Archives: Quiz

Gulf Shores Inn is comparing two separate capital structures. The first structure consists of 260,000 shares of stock and no debt. The second structure consists of 200,000 shares of stock and $1.5 million of debt. What is the price per […]

A note is a(n): A. unsecured debt that is generally payable within the next 10 years. B. formal type of loan that is secured by real estate. C. long-term debt secured by part, or all, of the assets of the […]

Which one of the following is the name given to a registration of securities under SEC 415 which permits a firm to issue the securities over a two-year period? A. Seasoned registration B. Negotiated registration C. Shelf registration D. Extended […]

Lewis Materials recently offered 15,000 shares of stock but received payment for only 12,500 shares since that was all the shares the underwriters could sell. What type of underwriting was this? A. Syndicated B. Firm commitment C. Private placement D. […]

Computing the present value of a future cash flow to determine what that cash flow is worth today is called: A. compounding. B. factoring. C. time valuation. D. simple cash flow valuation. E. discounted cash flow valuation. Which one of […]

British Motor Works is reviewing its current accounts to determine how a proposed project might affect the account balances. The firm estimates the project will initially require $67,000 in additional current assets and $32,000 in additional current liabilities. The firm […]

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 […]

Sensitivity analysis: A. looks at the most reasonably optimistic and pessimistic results for a project. B. helps identify the variable within a project that presents the greatest forecasting risk. C. is used for projects that cannot be analyzed by scenario […]

Pluto United has 18,000 shares of stock outstanding at a price per share of $38. How many shares will be outstanding if the firm does a 5-for-4 stock split? A. 13,600 shares B. 15,800 shares C. 18,000 shares D. 19,600 […]

Which one of the following is an intangible fixed asset? A. Inventory B. Machinery C. Copyright D. Account receivable E. Building Graphic Designs has 120,000 shares of cumulative preferred stock outstanding. Preferred shareholders are supposed to be paid $1.50 per […]

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 […]

Rocket City Space Camp has annual credit sales of $16 million. The average collection period is 35 days. What is the average investment in accounts receivable as shown on the balance sheet? A. $646,000 B. $824,000 C. $1,408,888 D. $1,534,247 […]

Which one of the following statements is correct? A. A longer payback period is preferred over a shorter payback period. B. The payback rule states that you should accept a project if the payback period is less than one year. […]

Suppose that in 2010, a $10 silver certificate from 1898 sold for $11,200. For this to have been true, what would the annual increase in the value of the certificate have been? A. 6.47 percent B. 6.81 percent C. 7.23 […]

The Three Amigos Restaurant just paid an annual dividend of $4.20 per share and is expected to pay annual dividends of $4.40 and $4.50 per share the next two years, respectively. After that, the firm expects to maintain a constant […]

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 Delivery trucks are classified as: A. noncash expenses. B. current […]

Beginning in 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act requires corporations with a market value over ________ to allow a nonbinding shareholder vote on executive pay. A. $25,000,000 B. $50,000,000 C. $75,000,000 D. $100,000 E. $750,000 Tanner […]

Which one of the following types of securities has no priority in a bankruptcy proceeding? A. Convertible bond B. Senior debt C. Common stock D. Preferred stock E. Straight bond The DuPont identity can be totally defined by which one […]

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 […]

Limited liability companies are primarily designed to: A. allow a portion of their owners to enjoy limited liability while granting the other portion of their owners control over the entity. B. provide the benefits of the corporate structure to foreign-based […]

Assume that long-term corporate bonds had an average return of 5.3 percent and a standard deviation of 9.3 percent for a 30-year period. What range of returns would you expect to see on these bonds 68 percent of the time? […]

The Glass Ceiling paid an annual dividend of $2.20 per share last year. Management just announced that future dividends will increase by 2.8 percent annually. What is the amount of the expected dividend in year 5? A. $2.39 B. $2.41 […]

You own a portfolio that is invested as follows: $11,400 of Stock A, $8,800 of Stock B, $14,900 of Stock C, and $3,200 of Stock D. What is the portfolio weight of Stock C? A. 38.47 percent B. 38.90 percent […]

Decatur Marina has a line of credit with a local bank that permits it to borrow up to $1.3 million at any time. The interest rate is 0.60 percent per month. The bank charges compound interest and also requires that […]

Which of the following will increase the cost of equity for a firm with a beta of 1.1?I. Decrease in the securitys betaII. Decrease in the market risk premiumIII. Decrease in the risk-free rateIV. Increase in the risk-free rate A. […]

The App Store needs to raise $2.2 million for an expansion project. The firm wants to raise this money by selling zero coupon bonds with a par value of $1,000 that mature in 20 years. The market yield on similar […]

