Archives: Quiz
Finance Chapter 23 4 Generalize the formulas for determining the value of the following four option types: buying a call, buying a put, writing a call, writing a put
102. What is the payoff to buyers and sellers of call and put options? There are two basic types of options. A call option is the right to buy an asset at a specific exercise price on or before the […]
Finance Chapter 23 3 How does the price of a put option respond to the following changes, other things being equal? Does the put price go up or down
84. What is the minimum value of the call option on a convertible bond (with face value of $1,000) with a conversion ratio of 30 if the bond offers a 9% coupon, has 10 years until maturity, and market interest […]
Finance Chapter 23 1 The lower limit on a call option’s value is equal to the greater of zero or the exercise price minus the stock price
1. The seller of a put option is betting that the market value of the stock will decrease. FALSE AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 1 Easy Learning Objective: 23-01 Calculate the payoff to buyers and sellers […]
Finance Chapter 23 2 The option to abandon a project investing in real assets can be considered to have a strike price equal to the
49. Executive stock options are issued with the hope that the recipient will: A. sell the shares they currently own thereby diversifying the firm’s ownership. B. work to increase the value of the firm’s stock. C. never execute them. D. […]
Finance Chapter 22 3 Which one of the following appears to be a safe assumption when there is no difference between the forward and spot exchange rates between two currencies
75. Assume nominal rates are 10% in the United States and 25% in Holland, while the expected rates of inflation are 5% and 19%, respectively. Assuming investments of equal risk, you should invest in: A. the United States because of […]
Finance Chapter 22 4 Why should interest rate parity mean that the forward premium should equal the interest rate differential between countries
98. What is the international Fisher effect and how would you test it, knowing that 6% inflation is expected in the United States but only 3% is expected in Spain. The nominal U.S. interest rate is 9%. The international Fisher […]
Finance Chapter 22 2 The theory that goods in a foreign country should be priced approximately equal after currency translation to goods in a host country is referred to as the law of
43. If the spot exchange rate between euros and dollars is €1.5/$ before the dollar depreciates by 10%, how many dollars will it take after the depreciation has occurred to pay an invoice of €500? A. $366.67 B. $370.37 C. […]
Finance Chapter 22 1 The New York Stock Exchange is one of few markets to have a higher daily volume than the foreign exchange market
1. The New York Stock Exchange is one of few markets to have a higher daily volume than the foreign exchange market. FALSE AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 22-01 Understand the difference between […]
Finance Chapter 21 4 Why is it stated that the safest way of evaluating the potential gains from a merger is to focus on the changes in cash flow that will transpire as a result of the merger
110. Energetic Inc., believes that it can acquire Satisfied Industries and improve efficiency to the extent that the market value of Satisfied will increase by $5 million. Satisfied currently sells for $20 a share, and there are 1 million shares […]
Finance Chapter 21 3 Which one of the following statements is correct for a firm that has undergone a leveraged buyout
92. Firm B’s 1 million shares of stock currently sell for $20 each. Firm A estimates the economic gain from the merger to be $10 million and is prepared to offer $22 cash for each share of B. What percentage […]
Human Resources Chapter 16 5 In general, HR departments should be able to improve their performance through some combination of greater efficiency and greater effectiveness
88. The use of HR analytics involves measuring a program’s success in terms of: A. whether it adopted a pro-innovation approach. B. whether it was perceived as effective by external stakeholders. C. whether it sustained the status quo. D. whether […]
Finance Chapter 21 2 In which one of the following ways can the management teams of many corporations influence the board of directors
54. An increase in earnings per share after a merger may not indicate increased value if the: A. number of shares has increased. B. price of the acquirer’s stock increases. C. price-earnings ratios were different in the premerger firms. D. […]
Human Resources Chapter 16 4 Which of the following is a measure of customer satisfaction that indicates the success of the staffing efforts of an HR department
74. A formal review of the outcomes of HRM functions, based on identifying key HRM functions and measures of business performance, is referred to as a(n) _____. A. balanced scorecard B. profit-and-loss statement C. evidence-based HRM D. job description E. […]
