Archives: Quiz

1) narrbegin: smith credit ln -w/o comp smith enterprise credit line (w/o comp) smith enterprise has an one year credit line of $5,000,000 with second bank. on average smith uses $3,250,000 of the credit line. second bank charges a .45% […]

1) narrbegin: “flip” shares 1 “flip” shares 1 three companies went public last month with initial public offerings (ipo). the offer price and first day closing price are shown below for the three firms. an investor was able to purchase […]

1) if a company has a liabilities to equity ratio of 0.5, then its assets to equity ratio is a.0.5 b.1.0 c.1.5 d.2.0 2) consider the cash receipts projections of emma inc. that is developing a cash budget for october […]

1) the globe incorporated has ebit of $20 million for the current year. on the firm balance sheet, there is $80 million of debt outstanding that carries a coupon rate of 8 percent. investors seek a return of 12 percent […]

1) for which of the following would missing (that is, not taking) the discount be the least costly? a.2/10 net 40 b.1/15 net 60 c.3/10 net 70 d.1/10 net 50 2) what is meant by the term double taxation as […]

1) a call option on dani corp. is trading for $4.50. the strike price of the option is $25 and it has an expiration of 3 months. if the stock of dani corp. is trading at $28, how much of […]

1) great lakes christmas tree co. expects to pay an annual dividend of $2 per share in perpetuity on its preferred shares starting one year from now. the firm is committed solely to its steady north american christmas tree business […]

1) if a bond issue has a sinking fund provision then a.the corporation makes payments, based upon a preconceived schedule, to a trustee who uses these funds to retire bonds by purchasing them in the marketplace b.the indenture allows the […]

1) narrbegin: big diesel incorporated big diesel incorporated consider the following historical returns for big diesel incorporated: narrend refer to big diesel incorporated. if we assume that these returns represent the full sample of big diesel returns, what is the […]

1) which of the following is not a difference between entrepreneurial finance and ordinary finance? a.entrepreneurial companies generally have faster growth than ordinary companies b.most of the assets of entrepreneurial companies are often intangible assets c.entrepreneurial companies must attract, motivate, […]

1) narrbegin: silly sally silly sally, inc. silly sally, inc. forecasts the following sales levels: january, $420; february, $435; march, $450; and april, $470. historically, 40% of its sales are for cash. of the remaining sales, 80% are collected in […]

1) smith enterprises stock currently sells for $17.50. a put option on the stock has a strike price of $15 and currently sells at $4.50. what is the time value of the option? a.$0 b.$2.50 c.$4.50 d.$2.00 2) narrbegin: bavarian […]

1) capital budgeting: a.is the area in which managers have the greatest scope to create (or destroy) value for shareholders b.involves identifying potential investments, analyzing those investments and identifying which of those will create shareholder value and implement and monitor […]

1) quiz company has a 12 year lease, with payments of $250,000 made at the beginning of each year. if no purchase option exists, and the company is in the 40% tax bracket, what is the annual after-tax cash outflow […]

1) which of the following encourages managers to act in the shareholders interests? a.performance based compensation b.audits c.threat of hostile takeovers d.all of the above 2) you are consulting for a firm that anticipates that it will sell 730,000 units […]

1) which of the following investment opportunities has the highest present value if the discount rate is 10%? a.investment a b.investment b c.investment c d.the present value of investments a and c are equal and higher than the present value […]

1) roxy is considering a new cat food factory with the following cash flows, if the discount rate is 10% what is the pi? a.0.960 b.0.956 c.0.938 d.0.917 2) a put option with a $35 strike price on bavarian sausage […]

1) if the spot rate for the yen/ dollar is ¥110.00 and the forward rate is ¥111.00 then the yen trades at a.a forward discount of .009091 to the dollar b.a forward premium of .009091 to the dollar c.a forward […]

1) if you deposit $10,000 today in an account that pays 5% interest compounded annually for five years, how much interest will you earn? a.$2,500.00 b.$2,762.82 c.$3,400.96 d.$12,762.82 2) which of the following is not considered a type of an […]

1) a portfolio has 40% invested in asset 1, 50% invested in asset 2 and 10% invested in asset 3. asset 1 has a beta of 1.2, asset 2 has a beta of 0.8 and asset 3 has a beta […]

1) suppose david can borrow and lend at the risk-free rate of 5%. which of the following three risky portfolios should he hold in combination with a position in the risk-free asset? a.portfolio with a standard deviation of 16% and […]

1) narrbegin: exhibit 15-1 exhibit 15-1 you are working to forecast the cash disbursements for a manufacturing company. sales are forecasted to be $175,000, $200,000, $225,000, and $250,000 for january, february, march, and april, respectively. the firm purchases 25% of […]

1) narrbegin: bavarian brewhouse div. bavarian brewhouse dividend bavarian brewhouse had earnings per share of $2.50 in 2004 and paid out a dividend per share of $1.45 that same year. earnings per share are expected to be $3.25 in 2005. […]

1) you are trying to determine the appropriate risk-adjusted rate, in venus sun-dollars for a project on venus. you know that the correct risk-adjusted discount rate in u.s. dollars is 15% and the risk-free rate in dollars is 8%. if […]

1) which of the following is considered a direct cost of bankruptcy? a.diversion of managements time b.constrained capital investment spending c.lost sales d.none of the above 2) the holding period yield (hpy) calculation differs from the yield to maturity (ytm) […]

1) which of the following stock exchanges has the most strict listing requirements? a.american stock exchange b.nasdaq c.new york stock exchange d.pacific stock exchange 2) bavarian sausage just issued a 10-year 12% coupon bond. the face value of the bond […]

