Archives: Quiz

Martha’s Fabric House has sales of $137,200, total equity of $74,400, and a debt-equity ratio of 0.45. What is the capital intensity ratio? A. 0.79 B. 0.83 C. 1.06 D. 1.20 E. 1.27 Answer: The payback period is the length […]

Which one of the following decreases net income but does not affect the operating cash flow of a firm that owes no taxes for the current year? A. Indirect cost B. Direct cost C. Noncash item D. Period cost E. […]

Franklin Oil issued 150,000 shares of stock last week. The underwriters charged a 7.5 percent spread in exchange for agreeing to a firm commitment. The legal and accounting fees amounted to $310,000 and the company incurred $65,000 in indirect costs. […]

Which one of the following will decrease the liquidity level of a firm? A. Cash purchase of inventory B. Credit sale of inventory C. Cash sale of inventory D. Collection of an account receivable E. Proceeds from a long-term loan […]

Consider an asset that costs $465,000 and is depreciated straight-line to zero over its six-year tax life. The asset is to be used in a four-year project; at the end of the project, the asset can be sold for $120,000. […]

Lisa is interested in purchasing 1,000 shares of TJH, Inc. when the shares are issued. Her broker just gave Lisa a preliminary prospectus on these shares for her to review as she waits for the shares to be cleared for […]

The value of a bond is dependent on the: A. coupon rate and the current yield. B. coupon rate and the yield to maturity. C. current yield and the yield to maturity. D. coupon rate but neither the current yield […]

Andre’s Dog House had current assets of $67,200 and current liabilities of $71,100 last year. This year, the current assets are $82,600 and the current liabilities are $85,100. The depreciation expense for the past year is $9,600 and the interest […]

The preferred stock of Dolphin Pools pays an annual dividend of $6.25 a share and sells for $42 a share. The tax rate is 35 percent. What is the firm’s cost of preferred stock? A. 9.67 percent B. 14.88 percent […]

Over the last four years, a stock has had an arithmetic average return of 8.8 percent. Three of those four years produced returns of 16.3 percent, 10.2 percent, and -14.1 percent, respectively. What is the geometric average return for this […]

What is the effective annual rate of 10 percent compounded semiannually? A. 10.21 percent B. 10.25 percent C. 10.35 percent D. 10.38 percent E. 10.42 percent Answer: Which one of the following will generally receive the highest priority in a […]

Assume that clienteles exist. Given this assumption, which one of the following statements is correct? A. A firm can increase its share price by increasing its dividend payout. B. Dividend policy is irrelevant as long as each clientele group is […]

Given the current tax laws, which one of the following statements is correct? A. Both stock repurchases and cash dividends are treated equally for tax purposes for individual shareholders. B. Stock repurchases give individual shareholders more control over their personal […]

Standard deviation measures _____ risk while beta measures _____ risk. A. systematic; unsystematic B. unsystematic; systematic C. total; unsystematic D. total; systematic E. asset-specific; market Answer: If shareholders are granted a preemptive right they will: A. be given the choice […]

You are analyzing a project and have developed the following estimates: unit sales = 3,100, price per unit = $215, variable cost per unit = $115, fixed costs = $164,000. The depreciation is $59,000 a year and the tax rate […]

The addition of a risky security to a fully diversified portfolio: A. must decrease the portfolio’s expected return. B. must increase the portfolio beta. C. may or may not affect the portfolio beta. D. will increase the unsystematic risk of […]

Which one of the following represents additional compensation provided to bondholders to offset the possibility that the bond issuer might not pay the interest and/or principal payments as expected? A. Interest rate risk premium B. Inflation premium C. Liquidity premium […]

You’ve just found a 7 percent coupon bond on the market that sells for par value. What is the maturity on this bond? A. The bond must mature in 1 year. B. The bond could have any maturity date. C. […]

You are planning a trip to the UK and plan on spending 3,800 pounds. How many dollars will this trip cost you if the currency per U.S. dollar is 0.6789 pound? A. $2,579.82 B. $3,892.16 C. $5,597.29 D. $5,890.01 E. […]

The price at which a dealer will purchase a bond is called the _____ price. A. asked B. face C. call D. put E. bid Answer: The net present value of a project’s cash inflows is $8,216 at a 14 […]

Dexter Companies has a conventional factoring arrangement with its local bank. Which one of the following would be a common characteristic of that type of financing arrangement? A. Dexter Companies will receive the full amount of the accounts receivable included […]

Which of the following factors is primarily concerned with how consumers perceive various prices or price changes? A. Environmental factors B. Psychological factors C. Demographic factors D. Sociological factors Answer: _____ usually refers to a specific amount of monetary compensation […]

The number of different targeted audience members exposed at least once to the advertiser’s message within a predetermined time frame is known as: A. “average frequency.” B. “reach.” C. “width.” D. “depth.” Answer: Which of the following groups is characterized […]

An advertising expenditure approach that initially formulates the advertising goals and defines the tasks to accomplish these goals is known as a(n) _____. A. objective approach B. task approach C. percentage sale approach D. functional approach Answer: Which of the […]

Which of the following critical components requires a management to clearly define the skills a service person must bring to the job? A. Energetic follow-through process by the service person. B. Significant modeling by managers on the service person. C. […]