Finance Chapter 21 1 Instead of selling part of its operations, companies sometimes spin off a business by separating it from the parent firm and distributing to
1. When a firm is taken over, its management is usually replaced. TRUE AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 21-03 Describe ways that companies change their ownership or management. Topic: Motives for mergers and […]
Human Resources Chapter 16 3 Which one of the following refers to the computations and calculations involved in reviewing and documenting HRM decisions and practices
54. Merit pay, gainsharing, and profit sharing are all methods of: A. including employees in organizational planning. B. disassociating compensation from performance measures. C. disseminating organizational learning. D. increasing employee participation in strategic decision making. E. linking compensation to performance […]
Finance Chapter 20 4 How can it evaluate the differences between parking the funds in commercial paper versus repurchase agreements
104. What information can the financial manager obtain from an aging schedule of accounts receivable? The purpose of an aging schedule is to list the total amount of receivables in each time category. This is generally done by customer account. […]
Human Resources Chapter 16 2 Each employee’s and each group’s ongoing efforts to gather information and apply the information to their decisions in a learning organization is referred to
33. Which of the following is an outcome of a high-performance work system? A. Simple, repetitive jobs B. High employee turnover C. High production costs D. High product quality E. Centralized decision making Outcomes of a high-performance work system thus […]
Finance Chapter 20 3 Which one of the following conditions would make a lock-box system potentially more attractive to a firm
82. What is the benefit for a firm with daily sales of $30,000 to be able to speed up collections by 3 days, assuming an annual opportunity cost of funds of 8%? A. $7,200 daily benefit B. $7,200 annual benefit […]
Human Resources Chapter 16 1 According to research, organizations that introduce integrated high-performance work practices usually experience increases in productivity
1. According to research, organizations that introduce integrated high-performance work practices usually experience increases in productivity and long-term financial performance. TRUE According to research, organizations that introduce integrated high-performance work practices usually experience increases in productivity and long-term financial performance. […]
Finance Chapter 20 2 Which one of the following statements is typically correct concerning the break-even probability of collection for repeat sale customers
48. Which one of the following statements is typically correct concerning the break-even probability of collection for repeat sale customers? A. The break-even probability is higher than for single sale customers. B. The break-even probability is lower than for single […]
Human Resources Chapter 15 5 In the context of the activities that an organization uses to help repatriated employees through the transition to the home-country
88. In the context of the activities that an organization uses to help repatriated employees through the transition to the home-country, which of the following activities involves the expatriate receiving information and recognizing changes while abroad? A. Validation B. Equalization […]
Finance Chapter 20 1 Firms are more likely to grant credit the higher the probability that a potential customer will become a repeat customer
1. Most large payments between business entities are made electronically through either CHIPS or Fedwire. TRUE AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 20-06 Compare the different techniques that firms use to make and receive […]
Finance Chapter 19 4 The text suggests that, of the three strategies discussed, the relaxed strategy is probably the worst from the standpoint of managerial evaluation
104. What is the best level of long-term financing relative to the total capital requirement? It is hard to say. However, we can make a few practical observations: 1. Matching maturities. When financial managers are asked the most important reason […]
Human Resources Chapter 15 4 Which of the following is true of the performance management process across national boundaries
74. Which of the following is true of the performance management process across national boundaries? A. The specific methods of performance management work the same way in almost every country. B. U.S. employees are much more used to indirect feedback […]
Finance Chapter 19 3 What are some of the major sources of short-term financing and how are interest rates commonly quoted on these types of loans