1) according to the mckinsey study the percentage of merger synergies that meet incremental revenue expectations. a.less than 25% b.25-50% c.50-75% d.more than 75% 2) which country has been the largest recipient of vc financing as a percentage of gdp? […]

1) momoney co. wants to increase its sustainable growth rate to 10%. if it maintains its 15% profit margin, 25% retention ratio, and 0.25 liabilities to equity ratio, what must its total asset turnover value be? a.0.42 b.0.65 c.1.94 d.2.37 […]

1) when a corporation offers shares to the public for the first time that is an: a.ipo b.ppo c.npo d.lbo 2) narrbegin: far corporation far corporation far corporation is considering a new project to manufacture widgets. the cost of the […]

1) narrbegin: efn 1 narrend what is smiths sustainable growth rate if the company has a dividend payout ratio of 75%? a.21.70% b.25.00% c.17.44% d.13.58% 2) roxy international has earnings per share of $4.05; just paid dividend $2.03 and expects […]

1) narrbegin: bavarian brew float bavarian brew float bavarian brew receives about 350 checks a day with an average check size of $550. currently customers payments spend 2 days in the mail. once a check is received it takes about […]

1) narrbegin: cash budget bavarian brews schedule of projected cash disbursement all of bavarian brews sales are credit sales. the company collects 60% of its sales in the next month and the remainder in the month after that. narrend due […]

1) national groceries chooses to have it local stores make payments on their own payables. national utilizes a a.centralized payment system b.fragmented payment system c.decentralized payment system d.none of the above 2) narrbegin: needsalift aprs needsalift, inc. aprs needsalift, inc. […]

1) narrbegin: exhibit 22-1 liquidation exhibit 23-1 narrend if the company has $3,000,000 in funds to distribute to unsecured creditors, what is the settlement that is received by the holders of the notes payable in case i? a.$1,764,706 b.$2,500,000 c.$735,250 […]

1) which of the following roles does finance play in long-term planning? a.identifying problems that could develop if the firm’s strategic plans do not develop as expected b.evaluating the firm’s existing and prospective sources of funding c.risk management d.all of […]

1) a fund that attempts to mimic the s&p 500 a.an efficient portfolio b.a passive portfolio c.an active portfolio d.an index portfolio 2) choc-lattes corp. earned $5.00 per share in 2006, and paid a dividend of $2.00 per share. if […]

1) which of the following is not a difficulty associated with valuing common stock? a.common stock does not have a specific expiration date b.the required rate of return is difficult to estimate c.common stock does not promise a fixed cash […]

1) alwaysaround co. has just issued a preferred stock that pays an annual $4 dividend. the first dividend will be received one year from today. if the required rate of return on this stock is 5%, then what is the […]

1) a root cause of firm agency costs is a.managerial carelessness b.a manager owning too much of his firms stock c.a managers concern for his personal well-being d.federal agency filing requirements 2) narrbegin: smart acquires snazzy smart acquires snazzy smart […]

1) by the ftc definition, the merger between exxon and mobil is a(n) a.vertical merger b.horizontal merger c.integrated merger d.all of the above 2) which of the following is also referred to as asset-backed lending? a.term loans b.syndicated loans c.project […]

1) suppose a firm experiences a seasonal pattern in its sales, in addition to a long-term upward trend. which of the following financing plans has the potential to be less costly to the firm? a.a conservative strategy b.an aggressive strategy […]

1) firm x plans to increase its financial leverage by issuing debt and using the proceeds to repurchase equity. if you assume that the modigliani and miller assumptions hold, then the effect of this increasing financial leverage transaction should a.increase […]

1) widgetmaker has discovered that its fixed costs are $100,000 per month. if widgetmaker sells its widgets for $35 per unit based upon a cost of $15 per unit to manufacture (variable costs) then what dollar sales per year must […]

1) you would like to retire with $1 million on your 60th birthday. if you start saving equal annual amounts on your 26th birthday, make your last deposit on your 60th birthday, and earn 10% interest on your money, how […]

1) you just bought a 5-year zero coupon bond with a $1,000 face value for $735.67. what is the taxable capital gain on this bond next year? a.$274.33 b.$68.51 c.$169.47 d.$46.64 2) narrbegin: bavarian credit terms bavarian brew credit terms […]

1) narrbegin: exhibit 22-1 liquidation exhibit 23-1 narrend if the company has $578,000 in funds to distribute to unsecured creditors, what percentage of their claims are going to be satisfied if case iii occurs? a.24.86% b.75.14% c.100% d.56.35% 2) narrbegin: […]

1) which of the following statements is false? a.bidders almost always offer target firm shareholders a premium price for their stock b.the average premium for completed u.s. mergers for the last 30 years has averaged about 20% c.premiums exist for […]

1) roxy international needs $200 million in new equity capital; currently shares are trading at $50 per share. morgan steely (the investment banker) requires a 6% spread of the offer price which will be $45 per share and is fully […]

1) narrbegin: exhibit 17-2 exhibit 23-2 coffee; 37,500 lbs per contract, $ per lb. may 2004 narrend refer to exhibit 23-2. for purposes of marking to market, what is the current price of coffee futures for december? a.$41,625 b.$53,625 c.$41,250 […]

1) one benefit of external expansion is: a.acquirers are able to purchase the firm at a substantial discount from market value b.it slows down the expansion compared to a greenfield entry and allows the firm more time to evaluate the […]