{"id":9525,"date":"2021-10-19T10:09:18","date_gmt":"2021-10-19T10:09:18","guid":{"rendered":"https:\/\/assignmenttutors.net\/blog\/american-public-university-finc400-quiz-1-8\/"},"modified":"2021-10-19T10:09:18","modified_gmt":"2021-10-19T10:09:18","slug":"american-public-university-finc400-quiz-1-8","status":"publish","type":"post","link":"https:\/\/assignmenttutors.net\/blog\/american-public-university-finc400-quiz-1-8\/","title":{"rendered":"American public university finc400 quiz 1-8"},"content":{"rendered":"
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Finc400 quiz 1-8<\/span><\/strong><\/p>\n

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art 1 of 1 – Week 1 Quiz<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/span><\/p>\n

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[removed]\u00a0A.capital structure.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.earnings volatility.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.sales, profit margins, and earnings.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The primary disadvantage of accrual accounting is that<\/span><\/p>\n

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[removed]\u00a0A.it does not match revenues and expenses in the period in which they are incurred.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.it does not appropriately measure accounting profit.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.it does not recognize accounts receivable.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.it does not adequately show the actual cash flow position of the firm<\/span><\/p>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Total assets of a firm are financed with liabilities and stockholders’ equity.<\/span><\/p>\n

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[removed]\u00a0True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

.<\/span><\/p>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Gross profit is equal to<\/span><\/p>\n

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[removed]\u00a0A.sales minus cost of goods sold.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.sales minus (selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.sales minus (cost of goods sold and selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.sales minus (cost of goods sold and depreciation expense).<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Ratios are used to compare different firms in the same industry.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Sarbanes-Oxley Act was passed in an effort to<\/span><\/p>\n

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[removed]\u00a0A.protect small business from large corporations dominating the market.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.ensure that partnerships divide profits among partners in a fair manner.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.guarantee outside auditors can control corporate accounting practices.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.control corrupt corporate behavior.<\/span><\/p>\n<\/td>\n

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uestion 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is not subtracted out in arriving at operating income?<\/span><\/p>\n

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[removed]\u00a0A.interest expense<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.cost of goods sold<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.depreciation<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.selling and administrative expense<\/span><\/p>\n<\/td>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is not a primary source of capital to the firm?<\/span><\/p>\n

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[removed]\u00a0A.assets<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.common stock<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.preferred stock<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.bonds<\/span><\/p>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A firm has $1,500,000 in its common stock account and $1,000,000 in its paid-in capital account. The firm issued 100,000 shares of common stock. What was the original issue price if only one stock issue has ever been sold?<\/span><\/p>\n

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[removed]\u00a0A.$35 per share<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.$25 per share<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$15 per share<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Not enough information to tell<\/span><\/p>\n<\/td>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Debt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.$60.00<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.$15.00<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$6.67<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.the market assigns a stock price independent of EPS and the P\/E ratio.<\/span><\/p>\n<\/td>\n

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Question 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The P\/E ratio is strongly related to the past performance of the firm.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Money markets would include which of the following securities?<\/span><\/p>\n

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[removed]\u00a0A.common stock and corporate bonds.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.treasury bills and commercial paper.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.certificates of deposit and preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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uestion 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Preferred stock is excluded from stockholders equity because it does not have full voting rights.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Sales minus cost of goods sold is equal to earnings before taxes.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n

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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Asset utilization ratios<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.relate balance sheet assets to income statement sales.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.measure how much cash is available for reinvestment into current assets.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.are most important to stockholders.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.measures the firm’s ability to generate a profit on sales.<\/span><\/p>\n<\/td>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The P\/E ratio provides no indication of investors’ expectations about the future of a company.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Question 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Asset utilization ratios relate balance sheet assets to income statement sales.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an outflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.profitable operations<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the sale of equipment<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.the sale of the company\u2019s common stock<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.the payment of cash dividends<\/span><\/p>\n<\/td>\n

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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.40%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B.12%<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0C.20%<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0D.25%<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

\n

4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The income statement is the major device for measuring the profitability of a firm over a period of time.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

\n

4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an inflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.funds spent in normal business operations<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B.the purchase of a new factory<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0C.the sale of the firm’s bonds<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0D.the retirement of the firm’s bonds<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 2<\/strong><\/p>\n

Question 1 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A lower price for the firm’s product will reduce the firm’s breakeven point.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 2 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Profit is generally adequate to finance significant growth.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 3 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.$100,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.$30,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.$15,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.$145,000<\/p>\n

\u00a0<\/p>\n

Question 4 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The break-even point can be calculated as<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.variable costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.total costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.variable cost times contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.fixed cost divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 6 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If fixed costs rise while other variables stay constant<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.degree of operating leverage increases.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.total profit declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these<\/p>\n

Question 7 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Operating leverage emphasizes the impact of using fixed assets in the business.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 8 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.is higher.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.is lower.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.is the same.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.can be either higher or lower.<\/p>\n

Question 9 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 10 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.decrease in inventory.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.increase in retained earnings.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.decrease in accounts payable.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.decrease in accounts receivable.<\/p>\n

\u00a0<\/p>\n

Question 11 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increase in sales and profits generates the necessary cash required for economic growth.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 13 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Pro forma financial statements are<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the most comprehensive means of financial forecasting.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.often required by prospective creditors.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.projections of financial statements for a future period.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these.<\/p>\n

Question 14 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) When the cost of raw materials is increasing, FIFO accounting<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.yields higher ending inventory values than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.produces higher unit sales than using LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.yields higher cost of goods sold than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these.<\/p>\n

