Archives: Quiz

1) The specific location on the floor of an exchange where a particular security is traded is called a: A.box office B.figure 6 C.DMM’s post D.trading booth E.seat 2) The spot exchange rate is the exchange rate that applies to […]

1) Cindy is taking out a loan today. The cash amount that she will receive today is equal to the present value of the lump sum payment that she will be required to pay two years from today. Which type […]

1) Which one of the following formulas illustrates the mechanics of covered interest arbitrage? Assume the $1 is borrowed and S0 = spot rate; F1 = one-year forward rate; RF = foreign country risk-free rate; and RUS = U.S. risk-free […]

1) The modified internal rate of return is specifically designed to address the problems associated with which one of the following? A.Mutually exclusive projects B.Unconventional cash flows C.Long-term projects D.Negative net present values E.Crossover points 2) The common stock of […]

1) Jericho Snacks is an all-equity firm with estimated earnings before interest and taxes of $826,000 annually forever. Currently, the firm has no debt but is considering borrowing $650,000 at 6.75 percent interest. The tax rate is 34 percent and […]

1) Sugar and Spice stock is expected to produce the following returns given the various states of the economy. What is the expected return on this stock? A.7.89 percent B.8.56 percent C.9.43 percent D.10.05 percent E.10.50 percent 2) Healthy Foods […]

1) Stock A comprises 28 percent of Susan’s portfolio. Which one of the following terms applies to the 28 percent? A.Portfolio variance B.Portfolio standard deviation C.Portfolio weight D.Portfolio expected return E.Portfolio beta 2) Which one of the following is a […]

1) Shoe Box Stores is currently an all-equity firm with 28,000 shares of stock outstanding. Management is considering changing the capital structure to 40 percent debt. The interest rate on the debt would be 9 percent. Ignore taxes. Jamie owns […]

1) The goal of financial management is to increase the: A.future value of the firm’s total equity B.book value of equity C.dividends paid per share D.current market value per share E.number of shares outstanding 2) Boyertown Industrial Tools is considering […]

1) Hometown Builders is borrowing $150,000 today for five years. The loan is an interest-only loan with an APR of 8.5 percent. Payments are to be made annually. What is the amount of the first annual payment? A.$12,750.00 B.$20,610.90.00 C.$30,029.18 […]

1) Currently, you can exchange $100 for 97.25. The inflation rate in Euroland is expected to be 3.8 percent as compared to 2.1 percent in the U.S. Assuming that relative purchasing power parity exists, what should the exchange rate be […]

1) Aaron’s Rentals has 58,000 shares of common stock outstanding at a market price of $36 a share. The common stock just paid a $1.64 annual dividend and has a dividend growth rate of 2.8 percent. There are 12,000 shares […]

1) Doris’ Boutique has 4,000 shares of stock outstanding at a price per share of $15. What will the price per share be if the firm pays a $1.30 per share dividend? Ignore taxes and market imperfections. A.$13.70 B.$15.40 C.$15.80 […]

1) Which one of the following will increase the operating cash flow as computed using the tax shield approach? A.Decrease in depreciation B.Decrease in sales C.Increase in variable costs D.Decrease in fixed costs E.Increase in the tax rate 2) A […]

1) A bond has a $1,000 face value, a market price of $1,045, and pays interest payments of $80 every year. What is the coupon rate? A.6.76 percent B.7.00 percent C.7.12 percent D.8.00 percent E.8.14 percent 2) Larry’s Gun Shop […]

1) The spot rate between Japan and the U.S. is 100.37 = $1, while the one-year forward rate is 99.97 = $1. A one-year risk-free security in the U.S. is yielding 3.8 percent. What is the rate of return on […]

1) The Good Life Store has sales of $79,600. The cost of goods sold is $48,200 and the other costs are $18,700. Depreciation is $8,300 and the tax rate is 34 percent. What is the net income? A.$2,904 B.$8,382 C.$11,204 […]

1) Assume a firm has positive net earnings. The operating cash flow of this firm: A.ignores both depreciation and taxes B.is unaffected by the depreciation expense C.must be negative D.increases when tax rates decrease E.is equal to net income minus […]

1) Which one of the following is a primary benefit of implementing zero-balance accounts into a cash management system? A.Increased disbursements float B.Total elimination of all safety stocks C.Additional cash availability D.Decreased collection float E.Elimination of all float 2) Your […]

1) For the past year, LP Gas, Inc. had cash flow from assets of $38,100 of which $21,500 flowed to the firm’s stockholders. The interest paid was $2,300. What is the amount of the net new borrowing? A.-$14,300 B.-$9,700 C.$12,300 […]

1) Western Steer purchased some three-year MACRS property three years ago. What is the current book value of this equipment if the original cost was $58,000? The MACRS allowance percentages are as follows, commencing with year 1: 33.33, 44.45, 14.81, […]

1) The common stock of The Garden of Eden is selling for $42 a share. The company pays a constant annual dividend and has a total return of 5.8 percent. What is the amount of the dividend? A.$1.02 B.$2.04 C.$2.44 […]

1) Today, you are buying a $1,000 face value bond at an invoice price of $987. The bond has a 6 percent coupon and pays interest semiannually. There are two months until the next coupon date. What is the clean […]

1) The manager of Gloria’s Boutique has approved Carla’s application for credit. The maximum payment that has been approved is $65 a month for 24 months. The APR is 15.7 percent. What is the maximum initial purchase that Carla can […]

1) Charles Henri is considering investing $36,000 in a project that is expected to provide him with cash inflows of $12,000 in each of the first two years and $18,000 for the following year. At a discount rate of zero […]

