Archives: Quiz
978-1259918940 Test Bank Chapter 26 Part 3
81) Quiet Press has an accounts receivable period of 38 days. The estimated quarterly sales for this year, starting with the first quarter, are $1,200, $1,400, $1,900, and $1,200, respectively. How much does the firm expect to collect in the […]
978-1259918940 Test Bank Chapter 26 Part 2
59) Heritage Farms has sales of $1.62 million with costs of goods sold equal to 78 percent of sales. The average inventory is $369,000, accounts payable average $438,000, and receivables average $147,000. How long is the cash cycle? A) 13.19 […]
978-1259918940 Test Bank Chapter 26 Part 1
Corporate Finance, 12e (Ross) Chapter 26 Short-Term Finance and Planning 1) Net working capital is defined as the: A) current assets of a business. B) difference between current assets and current liabilities. C) present value of short-term cash flows. D) […]
978-1259918940 Test Bank Chapter 25 Part 2
40) Credit default swaps: A) have no standardized agreement template. B) are traded on international exchanges. C) are traded only on national exchanges. D) are rarely used in actual practice. E) must follow the structure outlined by the SEC. Answer: […]
978-1259918940 Test Bank Chapter 25 Part 1
Corporate Finance, 12e (Ross) Chapter 25 Derivatives and Hedging Risk 1) A derivative is a financial instrument with a value derived from a: A) regulatory body such as the FTC. B) primitive or underlying asset. C) specified risk. D) negotiated […]
978-1259918940 Test Bank Chapter 24 Part 2
38) A firm has 600 shares of stock and 100 warrants outstanding. Assume the warrants are all exercised. The market value of the firm’s assets is $25,000 and the market value of its debt is $8,000. Each warrant grants its […]
978-1259918940 Test Bank Chapter 24 Part 1
Corporate Finance, 12e (Ross) Chapter 24 Warrants and Convertibles 1) A warrant bestows on its owner the: A) obligation to sell securities directly to the issuer at a fixed price for a stated period of time. B) right to purchase […]
978-1259918940 Test Bank Chapter 23 Part 2
28) I. M. Not. Greedy has been granted options on 50,000 shares. The stock is currently trading at $17 a share and the options are at the money. The volatility of the stock returns averages 16 percent. The options mature […]
978-1259918940 Test Bank Chapter 23 Part 1
Corporate Finance, 12e (Ross) Chapter 23 Options and Corporate Finance: Extensions and Applications 1) A ________ period prohibits executives from exercising their options for a stated period of time. A) investing B) freeze-out C) valuation D) guaranteed E) strike Answer: […]
978-1259918940 Test Bank Chapter 22 Part 3
80) Several rumors concerning Wyslow stock have started circulating. These rumors are causing the market price of the stock to become increasingly volatile. Given this situation, you decide to buy both a one-month put and a one-month call option on […]
978-1259918940 Test Bank Chapter 22 Part 2
47) An increase in which one of the following will decrease the value of a call option? A) Interest rate B) Exercise price C) Time to expiration D) Stock volatility E) Underlying asset price Answer: B Difficulty: 1 Easy Section: […]
978-1259918940 Test Bank Chapter 22 Part 1
Corporate Finance, 12e (Ross) Chapter 22 Options and Corporate Finance 1) A financial contract that provides its owner with the right, but not the obligation, to buy or sell a specified asset at an agreed-upon price on or before a […]
978-1259918940 Test Bank Chapter 21 Part 2
32) Which one of the following is probably the best reason for leasing instead of buying? A) Increased ROA B) Circumvented expenditure controls C) One hundred percent financing D) Tax reduction E) Increased uncertainty Answer: D Difficulty: 1 Easy Section: […]
978-1259918940 Test Bank Chapter 21 Part 1
Corporate Finance, 12e (Ross) Chapter 21 Leasing 1) In a direct lease arrangement, the owner of the asset is: A) either the lessee or the lessor. B) the lessee. C) the lessor. D) either the lessee or the manufacturer. E) […]
978-1259918940 Test Bank Chapter 20 Part 2
47) Arguments offered as explanations, with or without market evidence, as to why most U.S. equity issues are sold without rights include all the following except: A) underwriters buy at an agreed upon price and bear some risk of selling […]
978-1259918940 Test Bank Chapter 20 Part 1
Corporate Finance, 12e (Ross) Chapter 20 Raising Capital 1) The market for venture capital refers to the: A) private financial marketplace for servicing new, often high-risk firms. B) corporate bond market. C) market for selling unsubscribed rights. D) market for […]
978-1259918940 Test Bank Chapter 19 Part 2