Question 15 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) If sales volume exceeds the break-even point, the firm will experience<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.an operating loss.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.an operating profit.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.an increase in plant and equipment.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.an increase in stock price.<\/p>\n

\u00a0<\/p>\n

Question 16 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 17 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Leverage works best when volume is increasing.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 18 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

Question 19 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If the price per unit decreases because of competition but the cost structure remains the same<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.the degree of combined leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.the degree of financial leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these<\/p>\n

\u00a0<\/p>\n

Question 20 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Sales (100,000 units)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0 1,000,000<\/p>\n

Variable costs\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300,000<\/p>\n

Contribution margin\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0700,000<\/p>\n

Fixed manufacturing costs\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 200,000<\/p>\n

Operating income \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0500,000<\/p>\n

Interest\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a075,000<\/p>\n

Earnings before taxes\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 425,000<\/p>\n

Taxes (30%)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0127,500<\/p>\n

Net Income\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0\u00a0\u00a0\u00a0 297,500<\/p>\n

\u00a0<\/p>\n

Refer to the figure above. The Degree of Operating Leverage is<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.1.40x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.1.56x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.3.33x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.2.22x<\/p>\n

\u00a0<\/p>\n

Question 21 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 22 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) As the contribution margin rises, the breakeven point goes down.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 23 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In the percent-of-sales method, an increase in dividends<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.will increase required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.will decrease required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.has no effect on required new funds.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.more information is needed.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 24 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not true about leverage?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.operating leverage influences the top half of the income statement, determining EBIT.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.financial leverage deals with the bottom half of the income statement, determining EPS\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT.\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.none of these<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

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\u00a0<\/p>\n

Question 25 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The finance department should work independently without the input of other departments because there may be significant biases when creating proformas.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 3<\/span><\/p>\n

FINC400 quiz 3<\/span><\/h2>\n

FINC400<\/span><\/strong><\/p>\n

\u00a0<\/span><\/p>\n

Week 4<\/span><\/p>\n

\u00a0<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.need more information<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Financial capital does not include<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]<\/span>\u00a0<\/span>D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) An annuity may be defined as<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/span><\/a><\/span><\/p>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.decreases.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.remains the same.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.increases.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) Within the capital asset pricing model<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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When inflation rises, preferred stock prices fall.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.need more information.<\/span><\/p>\n<\/td>\n

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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.It influences their stock price<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
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[removed]\u00a0A.4.41%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.9.0%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.1.89%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.6.43%<\/span><\/p>\n<\/td>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

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[removed]\u00a0A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Future value of an annuity<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.Present value of $1<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Future value of $1<\/span><\/p>\n<\/td>\n

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\u00a0<\/p>\n

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Week 4<\/span><\/p>\n

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FINC400<\/span><\/strong><\/p>\n

Week 4<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]D.need more information<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Financial capital does not include<\/span><\/p>\n

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[removed]A.stock.<\/span><\/p>\n<\/td>\n

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[removed]B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]C.preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

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[removed]A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) An annuity may be defined as<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

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[removed]B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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[removed]C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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[removed]D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/a><\/span><\/p>\n\n\n\n
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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.decreases.<\/span><\/p>\n<\/td>\n

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[removed]B.remains the same.<\/span><\/p>\n<\/td>\n

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[removed]C.increases.<\/span><\/p>\n<\/td>\n

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[removed]D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n\n\n\n
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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) Within the capital asset pricing model<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

When inflation rises, preferred stock prices fall.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]D.need more information.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n\n\n\n
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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.It influences their stock price<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

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[removed]D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
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[removed]A.4.41%<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.9.0%<\/span><\/p>\n<\/td>\n

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[removed]C.1.89%<\/span><\/p>\n<\/td>\n

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[removed]D.6.43%<\/span><\/p>\n<\/td>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.Future value of an annuity<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.Present value of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.Future value of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 5<\/span><\/p>\n

\u00a0<\/p>\n

FINC400<\/span><\/strong><\/p>\n

Week 5 Quiz” for FINC400 I004 Sum 13<\/span><\/strong><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.expected value.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.internal rate of return.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.standard deviation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.coefficient of variation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a characteristic of beta?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.Beta measures only the volatility of returns on an individual bond relative to a bond market index.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.A beta of 1.0 is of equal risk with the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.A beta of greater than 1.0 has less risk than the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Two of the above are true.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital rationing<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.is a way of preserving the assets of the firm over the long term.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.is a less than optimal way to arrive at capital budgeting decisions.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.assures stockholder wealth maximization.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.assures maximum potential profitability.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is only a concern of finance and accounting personnel.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Even though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the planner to:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n
\n

[removed]\u00a0A.reduce the standard deviations of projects.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.test possible changes in each variable.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.deal with the uncertainty in forecasting outcome<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

D.b and c.<\/span><\/p>\n\n\n\n
\n

Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital is assumed to contain no risk for the firm.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If three investment alternatives all have some degree of risk and different expected returns, which of the following measures could best be used to rank the risk levels of the projects?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.Coefficient of correlation<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.Coefficient of variation<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.Standard deviation of returns<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Net present value<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

To find the exact internal rate of return for projects with uneven cash flows, we can interpolate between two present value annuity factors from Appendix D.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Projects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a false statement?<\/span><\/p>\n

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[removed]\u00a0A.Risky investments may produce large losses.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Risky investments may produce large gains.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.The coefficient of variation is a risk measure.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Risk-averse investors cannot be induced to invest in risky assets.<\/span><\/p>\n<\/td>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Regardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Cash flow can be said to equal<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.operating income less taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.operating income less taxes.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.operating income before depreciation and taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.operating income after taxes minus depreciation.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