Net capital spending is equal to: A. ending net fixed assets minus beginning net fixed assets plus depreciation. B. beginning net fixed assets minus ending net fixed assets plus depreciation. C. ending net fixed assets minus beginning net fixed assets […]

Manning, Inc. originally issued bonds that were rated investment grade. These bonds have now been downgraded to junk status. Which one of the following terms applies to this situation? A. Called bond B. Converted bond C. Protected covenant D. Fallen […]

Given the following information for Electric Transport, find the WACC. Assume the company’s tax rate is 34 percent.Debt: 7,500, 8.4 percent coupon bonds outstanding. $1,000 par value, 22 years to maturity, selling for 103 percent of par, the bonds make […]

The equilibrium hedonic wage function is most likely A. horizontal as no firm will over-pay for workers. B. horizontal as firms will choose their optimal level of safety. C. a single point, as all firms will choose the same level […]

A large employer gives each new hire an aptitude test, which is scored from 1 to 20. Let T be a workers score on the test. The firm then pays the new worker a wage of w = 0.6T + […]

A couple is considering moving to Tampa from Chicago. The cost of moving for Crystal is $300 while the cost of moving for Amelia is $600. Crystal earns $500 in Chicago and $550 in Tampa. Amelia earns $200 in Chicago […]

Consider the following data for men and women: If a regression estimates the return to experience for men, ²M, to be 0.25, how much of the average difference in wages can be attributed to differences in work experience and how […]

An increase in non-labor income while holding the wage rate constant A. rotates the budget line out along the consumption axis. B. rotates the budget line out along the leisure axis. C. rotates the budget line in along the leisure […]

Within a household, the allocation of labor to household production depends on: A. Relative marketplace wages. B. Individual preferences for household versus marketplace work. C. Relative ability at household production. D. The household utility function for marketplace versus household goods. […]

Consider a color-blind firm that is currently maximizing profits. An affirmative action policy is put in place requiring that all firms in the industry abide by a certain quota. Which of the following will occur? A. There will be no […]

What happens to the piece rate if there is a ratchet effect? A. The piece rate decreases over time. B. The piece rate increases over time. C. The piece rate is replaced with a time rate. D. The piece rate […]

When graphing a workers indifference curves in Probability of Injury (x-axis) versus Wage (y-axis) space, Als indifference curves are steeper than Petes indifference curve. In this case: A. Al is more risk-loving than Pete. B. Al requires a greater wage […]

What is an example of the scale effect? A. Workers choose to provide more hours of labor when the wage rate decreases. B. Hiring more labor as long as the marginal product of labor is positive. C. The firm expands […]

Suppose all 18-year-olds are identical in every way except that some have easy access to credit (i.e., they face a low interest rate when borrowing money) while others have a difficult time accessing credit (i.e., they face a high interest […]

The union wage gap for private sector unions in the United States is presently on the order of A. 2%. B. 8%. C. 15%. D. 28%. E. 39%. If ability is positively related to schooling, then estimating the returns to […]

In the United States, the wealthiest 10 percent of households earn approximately what share of total income? A. 5% B. 10% C. 30% D. 50% E. 80% The female-male wage gap in the United States A. has been increasing over […]

The National Labor Relations Act of 1935 (also known as the Wagner Act) was significant because it A. curtailed union power by permitting states to pass right-to-work laws. B. granted firms the right to break unions. C. outlawed yellow-dog contracts. […]

Suppose 40 percent of all potential workers are highly skilled and contribute $50,000 to the firm each year. The remaining 60 percent of potential workers are less-skilled and contribute only $30,000 to the firm each year. Schooling costs a highly […]

What is the main theoretical implication regarding the standard employer-based discrimination model? A. Most firms are discriminatory. B. Workers dont care if firms are discriminatory. C. Discrimination is not profitable. D. Discrimination can only occur if there are exactly two […]

The natural rate of unemployment is higher in many European countries than in the United States largely because A. European countries tend to offer more generous unemployment benefits than in the United States. B. European countries tend to place fewer […]

How does the presence of an underground labor market bias the governments calculation of the labor force participation rate? A. The official government statistic on labor force participation is too low, because people working in the underground labor market should […]

Wage differentials across individual workers are determined in part by: A. Effort. B. Productivity. C. Social capital. D. Luck. E. All of the above. What is the 50-10 wage gap if the 10th percentile wage is $25,000; the 50th percentile […]

A strike A. can be a rational response during the union-firm negotiation process. B. is a Pareto optimal outcome. C. hurts the firms management and share holders but not the union members. D. is never in the best interest of […]

The slope of the production function while holding capital fixed is A. the marginal product of labor. B. the marginal product of capital. C. the average product of labor. D. the labor-capital ratio. E. the capital-labor ratio. In the United […]