1) Which one of the following is an ordinary annuity, but not a perpetuity? A.$75 paid at the beginning of each monthly period for 50 years B.$15 paid at the end of each monthly period for an infinite period of […]

1) Over the past four years, a stock produced returns of 15 percent, 6 percent, 11 percent, and 22 percent, respectively. Based on these four years, what range of returns would you expect to see 95 percent of the time? […]

1) Marcos Enterprises has three separate divisions. The firm allocates each division $1.5 million per year for capital purchases. Which one of the following terms applies to this allocation process? A.Soft rationing B.Hard rationing C.Opportunity cost D.Sunk cost E.Strategic planning […]

1) In a typical month, River City Tours received 60 checks totaling $144,000. These are delayed 3 days on average. What is the average daily float? Assume 30 days in a month. A.$12,500 B.$13,333 C.$14,400 D.$16,217 E.$16,667 2) Jenny needs […]

1) The net present value profile illustrates how the net present value of an investment is affected by which one of the following? A.Project’s initial cost B.Discount rate C.Timing of the project’s cash inflows D.Inflation rate E.Real rate of return […]

1) Consider a three-year project with the following information: initial fixed asset investment = $770,000; straight-line depreciation to zero over the three-year life; zero salvage value; price = $34.99; variable costs = $23.16; fixed costs = $245,000; quantity sold = […]

1) A 5.5 percent $1,000 bond matures in seven years, pays interest semiannually, and has a yield to maturity of 6.23 percent. What is the current market price of the bond? A.$945.08 B.$947.21 C.$959.09 D.$959.60 E.$962.40 2) Which one of […]

1) Donegal’s Industrial Products wishes to maintain a growth rate of 6 percent a year, a debt-equity ratio of 0.45, and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at 1.25 . […]

1) Which one of the following is the agreed-upon exchange rate that is to be used when currencies are exchanged at some point in the future based on an agreement made today? A.Spot rate B.ADR rate C.London Interbank Offer Rate […]

1) Galaxy Sales has sales of $746,700, cost of goods sold of $603,200, and inventory of $94,300. How long on average does it take the firm to sell its inventory? A.6.40 days B.7.23 days C.48.68 days D.57.06 days E.61.10 days […]

1) Which one of the following best defines legal bankruptcy? A.Negotiating new payment terms with a firm’s creditors B.A temporary technical insolvency C.A legal proceeding for liquidating or reorganizing a business D.The internal process of revising the capital structure of […]

1) 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 borrower D.debt […]

1) A firm has net income of $114,000, a return on assets of 12.6 percent, and a debt-equity ratio of 0.60 . What is the return on equity? A.17.11 percent B.18.98 percent C.20.16 percent D.22.20 percent E.24.60 percent 2) An […]

1) As activity increases, unit variable cost: A.increases proportionately with activity B.decreases proportionately with activity C.remains constant D.increases by a fixed amount E.decreases by a fixed amount 2) Northwest’s production data for one of its products were taken from the […]

1) Which of the following measures would reflect the variable costs incurred by a business segment? A.Choice A B.Choice B C.Choice C D.Choice D E.Choice E 2) Sunrise Corporation has a return on investment of 15%. A Sunrise division, which […]

1) Yes! Co., had 3,000 units of work in process on April 1 that were 60% complete. During April, 11,000 units were started and as of April 30, 4,000 units that were 40% complete remained in production. How many units […]

1) Which of the following is the correct mathematical expression to derive a company’s capital turnover? A.Sales revenue invested capital B.Contribution margin invested capital C.Income invested capital D.Invested capital sales revenue E.Invested capital income 2) The following selected data were […]

1) Which of the following is an example of a fixed cost? A.Paper used in the manufacture of textbooks B.Property taxes paid by a firm to the City of Los Angeles C.The wages of part-time workers who are paid $8 […]

1) Which of the following employees would not be classified as indirect labor? A.Plant Custodian B.Salesperson C.Assembler of wooden furniture D.Plant security guard E.Salesperson and assembler of wooden furniture 2) Sullivan Enterprises had a sales margin of 5%, sales of […]

1) The accounting records of Reynolds Corporation revealed the following selected costs: Sales commissions, $65,000; plant supervision, $190,000; and administrative expenses, $185,000. Reynolds’s period costs total: A.$250,000 B.$440,000 C.$375,000 D.$255,000 E.$185,000 2) If direct materials used during the year were […]

1) Rock Star, Inc., which uses a job-costing system, began business on January 1, 20×3 and applies manufacturing overhead on the basis of direct-labor cost. The following information relates to 20×3: Budgeted direct labor and manufacturing overhead were anticipated to […]

1) Christiansen Corporation manufactures joint products W and X. During a recent period, joint costs amounted to $300,000 in the production of 20,000 gallons of W and 60,000 gallons of X. Both products will be processed beyond the split-off point, […]

1) If the cost of goods manufactured for the year was $565,000, what was the amount of direct materials used during the year? A.$155,500 B.$140,500 C.$150,000 D.$145,500 E.None of the other answers are correct 2) Which of the following methods […]

1) Narchie sells a single product for $50. Variable costs are 60% of the selling price, and the company has fixed costs that amount to $400,000. Current sales total 16,000 units. In order to produce a target profit of $22,000, […]

1) As production takes place, all manufacturing costs are added to the: A.Work-in-Process Inventory account B.Manufacturing-Overhead Inventory account C.Cost-of-Goods-Sold account D.Finished-Goods Inventory account E.Production Labor account 2) Which of the following elements is not used in the calculation of economic […]