86. Which one of the following would not be included as a source of short-term financing? A. Line of credit B. Increase in the minimum operating cash balance C. Sale of marketable securities D. Stretching of accounts payable AACSB: Communication […]
Human Resources Chapter 15 3 Which of the following is true about the influence of economic systems on human resource practices in international markets
54. How does a collectivist culture influence the HRM decisions related to job design? A. It gives more importance to skills, resources, and personality to succeed on the job. B. It encourages employees to make their own decisions. C. It […]
Finance Chapter 19 2 What happens to a firm whose uses of cash exceed its sources of cash during an accounting period
51. A firm’s permanent working capital refers to the: A. difference between fixed assets and current assets. B. maximum difference between current assets and current liabilities. C. portion of net working capital that is financed from long-term sources. D. amounts […]
Human Resources Chapter 15 1 The trends and arrangements that encourage international trade also increase and change the demands on human resource management
1. The trends and arrangements that encourage international trade also increase and change the demands on human resource management. TRUE The environment in which organizations operate is rapidly becoming a global one for various reasons. The trends and arrangements that […]
Finance Chapter 19 1 When financial managers are asked the key reason for choosing short-term rather than long-term debt, they often say that they try
1. When financial managers are asked the key reason for choosing short-term rather than long-term debt, they often say that they try to match the maturities of the firm’s assets and liabilities. TRUE AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember […]
Human Resources Chapter 14 5 Under the National Labor Relations Act, the union has a duty of fair representation, which means the union must
87. The process for resolving union-management conflicts over interpretation or violation of a collective bargaining agreement is known as a _____. A. complaint protocol B. chain of command C. grievance procedure D. protest procedure E. corporate campaign Contract administration includes […]
Finance Chapter 18 4 Managers sometimes state a target growth rate for sales or earnings per share. Do you think that either makes sense as a corporate goal
105. How can a firm quickly determine if its desired rate of growth is feasible? The internal growth rate is the maximum rate that the firm can grow if it relies entirely on reinvested profits to finance its growth, that […]
Human Resources Chapter 14 4 After certifying a union, the NLRB sets certain limits for future elections. Which of the following is one such limit
73. After certifying a union, the NLRB sets certain limits for future elections. Which of the following is one such limit? A. It will not permit additional elections for five years. B. After the union and employer have finished negotiating […]
Finance Chapter 18 3 In the percentage of sales model, which one of these is least apt to increase in a linear fashion as sales increase
84. What is the internal growth rate for a firm with an ROE of 20%, a dividend payout ratio of 40%, and an equity-to-debt ratio of 60%? A. 4.50% B. 5.39% C. 8.00% D. 12.00% IG = (1 – 0.40) […]
Human Resources Chapter 14 3 Which type of union security provision is illegal under the provisions of the National Labor Relations Act
53. Which type of union security provision is illegal under the provisions of the National Labor Relations Act? A. Union shop B. Agency shop C. Closed shop D. Open shop E. Checkoff provision The strongest union security arrangement is a […]
Finance Chapter 18 2 How much equity would be required if the results of a financial planning model indicate that the firm’s assets will grow to $4 million
AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Apply Difficulty: 2 Medium Learning Objective: 18-03 Estimate the effect of growth on the need for external financing. Topic: Internal and sustainable growth rates 49. If a firm with an asset base of […]
Human Resources Chapter 14 2 Which of the following is true of the American Federation of Labor and Congress of Industrial Organizations
33. Which of the following is a characteristic of an industrial union? A. All the members are in the same occupation. B. Union leaders try to limit the number of members in order to maintain high wages. C. Members are […]
Human Resources Chapter 14 1 A craft union’s bargaining power depends greatly on the control it can exercise over the supply of its workers
1. A craft union’s bargaining power depends greatly on the control it can exercise over the supply of its workers. TRUE A labor union whose members all have a particular skill or occupation are known as craft unions. Craft unions […]
Finance Chapter 18 1 Financial planning is necessary because financing and investment decisions interact and should not be made independently
