Archives: Quiz
Chapter 14 B explanation Although Debt Has Lower Cost Capital
Copyright © 2014 Pearson Education, Inc. 26) Assume that in addition to 1.25 billion common shares outstanding, Luther has stock options given to employees valued at $2 billion. The market value of Luther’s non-cash assets is closest to: A) $22 […]
Chapter 14 Shares Outstanding Million Million Repurchased Million Shares diff
Copyright © 2014 Pearson Education, Inc. Corporate Finance, 3e (Berk/DeMarzo) Chapter 14 Capital Structure in a Perfect Market 14.1 Equity Versus Debt Financing Use the following information to answer the question(s) below. Nielson Motors (NM) has no debt. Its assets […]
Chapter 13 Style based Anomalies And The Market Efficiency Debate skill
Copyright © 2014 Pearson Education, Inc. 11) Portfolio “D”: A) falls below the SML. B) has a negative alpha. C) is overpriced. D) offers an expected return equal to the risk-free rate. Answer: D Diff: 2 Section: 13.6 Style-Based Anomalies […]
Chapter 13 Which of the following stocks represent selling opportunities
Copyright © 2014 Pearson Education, Inc. Corporate Finance, 3e (Berk/DeMarzo) Chapter 13 Investor Behavior and Capital Market Efficiency 13.1 Competition and Capital Markets Use the following information to answer the question(s) below. Assume that the CAPM is a good description […]
Chapter 12 Trucks R’ Us has a market capitalization of $142 billion
Copyright © 2014 Pearson Education, Inc. Use the following information to answer the question(s) below. Consider the following information regarding corporate bonds: Rating AAA AA A BBB BB B CCC Average Default Rate 0.0% 0.1% 0.2% 0.5% 2.2% 5.5% 12.2% […]
Chapter 12 Rating The Bondholders Expected Loss Rate
21 Copyright © 2014 Pearson Education, Inc. 22 4) The Market’s average historical excess return is closest to: A) -2.50% B) -3.33% C) -4.33% D) -5.17% Answer: D Explanation: D) excess returnaverage = Year Risk-free Return Market Return Wyatt Oil […]
Chapter 12 The Efficient Portfolio The Portfolio That All
Copyright © 2014 Pearson Education, Inc. Corporate Finance, 3e (Berk/DeMarzo) Chapter 12 Estimating the Cost of Capital 12.1 The Equity Cost of Capital Use the following information to answer the question(s) below. Beta Volatility “Eenie” 0.45 20% “Meenie” 0.75 18% […]
Chapter 11 Assuming that Tom wants to maintain the current volatility
Copyright © 2014 Pearson Education, Inc. 15) Assuming that Tom wants to maintain the current volatility of his portfolio, then the maximum expected return that Tom could achieve by investing in the market portfolio and risk- free investment is closest […]
Chapter 11 The expected return on the precious metals fund is closest
Copyright © 2014 Pearson Education, Inc. 6) The expected return on the precious metals fund is closest to: A) -3% B) 4% C) 1% D) 10% Answer: C Explanation: C) = = = -0.3 ri = rf + × (E[Rp] […]
Chapter 11 Consider an equally weighted portfolio that contains
Copyright © 2014 Pearson Education, Inc. 21) Calculate the variance on a portfolio that is made up of equal investments in Stock Y and Stock Z stock . 21 Answer: Year End Stock Y Realized Return Stock Z Realized Return […]
Chapter 11 Almost All The Correlations Between Stocks Are
1 Corporate Finance, 3e (Berk/DeMarzo) Chapter 11 Optimal Portfolio Choice and the Capital Asset Pricing Model 11.1 The Expected Return of a Portfolio 1) Which of the following statements is FALSE? A) Without trading, the portfolio weights will decrease for […]
Chapter 10 The standard deviation for the return on an portfolio
Copyright © 2014 Pearson Education, Inc. 12) The standard deviation for the return on an portfolio of 20 type I firms is closest to: A) 5.25% B) 5.10% C) 15.0% D) 23.0% Answer: B Explanation: B) expected return = .7(20%) […]
Chapter 10 Common Versus Independent Risk skill Analytical What The
21 25) Using the data provided in the table, calculate the average annual return, the variance of the annual returns, and the standard deviation of the average returns for the market from 2000 to 2009. Answer: Rannual = = = […]
Chapter 10 Historical Returns Stocks And Bonds skill Analytical Assume
1 Corporate Finance, 3e (Berk/DeMarzo) Chapter 10 Capital Markets and the Pricing of Risk 10.1 Risk and Return: Insights from Years of Investor History 1) Which of the following investments offered the lowest overall return over the past eighty years? […]
Chapter 8 The incremental cash flow that the Krusty Krab
Copyright © 2014 Pearson Education, Inc. 8) The incremental cash flow that the Krusty Krab will incur in year 1 if they elect to upgrade to the new grill is closest to: A) 6,500 B) 7,800 C) 10,800 D) 11,500 […]
Chapter 8 The incremental unlevered net income Shepard Industries
Copyright © 2014 Pearson Education, Inc. 22) The incremental unlevered net income Shepard Industries in year two is closest to: A) $355 B) $415 C) $600 D) $510 Answer: B Explanation: B) Revenues 1200 1400 – Expenses 450 525 – […]
Chapter 8 The opportunity Cost Using Resource The Value Could