There are several disadvantages to the payback method, among them:<\/span><\/p>\n

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[removed]\u00a0A.payback ignores the time value of money.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.payback emphasizes receiving money back as fast as possible for reinvestment.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.payback is Basic to use and to understand.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.payback can be used in conjunction with time adjusted methods of evaluation.<\/span><\/p>\n<\/td>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.assumes that cash flows are reinvested at the project’s internal rate of return.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.concentrates on the liquidity aspects of investment projects.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.none of these.<\/span><\/p>\n<\/td>\n

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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the cost of capital increases<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.fewer projects are accepted.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.more projects are accepted.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.project selection remains unchanged.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.None of these.<\/span><\/p>\n<\/td>\n

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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The capital budgeting decisions of a firm will have no effect on the share price of the common stock.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False-<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The payback method considers all cash inflows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is primarily concerned with<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.capital formation in the economy.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.planning future financing needs.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.evaluating investment alternatives.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.minimizing the cost of capital.<\/span><\/p>\n<\/td>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following statements about the “payback method” is true?<\/span><\/p>\n

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[removed]\u00a0A.The payback method considers cash flows after the payback has been reached.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.The payback method does not consider the time value of money.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.The payback method uses discounted cash-flow techniques.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.The payback method generally leads to the same decision as other investment selection methods<\/span><\/p>\n<\/td>\n

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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the analyst to test possible changes in the variables used in the model.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The first step in the capital budgeting process is<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.collection of data.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.idea development.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.assign probabilities.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.determine cashflow.<\/span><\/p>\n<\/td>\n

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Week 7<\/p>\n

Question 1 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A bond’s rating can depend on all of the following except<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the corporation’s debt-equity ratio. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the corporation’s size. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the ability of the firm to make interest payments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the coupon rate on the bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 2 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The effect of a rights offering on a stockholder is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to increase his\/her wealth. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to increase his\/her wealth only if the new stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to decrease his\/her wealth unless the stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to decrease his\/her wealth if nothing is done. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 3 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock dividends are a deductible expense for a corporation.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 4 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A “subordinated debenture”<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must be transferred with the bond to which it is attached. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.is used mainly by railroad companies and usually specifies equipment as collateral. \u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.entitles the bondholder to purchase shares of common stock at a specific price. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.is an unsecured bond with an inferior claim on assets in the event of liquidation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 6 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stockholders always have preemptive rights when new issues of stock are offered.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 7 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Debentures are commonly issued by small companies.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 8 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.higher, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.higher, lower \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.lower, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.lower, lower<\/p>\n

Question 9 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Bondholders never have any control over the actions of a firm.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 10 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The increasing sophistication of individual investors has decreased the role of institutional investors in the stock market.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 11 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The term debenture refers to<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.long-term, secured debt. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long-term, unsecured debt. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the after-acquired property clause. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a 100-page document covering the specific terms of the offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 13 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 14 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

With regard to interest rates and bond prices it can be said that<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.long-term rates are more volatile than short-term rates. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a decrease in interest rates will cause bond prices to fall. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 15 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increasing proportion of shares in the U.S. are owned by:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.individual investors. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.corporations (Treasury Stock). \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.institutions. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.governments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 16 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Under normal operating conditions, the board of directors is elected by<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the common stockholders. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the preferred stockholders. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the bondholders. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 17 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures.<\/p>\n

Question 18 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The higher the bond rating<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the higher the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the lower the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the higher the call premium. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the lower the call premium \u00a0\u00a0\u00a0<\/p>\n

Question 19 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The purpose of cumulative voting is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to maintain majority control of the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to allow minority stockholders the possibility of a voice on the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to obstruct unfriendly mergers and takeover efforts. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to prevent the dilution of common stock through pre-emptive rights offerings. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 20 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 21 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock is the least used of all long-term securities because<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.investors can get higher returns after taxes in other investments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.flotation costs are extremely high compared to bonds. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 22 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not a form of yield on a bond?<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.coupon rate (nominal yield) \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.current yield<\/p>\n

C.dividend yield \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.yield to maturity \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 23 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

There are a number of possible advantages to a rights offering:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.current shareholders are protected against dilution. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the firm has a built-in market of knowledgeable investors. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.distribution costs are lower than a public offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 24 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The yield to maturity is the internal rate of return on a bond.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 25 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

When a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 8<\/strong><\/p>\n

Question 1 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Cash flow is equal to earnings before taxes minus depreciation.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 2 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following would not be included in the balance sheet investment account?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.stocks of other corporations <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long term government bonds \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.marketable securities \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.investments in other corporations \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 3 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.capital structure. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.earnings volatility. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.sales, profit margins, and earnings. \u00a0\u00a0 <\/strong><\/p>\n

D.all of these. \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 4 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.40% \u00a0 <\/strong><\/p>\n

B.12% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.20% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.25% \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 5 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) The break-even point can be calculated as<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.variable costs divided by contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.total costs divided by contribution margin. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.variable cost times contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.fixed cost divided by contribution margin. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 6 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 7 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/strong><\/p>\n

A.$100,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$30,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$15,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$145,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 8 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 3 of 6 – Week 1 Practice Quiz \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 9 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

For most firms, the primary motive for holding cash is the transaction motive.A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 10 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