1. A planning horizon refers to the amount of time necessary to develop the financial plan. FALSE AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 18-01 Describe the contents and uses of a financial plan. Topic: […]
Human Resources Chapter 13 5 What are the objectives of the unemployment insurance program established by the Social Security Act of 1935. How is this program funded
87. Which of the following is a requirement set for employers under the FASB standards? A. Employers must fund benefits on a pay-as-you-go basis. B. Benefits must not appear as future cost obligations. C. Employers should encourage employees to participate […]
Finance Chapter 17 2 Capital gains may be preferred by investors over dividends even if dividends and capital gains are taxed at the same rate because
45. Which one of the following signals is most likely to elicit a decrease in share price? A. A repurchase of 5% of the firm’s stock B. An increase in the regular quarterly dividend C. A decrease in the regular […]
Human Resources Chapter 13 4 To encourage learning and attract the kinds of employees who wish to develop their knowledge and skills, many organizations offer
73. To encourage learning and attract the kinds of employees who wish to develop their knowledge and skills, many organizations offer: A. tuition reimbursement programs. B. flexible schedules. C. paid leaves for more than 2 weeks. D. quarterly promotions. E. […]
Finance Chapter 17 4 How does the information content of a repurchase program differ from that of a dividend increase increase
104. Why would payout decisions be used by management to signal the prospects of the firm? A firm that chooses a high-dividend policy without the cash flow to back it up will find that it ultimately has to either cut […]
Finance Chapter 17 3 Which one of the following statements is correct about investors in Ajax Industries, which has just announced a three-for-one stock split
78. The date on which actual dividend checks are mailed to shareholders is the: A. declaration date. B. payment date. C. ex-dividend date. D. record date. AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 17-01 Describe […]
Human Resources Chapter 13 2 In which of the following areas are unemployment insurance benefits and workers’ compensation benefits similar
33. Which one of the following is an objective of the unemployment insurance program? A. To improve the productivity and skill set of workers B. To protect the employer from lawsuits C. To provide an incentive for employers to stabilize […]
Finance Chapter 17 1 Companies can pay out cash to their shareholders in two ways. They can pay a dividend or they can buy back some of their outstanding shares
1. A dividend does not accompany stocks that are purchased on the ex-dividend date. TRUE AACSB: Communication Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 1 Easy Learning Objective: 17-01 Describe how dividends are paid and shares are repurchased. Topic: Chronology of […]
Human Resources Chapter 13 1 Since benefits packages are more complex than pay structures, they are harder for employees to understand and appreciate
1. Since benefits packages are more complex than pay structures, they are harder for employees to understand and appreciate. TRUE Benefits packages are more complex than pay structures, so benefits are harder for employees to understand and appreciate. AACSB: Analytic […]
Finance Chapter 16 4 Discuss how agency problems can develop between shareholders and bondholders when the firm is experiencing financial distress
105. Equity Inc., is currently an all-equity firm. It has 10,000 shares outstanding that sell for $20 each. The firm has an operating income of $30,000 and pays no taxes. The firm contemplates a restructuring that would issue $50,000 in […]
Finance Chapter 16 3 When corporate taxes and the cost of financial distress are taken into consideration, the market value of a firm is equal to the value
79. What is the expected rate of return to equityholders if the firm has a tax rate of 35%, an interest rate on debt of 10%, a WACC of 15%, and a debt-asset ratio of 60%? A. 12.50% B. 21.25% […]
Human Resources Chapter 12 4 Which of the following is an arrangement in which the organization distributes shares of stock to all its employees by placing it in a trust
74. In 2003, a company employee received an option to purchase the company’s stock at $45 per share. If the stock is trading at $40 a share in 2005, the employee will most likely: A. exercise the option, receiving a […]
Finance Chapter 16 2 In a world with corporate taxes but no possibility of financial distress, the value of the firm is maximized when the
44. Assume an unlevered firm changes its capital structure to include $1 million in permanent debt at a 7% interest rate. The tax rate is 35%. According to MM I with taxes, the value of the firm will increase by […]