Archives: Quiz
978-0134083308 Chapter 8 Part 4
28 13) An internal rate of return (IRR) is the discount rate that A) represents the minimal rate required to create a positive net present value. B) is the minimal rate of return an investor will accept. C) provides an […]
978-0134083308 Chapter 8 Part 3
21 27) In applying the variable-growth dividend valuation model to a company’s stock, analysts frequently define the growth rate, g, as equal to A) ROE multiplied by the firm’s retention rate. B) ROE divided by the dividend payout ratio. C) […]
978-0134083308 Chapter 8 Part 2
11 5) Both beta and the expected return on the market portfolio incorporate risk into the Capital Asset Pricing Model. Answer: TRUE Learning Outcome: F-09 Discuss the fundamentals of stocks and how to value them AACSB: 3 Analytical thinking Question […]
978-0134083308 Chapter 8 Part 1
1 Fundamentals of Investing, 13e (Smart) Chapter 8 Stock Valuation 8.1 Learning Goal 1 1) The most important factors influencing a stock’s current price are its past earnings and dividends. Answer: FALSE Learning Outcome: F-09 Discuss the fundamentals of stocks […]
978-0134083308 Chapter 7 Part 4
29 40) Over the last 5 years, Spencer Inc.’s earnings have grown at an annual average rate of 9%. Current EPS are $1.80 and the company’s stock recently sold for $36 per share. Spencer’s PEG ratio is A) .05 B) […]
978-0134083308 Chapter 7 Part 3
21 Copyright © 2017 Pearson Education, Inc. 13) Return on equity can be expressed mathematically as “(net profit margin)(total asset turnover)(equity multiplier).” AACSB: 3 Analytical thinking Question Status: Previous Edition Learning Goal: Learning Goal 5 14) A high P/E ratio […]
978-0134083308 Chapter 7 Part 2
11 7) Investors who conduct industry analyses typically favor companies with strong market positions over companies with less secure market positions because firms with strong market positions tend to I. be price leaders. II. benefit more from economies of scale. […]
978-0134083308 Chapter 7 Part 1
1 Fundamentals of Investing, 13e (Smart) Chapter 7 Analyzing Common Stocks 7.1 Learning Goal 1 1) The top down approach to security analysis starts with top management and then examines production and marketing strategies. Answer: FALSE Learning Outcome: F-09 Discuss […]
978-0134083308 Chapter 6 Part 4
31 15) Investors seeking current income that tends to increase over time should purchase A) corporate bonds. B) income stocks. C) growth stocks. D) speculative stocks. Answer: B Learning Outcome: F-09 Discuss the fundamentals of stocks and how to value […]
978-0134083308 Chapter 6 Part 3
21 15) You are given the following information on a company. Which one of the following statements is correct based on the information provided? A) The market price is $21.34 per share. B) The investment value is $2.67 per share. […]
978-0134083308 Chapter 6 Part 2
11 6) Stock held in treasury is a means of increasing the number of shares outstanding. Answer: FALSE Learning Outcome: F-09 Discuss the fundamentals of stocks and how to value them AACSB: 8 Application of knowledge (Able to translate knowledge […]
978-0134083308 Chapter 6 Part 1
1 Fundamentals of Investing, 13e (Smart) Chapter 6 Common Stocks 6.1 Learning Goal 1 1) Every shareholder is a part owner of the firm and, as such, has a direct claim on a portion of the firm’s assets. Answer: FALSE […]
978-0134083308 Chapter 5 Part 4
28 10) Investors are rewarded for assuming A) total risk. B) diversifiable risk. C) nondiversifiable risk. D) any type of risk. Answer: C Learning Outcome: F-11 Explain the relationship between risk and return in capital markets AACSB: 8 Application of […]
978-0134083308 Chapter 5 Part 3
21 6) The risk premium to be used in the Capital Asset Pricing Model is calculated as (rrf-rm). Answer: FALSE Learning Outcome: F-11 Explain the relationship between risk and return in capital markets AACSB: 3 Analytical thinking Question Status: New […]
978-0134083308 Chapter 5 Part 2
11 6) A beta of 0.5 means that a stock is half as risky the overall market. Answer: TRUE Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and its role in shaping investment choices AACSB: 3 […]
978-0134083308 Chapter 5 Part 1
1 Fundamentals of Investing, 13e (Smart) Chapter 5 Modern Portfolio Concepts 5.1 Learning Goal 1 1) Portfolio objectives should be established before beginning to invest. Answer: TRUE Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets and […]
978-0134083308 Chapter 4 Part 4
31 Copyright © 2017 Pearson Education, Inc. 10) Which of the following choices is in the correct order from less risk to more risk? A) corporate bonds, certificates of deposit, mutual funds that invest in stock, common stock B) certificates […]