A Just-In-Time (JIT) inventory management program has all but which of the following requirements?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.quality production \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.large safety stocks \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.close ties between suppliers, manufacturers, and customers \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.minimizing inventory levels <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 11 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Modos Company has deposited $3,500 in checks received from customers. It has written $1,400 in checks to its suppliers. The initial bank and book balance was $600. If $1,600 of its customer\u2019s checks have cleared but only $600 of its own, calculate its float.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.$1,200 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$1,100 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$300 \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$700 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 12 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Even during slack loan periods, banks will never loan out money at an interest rate lower than the prime rate because the prime rate is their best rate.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Part 4 of 6 – Final Exam 20.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 13 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 14 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.decreases. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.remains the same. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.increases. \u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Not enough information to tell. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 15 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) Within the capital asset pricing model<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the risk-free rate is usually higher than the return in the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the higher the beta the lower the required rate of return. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.beta measures the volatility of an individual stock relative to a stock market index. \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above are true. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

Question 16 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.4.41% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.9.0% <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.1.89% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

D.6.43% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 17 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If the yield to maturity on a bond is greater than the coupon rate, you can assume:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.interest rates have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the price is below the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the price is above the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.risk premiums have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 5 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 18 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.assumes that cash flows are reinvested at the project’s internal rate of return. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.concentrates on the liquidity aspects of investment projects. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.none of these. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 19 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

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Question 20 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

There are several disadvantages to the payback method, among them:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.payback ignores the time value of money. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.payback emphasizes receiving money back as fast as possible for reinvestment. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.payback is Basic to use and to understand. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.payback can be used in conjunction with time adjusted methods of evaluation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

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Question 21 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following is a characteristic of beta?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.A beta of 1.0 is of equal risk with the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.A beta of greater than 1.0 has less risk than the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Two of the above are true. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Part 6 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 22 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

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Question 23 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Bondholders never have any control over the actions of a firm.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 24 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury s<\/strong><\/p>\n\n\n\n
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Finc400 quiz 1-8<\/span><\/strong><\/p>\n

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art 1 of 1 – Week 1 Quiz<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/span><\/p>\n

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[removed]\u00a0A.capital structure.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.earnings volatility.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.sales, profit margins, and earnings.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The primary disadvantage of accrual accounting is that<\/span><\/p>\n

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[removed]\u00a0A.it does not match revenues and expenses in the period in which they are incurred.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.it does not appropriately measure accounting profit.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.it does not recognize accounts receivable.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.it does not adequately show the actual cash flow position of the firm<\/span><\/p>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Total assets of a firm are financed with liabilities and stockholders’ equity.<\/span><\/p>\n

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[removed]\u00a0True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

.<\/span><\/p>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Gross profit is equal to<\/span><\/p>\n

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[removed]\u00a0A.sales minus cost of goods sold.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.sales minus (selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.sales minus (cost of goods sold and selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.sales minus (cost of goods sold and depreciation expense).<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Ratios are used to compare different firms in the same industry.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Sarbanes-Oxley Act was passed in an effort to<\/span><\/p>\n

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[removed]\u00a0A.protect small business from large corporations dominating the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.ensure that partnerships divide profits among partners in a fair manner.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.guarantee outside auditors can control corporate accounting practices.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.control corrupt corporate behavior.<\/span><\/p>\n<\/td>\n

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uestion 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is not subtracted out in arriving at operating income?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.interest expense<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.cost of goods sold<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.depreciation<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.selling and administrative expense<\/span><\/p>\n<\/td>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is not a primary source of capital to the firm?<\/span><\/p>\n

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[removed]\u00a0A.assets<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.common stock<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.preferred stock<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.bonds<\/span><\/p>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A firm has $1,500,000 in its common stock account and $1,000,000 in its paid-in capital account. The firm issued 100,000 shares of common stock. What was the original issue price if only one stock issue has ever been sold?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.$35 per share<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.$25 per share<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$15 per share<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Not enough information to tell<\/span><\/p>\n<\/td>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Debt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.$60.00<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.$15.00<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.$6.67<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0D.the market assigns a stock price independent of EPS and the P\/E ratio.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The P\/E ratio is strongly related to the past performance of the firm.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Money markets would include which of the following securities?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.common stock and corporate bonds.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.treasury bills and commercial paper.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.certificates of deposit and preferred stock.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Preferred stock is excluded from stockholders equity because it does not have full voting rights.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Sales minus cost of goods sold is equal to earnings before taxes.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Asset utilization ratios<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.relate balance sheet assets to income statement sales.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B.measure how much cash is available for reinvestment into current assets.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.are most important to stockholders.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.measures the firm’s ability to generate a profit on sales.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The P\/E ratio provides no indication of investors’ expectations about the future of a company.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Question 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Asset utilization ratios relate balance sheet assets to income statement sales.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an outflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.profitable operations<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.the sale of equipment<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.the sale of the company\u2019s common stock<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.the payment of cash dividends<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.40%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.12%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.20%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.25%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The income statement is the major device for measuring the profitability of a firm over a period of time.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an inflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.funds spent in normal business operations<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.the purchase of a new factory<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.the sale of the firm’s bonds<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.the retirement of the firm’s bonds<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 2<\/strong><\/p>\n

Question 1 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A lower price for the firm’s product will reduce the firm’s breakeven point.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 2 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Profit is generally adequate to finance significant growth.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 3 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.$100,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.$30,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.$15,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.$145,000<\/p>\n

\u00a0<\/p>\n

Question 4 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The break-even point can be calculated as<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.variable costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.total costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.variable cost times contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.fixed cost divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 6 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If fixed costs rise while other variables stay constant<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.degree of operating leverage increases.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.total profit declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these<\/p>\n

Question 7 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Operating leverage emphasizes the impact of using fixed assets in the business.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 8 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.is higher.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.is lower.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.is the same.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.can be either higher or lower.<\/p>\n