52) Alpha Co. is paying a $.72 per share dividend today. There are 138,000 shares outstanding with a par value of $1 per share. As a result of this dividend, the: A) retained earnings will decrease by $99,360. B) retained […]
978-1259918940 Test Bank Chapter 19 Part 1
Corporate Finance, 12e (Ross) Chapter 19 Dividends and Other Payouts 1) Nu Tech is a technology firm with good growth prospects. The firm wishes to do something to acknowledge the loyalty of its shareholders but needs all its available cash […]
978-1259918940 Test Bank Chapter 18 Part 2
32) Jensen’s has a total value of $548,000 and debt valued at $262,000. What is the weighted average cost of capital if the aftertax cost of debt is 7.2 percent and the cost of equity is 12.6 percent? A) 11.13 […]
978-1259918940 Test Bank Chapter 18 Part 1
Corporate Finance, 12e (Ross) Chapter 18 Valuation and Capital Budgeting for the Levered Firm 1) The acronym APV stands for: A) applied present value. B) all-purpose variable. C) accepted project verified. D) adjusted present value. E) applied projected value. Answer: […]
978-1259918940 Test Bank Chapter 17 Part 2
36) Which three factors are generally considered to be the most important when determining a target debt-equity ratio? A) Taxes, asset types, and inflation rate B) Asset types, current operating income, and inflation rates C) Taxes, current operating income, and […]
978-1259918940 Test Bank Chapter 17 Part 1
Corporate Finance, 12e (Ross) Chapter 17 Capital Structure: Limits to the Use of Debt 1) Which one of these lowers cash flows? A) Decreased use of leverage B) Decreased costs C) Increased sales due to an improved economy D) The […]
978-1259918940 Test Bank Chapter 16 Part 2
41) A firm has a debt-equity ratio of .48. Its cost of debt is 7 percent and its WACC is 10.8 percent. What is its cost of equity if there are no taxes or other imperfections? A) 10.97 percent B) […]
978-1259918940 Test Bank Chapter 16 Part 1
Corporate Finance, 12e (Ross) Chapter 16 Capital Structure: Basic Concepts 1) The firm’s capital structure refers to the: A) mix of current and fixed assets a firm holds. B) amount of capital invested in the firm. C) amount of dividends […]
978-1259918940 Test Bank Chapter 15 Part 2
32) Which type of bond grants the bond holder the right to force the bond’s issuer to repay the bond at a stated price given that a certain situation(s) occurs? A) Put bond B) Cat bond C) NoNo bond D) […]
978-1259918940 Test Bank Chapter 15 Part 1
Corporate Finance, 12e (Ross) Chapter 15 Long-Term Financing 1) Which group has the ultimate control over a corporation? A) Bondholders B) Classified board C) Shareholders D) Directors E) Chief executive officer Answer: C Difficulty: 1 Easy Section: 15.1 Some Features […]
978-1259918940 Test Bank Chapter 14 Part 2
30) Serial correlation: A) measures the relationship between the current return on a security with that of a second security. B) involves multiple securities within the same industry. C) indicates a tendency for continuation when the correlation is positive. D) […]
978-1259918940 Test Bank Chapter 14 Part 1
Corporate Finance, 12e (Ross) Chapter 14 Efficient Capital Markets and Behavioral Challenges 1) Which one of these is the best means of creating a valuable financing opportunity? A) Reduce a tax subsidy B) Fool investors in an efficient market C) […]
978-1259918940 Test Bank Chapter 13 Part 2
45) The cost of equity for RJ Corporation is 8.4 percent and the debt-equity ratio is .6. The expected return on the market is 10.4 percent and the risk-free rate is 3.8 percent. Using the common assumption for the debt […]
978-1259918940 Test Bank Chapter 13 Part 1
Corporate Finance, 12e (Ross) Chapter 13 Risk, Cost of Capital, and Valuation 1) The cost of capital used to compute the present value of a project should be the rate that can be earned on: A) the overall market portfolio. […]
978-1259918940 Test Bank Chapter 12 Part 2
31) If you were to consider the CAPM as a one-factor model, then the factor would be the: A) rate of inflation. B) market risk premium. C) GNP. D) risk-free rate. E) individual beta of each security or portfolio. Answer: […]
978-1259918940 Test Bank Chapter 12 Part 1
Corporate Finance, 12e (Ross) Chapter 12 An Alternative View of Risk and Return: The Arbitrage Pricing Theory 1) In the equation R = E(R) + U, the three symbols, from left to right, stand for: A) average return, expected return, […]
978-1259918940 Test Bank Chapter 11 Part 3
79) The probability the economy will boom is 10 percent while the probability of a recession is 20 percent. Stock A is expected to return 15 percent in a boom, 9 percent in a normal economy, and lose 14 percent […]
