600 tops annually. By adding the fleece tops,
management feels the firm will sell an additional 220 pairs of jeans at $59 a pair and
350 fewer T-shirts at $18 each. The variable cost per unit is $36 on the jeans, $9 on the
T-shirts, and $21 on the fleece tops. With the new item, the depreciation expense is
$27,000 a year and the fixed costs are $62,000 annually. The tax rate is 34 percent.
What is the projects operating cash flow?
A. $27,789
B. $34,708
C. $36,049
D. $38,419
E. $40,201