Question 9 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 10 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.decrease in inventory.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.increase in retained earnings.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.decrease in accounts payable.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.decrease in accounts receivable.<\/p>\n

\u00a0<\/p>\n

Question 11 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increase in sales and profits generates the necessary cash required for economic growth.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 13 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Pro forma financial statements are<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the most comprehensive means of financial forecasting.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.often required by prospective creditors.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.projections of financial statements for a future period.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these.<\/p>\n

Question 14 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) When the cost of raw materials is increasing, FIFO accounting<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.yields higher ending inventory values than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.produces higher unit sales than using LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.yields higher cost of goods sold than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these.<\/p>\n

Question 15 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) If sales volume exceeds the break-even point, the firm will experience<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.an operating loss.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.an operating profit.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.an increase in plant and equipment.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.an increase in stock price.<\/p>\n

\u00a0<\/p>\n

Question 16 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 17 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Leverage works best when volume is increasing.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 18 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

Question 19 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If the price per unit decreases because of competition but the cost structure remains the same<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.the degree of combined leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.the degree of financial leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these<\/p>\n

\u00a0<\/p>\n

Question 20 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Sales (100,000 units)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0 1,000,000<\/p>\n

Variable costs\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300,000<\/p>\n

Contribution margin\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0700,000<\/p>\n

Fixed manufacturing costs\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 200,000<\/p>\n

Operating income \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0500,000<\/p>\n

Interest\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a075,000<\/p>\n

Earnings before taxes\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 425,000<\/p>\n

Taxes (30%)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0127,500<\/p>\n

Net Income\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0\u00a0\u00a0\u00a0 297,500<\/p>\n

\u00a0<\/p>\n

Refer to the figure above. The Degree of Operating Leverage is<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.1.40x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.1.56x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.3.33x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.2.22x<\/p>\n

\u00a0<\/p>\n

Question 21 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 22 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) As the contribution margin rises, the breakeven point goes down.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 23 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In the percent-of-sales method, an increase in dividends<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.will increase required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.will decrease required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.has no effect on required new funds.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.more information is needed.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 24 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not true about leverage?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.operating leverage influences the top half of the income statement, determining EBIT.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.financial leverage deals with the bottom half of the income statement, determining EPS\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT.\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.none of these<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 25 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The finance department should work independently without the input of other departments because there may be significant biases when creating proformas.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 3<\/span><\/p>\n

FINC400 quiz 3<\/span><\/h2>\n

FINC400<\/span><\/strong><\/p>\n

\u00a0<\/span><\/p>\n

Week 4<\/span><\/p>\n

\u00a0<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n
\n

Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0D.need more information<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n
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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

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[removed]\u00a0A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Financial capital does not include<\/span><\/p>\n

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[removed]\u00a0A.stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

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[removed]\u00a0A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]<\/span>\u00a0<\/span>D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) An annuity may be defined as<\/span><\/p>\n

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[removed]\u00a0A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/span><\/a><\/span><\/p>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

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[removed]\u00a0A.decreases.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.remains the same.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.increases.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) Within the capital asset pricing model<\/span><\/p>\n

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[removed]\u00a0A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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When inflation rises, preferred stock prices fall.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.need more information.<\/span><\/p>\n<\/td>\n

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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

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[removed]\u00a0A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.It influences their stock price<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
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[removed]\u00a0A.4.41%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.9.0%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.1.89%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.6.43%<\/span><\/p>\n<\/td>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

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[removed]\u00a0A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.Future value of an annuity<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.Present value of $1<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Future value of $1<\/span><\/p>\n<\/td>\n

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Week 4<\/span><\/p>\n

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FINC400<\/span><\/strong><\/p>\n

Week 4<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]D.need more information<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Financial capital does not include<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.stock.<\/span><\/p>\n<\/td>\n

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[removed]B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]C.preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) An annuity may be defined as<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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[removed]C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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[removed]D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/a><\/span><\/p>\n\n\n\n
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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.decreases.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.remains the same.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.increases.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) Within the capital asset pricing model<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

When inflation rises, preferred stock prices fall.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.need more information.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n\n\n\n
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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.It influences their stock price<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
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[removed]A.4.41%<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.9.0%<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.1.89%<\/span><\/p>\n<\/td>\n

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[removed]D.6.43%<\/span><\/p>\n<\/td>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

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[removed]A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

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[removed]B.Future value of an annuity<\/span><\/p>\n<\/td>\n

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[removed]C.Present value of $1<\/span><\/p>\n<\/td>\n

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[removed]D.Future value of $1<\/span><\/p>\n<\/td>\n

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Week 5<\/span><\/p>\n

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FINC400<\/span><\/strong><\/p>\n

Week 5 Quiz” for FINC400 I004 Sum 13<\/span><\/strong><\/p>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the<\/span><\/p>\n

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[removed]\u00a0A.expected value.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.internal rate of return.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.standard deviation.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.coefficient of variation.<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a characteristic of beta?<\/span><\/p>\n

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[removed]\u00a0A.Beta measures only the volatility of returns on an individual bond relative to a bond market index.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.A beta of 1.0 is of equal risk with the market.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.A beta of greater than 1.0 has less risk than the market.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Two of the above are true.<\/span><\/p>\n<\/td>\n

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uestion 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital rationing<\/span><\/p>\n

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[removed]\u00a0A.is a way of preserving the assets of the firm over the long term.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.is a less than optimal way to arrive at capital budgeting decisions.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.assures stockholder wealth maximization.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.assures maximum potential profitability.<\/span><\/p>\n<\/td>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is only a concern of finance and accounting personnel.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Even though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the planner to:<\/span><\/p>\n