Which of the following is an advantage of using radio as an advertising medium? A. It provides geographic flexibility. B. It faces no competition from competing advertisements. C. It appeals to the senses and provides a combination of sight, sound, […]

An advantage of using focus groups to conduct market research is that: A. they are flexible to use in a marketing study. B. they do not require expert moderators. C. they have a broad geographic dispersion. D. they prevent moderator […]

Which of the following objectives of a salesperson involves selling additional or complementary items to repeat customers? A. Reassurance B. Orientation C. Information D. Persuasion Answer: In its attempts to source the best raw materials, Enfi Computers, a computer manufacturer, […]

An organization’s mission statement must be _____ to be able to provide direction and guidelines to management when they are choosing between alternative courses of action. A. challenging B. broad C. generic D. specific Answer: Which of the following is […]

According to the process of product adoption and diffusion, which of the following adoptive categories first begins to buy a product if the experience of innovators has been favorable? A. Laggards B. Early majority C. Late majority D. Early adopters […]

Which of the following is a research method that deals with manipulating one variable and examining its impact on other variables? A. Marketing audit B. Observational research C. Archival research D. Experimental research Answer: By investing solely in domestic operations […]

In which of the following kinds of organizations do employees exhibit a moderate level of commitment toward performing their expected roles? A. Lethargic organization B. Innovative organization C. Adaptive organization D. Supportive organization Answer: The management of Delicaci, a multi-cuisine […]

The common stock of The Burger Hut is selling for $16.25 a share. The company has earnings per share of $0.42 and a book value per share of $9.28. What is the market-to-book ratio? A. 1.58 B. 1.69 C. 1.75 […]

Currently, you can purchase either 128 Canadian dollars or 10,050 Japanese yen for $100. What is the /Can$ cross-rate? A. 78.52/Can$1 B. 79.94/Can$1 C. 81.23/Can$1 D. 86.27/Can$1 E. 87.08/Can$1 Answer: The net present value profile illustrates how the net present […]

On which one of the following dates is the principal amount of a bond repaid? A. Coupon date B. Issue date C. Discount date D. Maturity date E. Face date Answer: A project has annual depreciation of $16,200, costs of […]

Which of the following characteristics apply to a perpetuity? I. Constant cash flow dollar amount II. Unequal cash flow dollar amount III. Limited time period IV. Infinite time period A. I and III only B. I and IV only C. […]

The Undergrounds Coffee Shop has total assets of $85,300 and an equity multiplier of 1.53. What is the debt-equity ratio? A. 0.28 B. 0.35 C. 0.50 D. 0.53 E. 0.67 Answer: Which one of the following is basically equivalent to […]

The Shoe Box is considering adding a new line of winter footwear to its product lineup. Which of the following are relevant cash flows for this project? I. Decreased revenue from products currently being offered if this new footwear is […]

A firm is considering two different capital structures. The first option is an all-equity firm with 32,000 shares of stock. The second option is 20,000 shares of stock plus some debt. Ignoring taxes, the break-even level of earnings before interest […]

The amount of time that a firm holds inventory in stock is referred to as which one of the following? A. Inventory period B. Accounts receivable period C. Accounts payable period D. Operating cycle E. Cash cycle Answer: A trader […]

Turntable Industrial, Inc. owes your firm $138,600. This amount is seriously delinquent so your firm has offered to arrange a payment plan in the hopes that it might at least collect a portion of this receivable. Your firm’s offer consists […]

Which one of the following statements is correct concerning capital structure weights? A. Target rates are less relevant to a project than are historical rates. B. The weights are unaffected when a bond issue matures. C. An increase in the […]

Lay’s Meat Market has 8,000 shares of stock outstanding at a price per share of $13. What will the price per share be if the firm declares a 3-for-5 reverse stock split? A. $7.80 B. $8.50 C. $13.00 D. $15.00 […]

Use the following tax table to answer this question: Bait and Tackle has taxable income of $411,562. How much does it owe in taxes? A. $128,603.33 B. $134,611.27 C. $138,542.79 D. $139,931.08 E. $141,354.82 Answer: The primary purpose of protective […]

Which of the following is a disadvantage of secondary data? A. Secondary data is not always available for strategy-specific research questions. B. Secondary data sources are more limited than sources of primary data. C. Secondary data is more expensive to […]

The _____ in an organization’s buying center has the formal or informal power to select or approve the supplier that receives the contract in an organization. A. initiator B. influencer C. user D. decider Answer: Which of the following products […]

Which of the following methods of determining the advertising budget views advertising as a function of sales, rather than sales as a function of advertising? A. The per-unit expenditure approach B. The research approach C. The competitive parity approach D. […]

The specialist viewpoint about the contribution of advertising to the economic health of a firm is primarily concerned with: A. viewing advertising as a competitive weapon. B. emphasizing the strategic aspects of the advertising function. C. measuring the effects of […]

Price, promotion strategy, and channels of distribution are examples of _____. A. marketing dimensions B. marketing trends C. product features D. product attributes Answer: Which of the following is a benefit wholesalers bring to manufacturers? A. They reduce potential losses […]

Depending on the type of service, the _____ factor may dictate use of direct channels because of the need for personal contact between a buyer and a seller. A. perishability B. intangibility C. uniformity D. inseparability Answer: For which of […]