978-0134083308 Chapter 4 Part 3
21 16) If a stock is purchased at the beginning of a year, a single dividend is paid at the end of the year and the stock is sold immediately after the dividend has been received. In this case A) […]
978-0134083308 Chapter 4 Part 2
11 3) If the risk-free rate of return is less than the inflation rate, the real rate of return is negative. Answer: TRUE Learning Outcome: F-05 Explain what determines interest rates and how changes in rates influence investment choices AACSB: […]
978-0134083308 Chapter 4 Part 1
1 Fundamentals of Investing, 13e (Smart) Chapter 4 Return and Risk 4.1 Learning Goal 1 1) Investors can be confidently predict future returns on an investment by studying its past performance. Answer: FALSE Learning Outcome: F-11 Explain the relationship between […]
978-0134083308 Chapter 3 Part 5
37 38) Angela placed a stop-limit order to sell 100 shares of RST stock at $28 when the market price of RST was $31. Shortly after Angela placed her order, trading on RST was halted due to a pending news […]
978-0134083308 Chapter 3 Part 4
31 24) Heather places an order to buy 525 shares of stock. This is an order for A) five round lots and one odd lot. B) 21 round lots of 25. C) one odd lot. D) five hundred round lots […]
978-0134083308 Chapter 3 Part 3
21 5) Stocks held in street name can be quickly sold online or by telephone. Answer: TRUE Learning Outcome: F-01 Describe the different financial markets and the role of the financial managers AACSB: 8 Application of knowledge (Able to translate […]
978-0134083308 Chapter 3 Part 2
11 23) Current price information is found in which of the following? I. Dow Theory Letters II. Yahoo!Finance III. CNBC TV website IV. Hulbert Financial Digest A) II and III only B) I, II and III only C) II, III […]
978-0134083308 Chapter 3 Part 1
1 Fundamentals of Investing, 13e (Smart) Chapter 3 Investment Information and Securities Transactions 3.1 Learning Goal 1 1) Most brokers charge higher commissions for on-line trades than for telephone transactions. Answer: FALSE Learning Outcome: F-01 Describe the different financial markets […]
978-0134083308 Chapter 2 Part 4
29 7) The minimum initial margin requirement for both long and short positions is set by the Federal Reserve Board and currently is 50%. Answer: TRUE Learning Outcome: F-11 Explain the relationship between risk and return in capital markets AACSB: […]
978-0134083308 Chapter 2 Part 3
21 9) Which of the following can be encountered when investing in foreign markets? I. foreign taxation of dividends II. different accounting standards for financial disclosure III. restrictions on types of investments IV. illiquid markets A) II and III only […]
978-0134083308 Chapter 2 Part 2
11 14) Market makers in dealer markets A) bring sellers and buyers together by matching offers. B) earn commissions paid by the sellers of securities. C) buy securities at a bid price and hope to resell them at a higher […]
978-0134083308 Chapter 2 Part 1
1 Fundamentals of Investing, 13e (Smart) Chapter 2 Securities Markets and Transactions 2.1 Learning Goal 1 1) Stocks, bonds and mutual fund shares are bought and sold in the capital market. Answer: TRUE Learning Outcome: F-01 Describe the different financial […]
978-0134083308 Chapter 1 Part 3
19 1.5 Learning Goal 5 1) U.S. Treasury Bills mature in 1 year or less. Answer: TRUE Learning Outcome: F-01 Describe the different financial markets and the role of the financial managers AACSB: 8 Application of knowledge (Able to translate […]
978-0134083308 Chapter 1 Part 2
11 4) Investors can postpone or avoid income taxes by investing through Individual Retirement Accounts. Answer: TRUE Learning Outcome: F-01 Describe the different financial markets and the role of the financial managers AACSB: 8 Application of knowledge (Able to translate […]
978-0134083308 Chapter 1 Part 1
1 Fundamentals of Investing, 13e (Smart) Chapter 1 The Investment Environment 1.1 Learning Goal 1 1) A non-interest bearing checking account is still considered an investment. Answer: FALSE Learning Outcome: F-12 Discuss the implications of systematic risk in financial markets […]
978-0134083285 Chapter 17 Part 5
38 16) The purpose of work-in-process inventory is to ensure that machine failures and work stoppages in one operation do not affect other operations. Answer: TRUE Diff: 2 Page Ref: W-18 Keywords: Work-In-Process Inventory Learning Obj.: L.O. 17.3 AACSB: Reflective […]
978-0134083285 Chapter 17 Part 4
31 13) The terms of sale identify the possible discount for early payment, the discount period, and the total credit period. Answer: TRUE Diff: 1 Page Ref: W-15 Keywords: Terms of Sale Learning Obj.: L.O. 17.2 AACSB: Reflective Thinking 14) […]