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[removed]\u00a0A.reduce the standard deviations of projects.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.test possible changes in each variable.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.deal with the uncertainty in forecasting outcome<\/span><\/p>\n<\/td>\n

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D.b and c.<\/span><\/p>\n\n\n\n
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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital is assumed to contain no risk for the firm.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If three investment alternatives all have some degree of risk and different expected returns, which of the following measures could best be used to rank the risk levels of the projects?<\/span><\/p>\n

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[removed]\u00a0A.Coefficient of correlation<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Coefficient of variation<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.Standard deviation of returns<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Net present value<\/span><\/p>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

To find the exact internal rate of return for projects with uneven cash flows, we can interpolate between two present value annuity factors from Appendix D.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Projects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a false statement?<\/span><\/p>\n

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[removed]\u00a0A.Risky investments may produce large losses.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Risky investments may produce large gains.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.The coefficient of variation is a risk measure.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Risk-averse investors cannot be induced to invest in risky assets.<\/span><\/p>\n<\/td>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Regardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Cash flow can be said to equal<\/span><\/p>\n

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[removed]\u00a0A.operating income less taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.operating income less taxes.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.operating income before depreciation and taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.operating income after taxes minus depreciation.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

There are several disadvantages to the payback method, among them:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.payback ignores the time value of money.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.payback emphasizes receiving money back as fast as possible for reinvestment.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.payback is Basic to use and to understand.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.payback can be used in conjunction with time adjusted methods of evaluation.<\/span><\/p>\n<\/td>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.assumes that cash flows are reinvested at the project’s internal rate of return.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.concentrates on the liquidity aspects of investment projects.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.none of these.<\/span><\/p>\n<\/td>\n

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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the cost of capital increases<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.fewer projects are accepted.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.more projects are accepted.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.project selection remains unchanged.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.None of these.<\/span><\/p>\n<\/td>\n

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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The capital budgeting decisions of a firm will have no effect on the share price of the common stock.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False-<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The payback method considers all cash inflows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is primarily concerned with<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.capital formation in the economy.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.planning future financing needs.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.evaluating investment alternatives.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.minimizing the cost of capital.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n\n\n\n
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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following statements about the “payback method” is true?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.The payback method considers cash flows after the payback has been reached.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.The payback method does not consider the time value of money.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.The payback method uses discounted cash-flow techniques.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.The payback method generally leads to the same decision as other investment selection methods<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n\n\n\n
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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the analyst to test possible changes in the variables used in the model.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The first step in the capital budgeting process is<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.collection of data.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.idea development.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.assign probabilities.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.determine cashflow.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 7<\/p>\n

Question 1 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A bond’s rating can depend on all of the following except<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the corporation’s debt-equity ratio. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the corporation’s size. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the ability of the firm to make interest payments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the coupon rate on the bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 2 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The effect of a rights offering on a stockholder is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to increase his\/her wealth. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to increase his\/her wealth only if the new stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to decrease his\/her wealth unless the stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to decrease his\/her wealth if nothing is done. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 3 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock dividends are a deductible expense for a corporation.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 4 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A “subordinated debenture”<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must be transferred with the bond to which it is attached. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.is used mainly by railroad companies and usually specifies equipment as collateral. \u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.entitles the bondholder to purchase shares of common stock at a specific price. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.is an unsecured bond with an inferior claim on assets in the event of liquidation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 6 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stockholders always have preemptive rights when new issues of stock are offered.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 7 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Debentures are commonly issued by small companies.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 8 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.higher, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.higher, lower \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.lower, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.lower, lower<\/p>\n

Question 9 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Bondholders never have any control over the actions of a firm.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 10 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The increasing sophistication of individual investors has decreased the role of institutional investors in the stock market.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 11 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The term debenture refers to<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.long-term, secured debt. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long-term, unsecured debt. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the after-acquired property clause. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a 100-page document covering the specific terms of the offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 13 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 14 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

With regard to interest rates and bond prices it can be said that<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.long-term rates are more volatile than short-term rates. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a decrease in interest rates will cause bond prices to fall. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 15 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increasing proportion of shares in the U.S. are owned by:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.individual investors. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.corporations (Treasury Stock). \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.institutions. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.governments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 16 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Under normal operating conditions, the board of directors is elected by<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the common stockholders. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the preferred stockholders. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the bondholders. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 17 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures.<\/p>\n

Question 18 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The higher the bond rating<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the higher the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the lower the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the higher the call premium. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the lower the call premium \u00a0\u00a0\u00a0<\/p>\n

Question 19 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The purpose of cumulative voting is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to maintain majority control of the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to allow minority stockholders the possibility of a voice on the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to obstruct unfriendly mergers and takeover efforts. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to prevent the dilution of common stock through pre-emptive rights offerings. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 20 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 21 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock is the least used of all long-term securities because<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.investors can get higher returns after taxes in other investments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.flotation costs are extremely high compared to bonds. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 22 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not a form of yield on a bond?<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.coupon rate (nominal yield) \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.current yield<\/p>\n

C.dividend yield \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.yield to maturity \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 23 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

There are a number of possible advantages to a rights offering:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.current shareholders are protected against dilution. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the firm has a built-in market of knowledgeable investors. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.distribution costs are lower than a public offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 24 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The yield to maturity is the internal rate of return on a bond.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 25 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