Copyright © 2014 Pearson Education, Inc. Corporate Finance, 3e (Berk/DeMarzo) Chapter 8 Fundamentals of Capital Budgeting 8.1 Forecasting Earnings 1) Which of the following statements is FALSE? A) A capital budget lists the projects and investments that a company plans […]
Chapter 7 What is the most appropriate tool to use if you are
Copyright © 2014 Pearson Education, Inc. 17) Assuming that the discount rate for project A is 16% and the discount rate for B is 15%, then given that these are mutually exclusive projects, which project would you take and why? […]
Chapter 7 The internal rate of return rule can result
Copyright © 2014 Pearson Education, Inc. 22) The internal rate of return rule can result in the wrong decision if the projects being compared have: A) differences in scale. B) differences in timing. C) differences in NPV. D) A and […]
Chapter 7 Palin could have been paid to give speeches sand
Copyright © 2014 Pearson Education, Inc. Corporate Finance, 3e (Berk/DeMarzo) Chapter 7 Investment Decision Rules 7.1 NPV and Stand-Alone Projects 1) Which of the following statements is FALSE? A) About 75% of firms surveyed used the NPV rule for making […]
Chapter 17 Footnotes Financial Statements Should Not Used Describe
Chapter 17 Multiple Choice 1. Footnotes to financial statements should not be used to a. Describe the nature and effect of a change in accounting principles b. Identify substantial differences between book and tax income c. Correct an improper financial […]
Chapter 6 Wyatt oil is contemplating issuing a 20-year bond
Copyright © 2014 Pearson Education, Inc. 4) Which of the following statements is FALSE? A) The bond’s expected return, which is equal to the firm’s debt cost of capital, is less than the yield to maturity if there is a […]
Chapter 16 Arkin Inc Owns Percent The Outstanding Stock
Chapter 16 Multiple Choice 1. Consolidated statements are proper for Neely, Inc., Randle, Inc., and Walker, Inc., if a. Neely owns 80 percent of the outstanding common stock of Randle and 40 percent of Walker; Randle owns 30 percent of […]
Chapter 6 then as time goes on the bond price will approach the
Copyright © 2014 Pearson Education, Inc. 22) The amount that the price of bond “D” will change if its yield to maturity increases from 8% to 9% is closest to: A) -$36 B) -$39 C) $36 D) $9 Answer: A […]
Chapter 15 For Compensatory Stock Option Plan For Which
Chapter 15 Multiple Choice 1. For a compensatory stock option plan for which the date of grant and measurement date are the same, compensation cost should be recognized in the income statement a. At the date of retirement b. Of […]
Chapter 6 Bond Cash Flows Prices And Yields skill Conceptual use
Copyright © 2014 Pearson Education, Inc. Corporate Finance, 3e (Berk/DeMarzo) Chapter 6 Valuing Bonds 6.1 Bond Cash Flows, Prices, and Yields 1) Which of the following statements is FALSE? A) Bonds are a securities sold by governments and corporations to […]
Chapter 14 minimum and maximum limits on the annual provision
Chapter 14 Multiple Choice 1. APB Opinion No. 8 set minimum and maximum limits on the annual provision for pension cost. An amount that was always included in the calculation of both the minimum and the maximum limit is a. […]
Chapter 5 The Real Rate However Can Be negative Anytime
Copyright © 2014 Pearson Education, Inc. 5.2 Application: Discount Rates and Loans 1) Hugh Akston took out a 30-year mortgage with an EAR of 5.9%. If Hugh borrowed $300,000 to buy his home, then his monthly payment will be closest […]
Chapter 13 When Measuring The Present Value Future Rentals
Chapter 13 1. Under the capital method of accounting for leases the excess of aggregate rentals over the cost of leased property should be recognized as revenue of the lessor a. In increasing amounts during the term of the lease […]
Chapter 5 C explanation First Need The Monthly Interest Rate
Copyright © 2014 Pearson Education, Inc. Corporate Finance, 3e (Berk/DeMarzo) Chapter 5 Interest Rates 5.1 Interest Rate Quotes and Adjustments 1) Which of the following statements is FALSE? A) Because interest rates may be quoted for different time intervals, it […]
Chapter 12 With Respect The Difference Between Taxable Income
1 Chapter 12 Multiple Choice 1. With respect to the difference between taxable income and pretax accounting income, the tax effect of the undistributed earnings of a subsidiary included in consolidated income should normally be 2. Income tax allocation procedures […]
Chapter 4 The British government has a consol bond outstanding
Copyright © 2014 Pearson Education, Inc. 9) The British government has a consol bond outstanding that pays ₤100 in interest each year. Assuming that the current interest rate in Great Britain is 5% and that you will receive your first […]
Chapter 11 Unamortized Debt Discount Should Reported The Balance
Chapter 11 Multiple Choice 1. A loss from early extinguishment of debt, if material, should be reported as a component of income a. After cumulative effect of accounting changes and after discontinued operations of a segment of a business b. […]
Chapter 4 Most Investment Opportunities Have Multiple Cash Flows