978-1259918940 Test Bank Chapter 11 Part 2
54) You recently purchased a stock that is expected to earn 12.6 percent in a booming economy, 8.9 percent in a normal economy, and lose 5.2 percent in a recessionary economy. Each economic state is equally likely to occur. What […]
978-1259918940 Test Bank Chapter 11 Part 1
Corporate Finance, 12e (Ross) Chapter 11 Return, Risk, and the Capital Asset Pricing Model (CAPM) 1) Which one of these is a measure of the interrelationship between two securities? A) Covariance B) Duration C) Standard deviation D) Alpha E) Variance […]
978-1259918940 Chapter 10 A Stock Had Returns Of 12 Percent
46) You bought 600 shares of stock at $24.20 each. At the end of the year, you received a total of $720 in dividends, and your stock was worth a total of $15,678. What was your total dollar capital gain […]
978-1259918940 Test Bank Chapter 10 Part 1
Corporate Finance, 12e (Ross) Chapter 10 Lessons from Market History 1) Alpha Industries stock sold for $39 a share at the beginning of the year. During the year, the company paid a dividend of $3 a share and then ended […]
978-1259918940 Test Bank Chapter 9 Part 2
49) DC Motors recently paid $1.10 as its annual dividend. Future dividends are projected at $1.06, $1.02, and $1.00 over the next three years, respectively. After that, the dividend is expected to decrease by 2 percent annually. What is one […]
978-1259918940 Test Bank Chapter 9 Part 1
Corporate Finance, 12e (Ross) Chapter 9 Stock Valuation 1) Which one of these applies to the dividend growth model of stock valuation? A) The dividend must be for the same time period as the stock price. B) The growth rate […]
978-1259918940 Test Bank Chapter 8 Part 2
53) Chocolate and More offers a bond with a coupon rate of 6 percent, semiannual payments, and a yield to maturity of 7.73 percent. The bonds mature in 9 years. What is the market price of a $1,000 face value […]
978-1259918940 Test Bank Chapter 8 Part 1
Corporate Finance, 12e (Ross) Chapter 8 Interest Rates and Bond Valuation 1) A bond that makes no coupon payments and is initially priced at a deep discount is called a ________ bond. A) Treasury B) municipal C) floating-rate D) junk […]
978-1259918940 Test Bank Chapter 7 Part 3
75) An investment has an initial cash outflow of $210,000 for fixed assets that will be depreciated straight-line to zero over the 4-year life of the project. The sales price is $19.95 a unit, annual fixed costs are $237,000, the […]
978-1259918940 Test Bank Chapter 7 Part 2
52) A project has a projected sales price of $99 a unit, variable costs per unit of $58, annual fixed costs of $238,000, and annual depreciation of $139,000. The tax rate is 22 percent. What is the contribution margin for […]
978-1259918940 Test Bank Chapter 7 Part 1
Corporate Finance, 12e (Ross) Chapter 7 Risk Analysis, Real Options, and Capital Budgeting 1) An analysis of what happens to the estimate of net present value when only one input variable is changed is called ________ analysis. A) forecasting B) […]
978-1259918940 Test Bank Chapter 6 Part 3
72) Samoa’s Tools has annual sales of $760,000 and a profit margin of 8 percent. The annual depreciation expense is $50,000. What is the amount of the annual operating cash flow if the company has no long-term debt? A) $50,000 […]
978-1259918940 Test Bank Chapter 6 Part 2
49) The Galley purchased some 3-year MACRS property two years ago at a cost of $19,800. The MACRS rates are 33.33 percent, 44.44 percent, 14.82 percent, and 7.41 percent. The firm no longer uses this property so is selling it […]
978-1259918940 Test Bank Chapter 6 Part 1
Corporate Finance, 12e (Ross) Chapter 6 Making Capital Investment Decisions 1) The changes in a firm’s future cash flows that are a direct consequence of accepting a project are called ________ cash flows. A) incremental B) stand-alone C) opportunity D) […]
978-1259918940 Test Bank Chapter 5 Part 3
79) Project A has an initial cost of $75,000 and annual cash flows of $33,000 for three years. Project B costs $60,000 and has cash flows of $25,000, $30,000, and $25,000 for Years 1 to 3, respectively. Projects A and […]
978-1259918940 Test Bank Chapter 5 Part 2
55) Why do managers suggest that ignoring all cash flows following the required payback period is not a major flaw of the payback method of capital budgeting analysis? A) Payback is never used in real practice so it makes no […]
978-1259918940 Test Bank Chapter 5 Part 1
Corporate Finance, 12e (Ross) Chapter 5 Net Present Value and Other Investment Rules 1) The difference between the present value of an investment’s future cash flows and its initial cost is the: A) net present value. B) internal rate of […]