When a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 8<\/strong><\/p>\n

Question 1 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Cash flow is equal to earnings before taxes minus depreciation.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 2 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following would not be included in the balance sheet investment account?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.stocks of other corporations <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long term government bonds \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.marketable securities \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.investments in other corporations \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 3 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.capital structure. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.earnings volatility. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.sales, profit margins, and earnings. \u00a0\u00a0 <\/strong><\/p>\n

D.all of these. \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 4 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.40% \u00a0 <\/strong><\/p>\n

B.12% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.20% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.25% \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 5 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) The break-even point can be calculated as<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.variable costs divided by contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.total costs divided by contribution margin. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.variable cost times contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.fixed cost divided by contribution margin. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 6 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 7 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/strong><\/p>\n

A.$100,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$30,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$15,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$145,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 8 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 3 of 6 – Week 1 Practice Quiz \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 9 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

For most firms, the primary motive for holding cash is the transaction motive.A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 10 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

A Just-In-Time (JIT) inventory management program has all but which of the following requirements?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.quality production \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.large safety stocks \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.close ties between suppliers, manufacturers, and customers \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.minimizing inventory levels <\/strong><\/p>\n

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Question 11 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Modos Company has deposited $3,500 in checks received from customers. It has written $1,400 in checks to its suppliers. The initial bank and book balance was $600. If $1,600 of its customer\u2019s checks have cleared but only $600 of its own, calculate its float.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.$1,200 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$1,100 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$300 \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$700 <\/strong><\/p>\n

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Question 12 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Even during slack loan periods, banks will never loan out money at an interest rate lower than the prime rate because the prime rate is their best rate.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Part 4 of 6 – Final Exam 20.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 13 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 14 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.decreases. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.remains the same. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.increases. \u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Not enough information to tell. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 15 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) Within the capital asset pricing model<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the risk-free rate is usually higher than the return in the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the higher the beta the lower the required rate of return. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.beta measures the volatility of an individual stock relative to a stock market index. \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above are true. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

Question 16 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.4.41% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.9.0% <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.1.89% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

D.6.43% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 17 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If the yield to maturity on a bond is greater than the coupon rate, you can assume:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.interest rates have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the price is below the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the price is above the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.risk premiums have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 5 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 18 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.assumes that cash flows are reinvested at the project’s internal rate of return. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.concentrates on the liquidity aspects of investment projects. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.none of these. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 19 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

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Question 20 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

There are several disadvantages to the payback method, among them:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.payback ignores the time value of money. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.payback emphasizes receiving money back as fast as possible for reinvestment. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.payback is Basic to use and to understand. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.payback can be used in conjunction with time adjusted methods of evaluation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

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Question 21 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following is a characteristic of beta?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.A beta of 1.0 is of equal risk with the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.A beta of greater than 1.0 has less risk than the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Two of the above are true. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

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\u00a0<\/strong><\/p>\n

Part 6 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 22 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 23 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Bondholders never have any control over the actions of a firm.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 24 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 25 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following best represents the hierarchy of creditor and stockholder claims?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Common stock, senior secured debt, s<\/strong><\/p>\n\n\n\n
\n

Finc400 quiz 1-8<\/span><\/strong><\/p>\n

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art 1 of 1 – Week 1 Quiz<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/span><\/p>\n

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[removed]\u00a0A.capital structure.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.earnings volatility.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.sales, profit margins, and earnings.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The primary disadvantage of accrual accounting is that<\/span><\/p>\n

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[removed]\u00a0A.it does not match revenues and expenses in the period in which they are incurred.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.it does not appropriately measure accounting profit.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.it does not recognize accounts receivable.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.it does not adequately show the actual cash flow position of the firm<\/span><\/p>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Total assets of a firm are financed with liabilities and stockholders’ equity.<\/span><\/p>\n

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[removed]\u00a0False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Gross profit is equal to<\/span><\/p>\n

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[removed]\u00a0A.sales minus cost of goods sold.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.sales minus (selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.sales minus (cost of goods sold and selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.sales minus (cost of goods sold and depreciation expense).<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Ratios are used to compare different firms in the same industry.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The Sarbanes-Oxley Act was passed in an effort to<\/span><\/p>\n

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[removed]\u00a0A.protect small business from large corporations dominating the market.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.ensure that partnerships divide profits among partners in a fair manner.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.guarantee outside auditors can control corporate accounting practices.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.control corrupt corporate behavior.<\/span><\/p>\n<\/td>\n

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uestion 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Which of the following is not subtracted out in arriving at operating income?<\/span><\/p>\n

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[removed]\u00a0A.interest expense<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.cost of goods sold<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.depreciation<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.selling and administrative expense<\/span><\/p>\n<\/td>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Which of the following is not a primary source of capital to the firm?<\/span><\/p>\n

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[removed]\u00a0A.assets<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.common stock<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.preferred stock<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.bonds<\/span><\/p>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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A firm has $1,500,000 in its common stock account and $1,000,000 in its paid-in capital account. The firm issued 100,000 shares of common stock. What was the original issue price if only one stock issue has ever been sold?<\/span><\/p>\n

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[removed]\u00a0A.$35 per share<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.$25 per share<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$15 per share<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Not enough information to tell<\/span><\/p>\n<\/td>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Debt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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A firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of<\/span><\/p>\n

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[removed]\u00a0A.$60.00<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.$15.00<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$6.67<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.the market assigns a stock price independent of EPS and the P\/E ratio.<\/span><\/p>\n<\/td>\n

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Question 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The P\/E ratio is strongly related to the past performance of the firm.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Money markets would include which of the following securities?<\/span><\/p>\n