Copyright © 2014 Pearson Education, Inc. Corporate Finance, 3e (Berk/DeMarzo) Chapter 4 The Time Value of Money 4.1 The Timeline Use the figure for the question(s) below. 1) Which of the following statements regarding timelines is FALSE? A) Timelines are […]
Chapter 10 Under The Equity Method Accounting For Investments
1 Chapter 10 Multiple Choice 1. Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the 2. Pence Corporation, which accounts for its investments in the common stock […]
Chapter 3 Which of the following statements regarding the Law
Copyright © 2014 Pearson Education, Inc. 2) Which of the following statements regarding the Law of One Price is INCORRECT? A) At any point in time, the price of two equivalent goods trading in different competitive markets will be the […]
Chapter 9 When Closely Held Corporation Issues Preferred Stock
Chapter 9 Multiple Choice 1. When a closely held corporation issues preferred stock for land, the land should be recorded at the a. Total par value of the stock issued b. Total book value of the stock issued c. Appraised […]
Chapter 3 By evaluating cost and benefits using competitive market prices
Copyright © 2014 Pearson Education, Inc. Corporate Finance, 3e (Berk/DeMarzo) Chapter 3 Financial Decision Making and the Law of One Price 3.1 Valuing Decisions 1) Due to a pre-existing contract, Recycle America Inc. has the opportunity to acquire 10,000 pounds […]
Chapter 8 The Following Items The One That Should
1 Chapter 8 Multiple Choice 1. Of the following items, the one that should be classified as a current asset is 2. The advantage of relating a company’s bad debt experience to its accounts receivable is that this approach a. […]
Chapter 2 Luther’s earnings before interest, taxes, depreciation
Copyright © 2014 Pearson Education, Inc. 6) Luther’s quick ratio for 2008 is closest to: A) 0.77 B) 0.87 C) 1.15 D) 1.30 Answer: A Explanation: A) quick ratio = (current assets – inventory)/current liabilities quick ratio = (144.0 – […]
Chapter 7 Balance Sheet What The Preferable Presentation Notes
1 Chapter 7 Multiple Choice 1. On a balance sheet, what is the preferable presentation of notes or accounts receivable from officers, employees, or affiliated companies? 2. The basis for classifying assets as current or noncurrent is the period of […]
Chapter 2 Which of the following statements regarding the balance sheet
Copyright © 2014 Pearson Education, Inc. Corporate Finance, 3e (Berk/DeMarzo) Chapter 2 Introduction to Financial Statement Analysis 2.1 Firms’ Disclosure of Financial Information 1) U.S. public companies are required to file their annual financial statements with the U.S. Securities and […]
Chapter 6 The Disposal Significant Component Business Called Change
Chapter 6 Multiple Choice 1. The disposal of a significant component of a business is called a. A change in accounting principle b. An extraordinary item c. An other expense d. Discontinued operation Answer d 2. If year one sales […]
Chapter 1 Which of the following organization forms for a business
Answer: B Diff: 1 Section: 1.1 The Four Types of Firms Skill: Conceptual Answer: C Diff: 1 Section: 1.1 The Four Types of Firms Skill: Conceptual Copyright © 2014 Pearson Education, Inc. 1 Answer: C Diff: 1 Section: 1.1 The […]
Chapter 5 The Term Revenue Recognition Conventionally Refers The
Chapter 5 Multiple Choice 1. One concept of income suggests that income be measured by determining the net change over time in the discounted present value of net cash flow expected to be received by the firm. Under this concept […]
Chapter 4 Which The Following Research Approaches Emphasizes Going
Chapter 4 Multiple Choice 1. Which of the following research approaches emphasizes going from the specific to the general? a. Deductive b. Behavioral c. Inductive d. Pragmatic Answer c 2. Which of the following research approaches is based on the […]
Chapter 3 Which The Following Not Environmental Factor That
Chapter 3 Multiple Choice 1. Which of the following is not an environmental factor that could impact on the development of a country’s accounting system? a. Level of education\ b. Political system c. Geographic location d. Legal system Answer c […]
Chapter 2 Which Early Accounting Theorist Was Among The
Chapter 2 Multiple Choice 1. Which early accounting theorist was among the first to express the view that all changes in the value of assets and liabilities should be reflected in the financial statements? a. A. C. Littleton b. John […]
Chapter 1 What Historical Evidence The Business Operations The
Example Test Questions Chapter 1 Multiple Choice: 1. Which of the following bodies has the ultimate authority to issue accounting pronouncements in the United States? a. Securities and Exchange Commission b. Financial Accounting Standards Board c. International Accounting Standards Committee […]
Chapter 23 When considering the feasibility and affordability of insuring small
38. When considering the feasibility and affordability of insuring small potential losses, which company program will impact this decision? a. ACV b. FICA c. Self-insurance d. Workers’ compensation 39. Identifying in an insurance policy the specific perils covered is a […]