978-0134083285 Chapter 17 Part 3
21 95) Which of the following is the least liquid? A) U.S. Treasury bills B) commercial paper C) money-market mutual funds D) federal agency securities Answer: B Diff: 2 Page Ref: W-13 Keywords: Commercial Paper, Liquidity Learning Obj.: L.O. 17.1 […]
978-0134083285 Chapter 17 Part 2
11 58) A company is technically insolvent when A) cash outflows in a given period are greater than cash inflows. B) earnings before interest payments are less than the interest payments. C) it lacks the necessary liquidity to promptly pay […]
978-0134083285 Chapter 17 Part 1
1 Foundations of Finance, 9e (Keown/Martin/Petty) Chapter 17 Cash, Receivables, and Inventory Management Learning Objective 17.1 1) Near-cash assets consist of marketable securities and accounts receivable. Answer: FALSE Diff: 1 Page Ref: W-2 Keywords: Near-cash Assets Learning Obj.: L.O. 17.1 […]
978-0134083285 Chapter 16 Part 3
20 6) The law of one price suggests that all of the following will have the same price in different countries EXCEPT A) oil. B) grain. C) fresh vegetables. D) silver. Answer: C Diff: 1 Page Ref: 527 Keywords: Law […]
978-0134083285 Chapter 16 Part 2
11 46) Buying and selling in more than one market to make a riskless profit is called A) profit-maximization. B) arbitrage. C) international trading. D) cannot be determined from the above information Answer: B Diff: 2 Page Ref: 520 Keywords: […]
978-0134083285 Chapter 16 Part 1
1 Foundations of Finance, 9e (Keown/Martin/Petty) Chapter 16 International Business Finance Learning Objective 16.1 1) Compared with other developed countries, the U.S. is particularly reliant on foreign trade for self– subsistence. Answer: FALSE Diff: 1 Page Ref: 516 Keywords: Foreign […]
978-0134083285 Chapter 15 Part 5
39 74) Dazzly Diamond Corp. called for credit at the Home Alone Bank of Paris, TX. The terms included a $35,000 maximum loan with interest of 1 percent over prime, and the agreement also requires a 15% compensating balance throughout […]
978-0134083285 Chapter 15 Part 4
31 52) Crawley, Inc. has a line of credit with HNC Bank that allows the company to borrow up to $800,000 at an interest rate of 12 percent. However, Crawley, Inc. must keep a compensating balance of 18 percent of […]
978-0134083285 Chapter 15 Part 3
21 8) Major sources of secured credit include commercial banks, finance companies, and factors. Answer: TRUE Diff: 2 Page Ref: 505 Keywords: Secured Credit, Commercial Banks, Finance Companies, Factors Learning Obj.: L.O. 15.5 AACSB: Reflective Thinking 9) The cost of […]
978-0134083285 Chapter 15 Part 2
11 13) Total debt must always be equal to the sum of temporary, permanent, and spontaneous sources of financing. Answer: FALSE Diff: 1 Page Ref: 490 Keywords: Temporary Financing, Permanent Financing, Spontaneous Financing Learning Obj.: L.O. 15.2 AACSB: Reflective Thinking […]
978-0134083285 Chapter 15 Part 1
1 Foundations of Finance, 9e (Keown/Martin/Petty) Chapter 15 Working-Capital Management Learning Objective 15.1 1) Management of a firm’s liquidity involves management of the firm’s investment in current assets as well as its mix of long-term capital. Answer: FALSE Diff: 1 […]
978-0134083285 Chapter 14 Part 5
41 30) Plato Industries’ projected sales for the first six months of 2012 are given below: Jan. $250,000 April $300,000 Feb. $340,000 May $350,000 Mar. $280,000 June $380,000 20% of sales are collected in cash at time of sale, 50% […]
978-0134083285 Chapter 14 Part 4
31 9) Under what circumstances does a firm violate the basic relationship underlying the percent of sales forecast method? Answer: The percent of sales method of financial forecasting provides reasonable estimates of a firm’s financing requirements only when asset requirements […]
978-0134083285 Chapter 14 Part 3
21 81) Lindsey Insurance Co. has current sales of $10 million and predicts next year’s sales will grow to $14 million. Current assets are $3 million and fixed assets are $4 million. The firm’s net profit margin is 7 percent […]
978-0134083285 Chapter 14 Part 2
11 54) Gerentology Associates, a highly profitable company, is considering two growth strategies, one that will achieve sales growth of 20% in one year, and the other that will achieve 20% growth in sales, but over a 4-year time frame. […]
978-0134083285 Chapter 14 Part 1
1 Foundations of Finance, 9e (Keown/Martin/Petty) Chapter 14 Short-Term Financial Planning Learning Objective 14.1 1) The key ingredient in a firm‘s financial planning is an accurate sales forecast. Answer: TRUE Diff: 1 Page Ref: 467 Keywords: Financial Planning, Sales Forecast […]