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[removed]\u00a0A.common stock and corporate bonds.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.treasury bills and commercial paper.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.certificates of deposit and preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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uestion 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Preferred stock is excluded from stockholders equity because it does not have full voting rights.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Sales minus cost of goods sold is equal to earnings before taxes.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n

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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Asset utilization ratios<\/span><\/p>\n

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[removed]\u00a0A.relate balance sheet assets to income statement sales.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.measure how much cash is available for reinvestment into current assets.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.are most important to stockholders.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.measures the firm’s ability to generate a profit on sales.<\/span><\/p>\n<\/td>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The P\/E ratio provides no indication of investors’ expectations about the future of a company.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Question 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Asset utilization ratios relate balance sheet assets to income statement sales.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Which of the following is an outflow of cash?<\/span><\/p>\n

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[removed]\u00a0A.profitable operations<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the sale of equipment<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.the sale of the company\u2019s common stock<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.the payment of cash dividends<\/span><\/p>\n<\/td>\n

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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/span><\/p>\n

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[removed]\u00a0A.40%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.12%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.20%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.25%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

\n

4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The income statement is the major device for measuring the profitability of a firm over a period of time.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

\n

4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an inflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.funds spent in normal business operations<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B.the purchase of a new factory<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0C.the sale of the firm’s bonds<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0D.the retirement of the firm’s bonds<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 2<\/strong><\/p>\n

Question 1 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A lower price for the firm’s product will reduce the firm’s breakeven point.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 2 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Profit is generally adequate to finance significant growth.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 3 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.$100,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.$30,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.$15,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.$145,000<\/p>\n

\u00a0<\/p>\n

Question 4 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The break-even point can be calculated as<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.variable costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.total costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.variable cost times contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.fixed cost divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 6 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If fixed costs rise while other variables stay constant<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.degree of operating leverage increases.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.total profit declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these<\/p>\n

Question 7 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Operating leverage emphasizes the impact of using fixed assets in the business.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 8 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.is higher.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.is lower.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.is the same.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.can be either higher or lower.<\/p>\n

Question 9 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 10 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.decrease in inventory.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.increase in retained earnings.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.decrease in accounts payable.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.decrease in accounts receivable.<\/p>\n

\u00a0<\/p>\n

Question 11 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increase in sales and profits generates the necessary cash required for economic growth.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 13 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Pro forma financial statements are<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the most comprehensive means of financial forecasting.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.often required by prospective creditors.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.projections of financial statements for a future period.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these.<\/p>\n

Question 14 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) When the cost of raw materials is increasing, FIFO accounting<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.yields higher ending inventory values than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.produces higher unit sales than using LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.yields higher cost of goods sold than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these.<\/p>\n

Question 15 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) If sales volume exceeds the break-even point, the firm will experience<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.an operating loss.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.an operating profit.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.an increase in plant and equipment.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.an increase in stock price.<\/p>\n

\u00a0<\/p>\n

Question 16 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 17 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Leverage works best when volume is increasing.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 18 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

Question 19 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If the price per unit decreases because of competition but the cost structure remains the same<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.the degree of combined leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.the degree of financial leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these<\/p>\n

\u00a0<\/p>\n

Question 20 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Sales (100,000 units)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0 1,000,000<\/p>\n

Variable costs\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300,000<\/p>\n

Contribution margin\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0700,000<\/p>\n

Fixed manufacturing costs\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 200,000<\/p>\n

Operating income \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0500,000<\/p>\n

Interest\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a075,000<\/p>\n

Earnings before taxes\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 425,000<\/p>\n

Taxes (30%)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0127,500<\/p>\n

Net Income\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0\u00a0\u00a0\u00a0 297,500<\/p>\n

\u00a0<\/p>\n

Refer to the figure above. The Degree of Operating Leverage is<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.1.40x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.1.56x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.3.33x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.2.22x<\/p>\n

\u00a0<\/p>\n

Question 21 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

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Question 22 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) As the contribution margin rises, the breakeven point goes down.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

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\u00a0<\/p>\n

Question 23 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In the percent-of-sales method, an increase in dividends<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.will increase required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.will decrease required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.has no effect on required new funds.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.more information is needed.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 24 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not true about leverage?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.operating leverage influences the top half of the income statement, determining EBIT.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.financial leverage deals with the bottom half of the income statement, determining EPS\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT.\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.none of these<\/p>\n

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Question 25 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The finance department should work independently without the input of other departments because there may be significant biases when creating proformas.<\/p>\n

\u00a0<\/p>\n

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\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

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\u00a0B. False<\/p>\n

\u00a0<\/p>\n

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Week 3<\/span><\/p>\n

FINC400 quiz 3<\/span><\/h2>\n

FINC400<\/span><\/strong><\/p>\n

\u00a0<\/span><\/p>\n

Week 4<\/span><\/p>\n

\u00a0<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.need more information<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Financial capital does not include<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]<\/span>\u00a0<\/span>D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) An annuity may be defined as<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/span><\/a><\/span><\/p>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.decreases.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.remains the same.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.increases.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) Within the capital asset pricing model<\/span><\/p>\n

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[removed]\u00a0A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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When inflation rises, preferred stock prices fall.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.need more information.<\/span><\/p>\n<\/td>\n

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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.It influences their stock price<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
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[removed]\u00a0A.4.41%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.9.0%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.1.89%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.6.43%<\/span><\/p>\n<\/td>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

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[removed]\u00a0A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Future value of an annuity<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.Present value of $1<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Future value of $1<\/span><\/p>\n<\/td>\n

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Week 4<\/span><\/p>\n

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FINC400<\/span><\/strong><\/p>\n

Week 4<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]D.need more information<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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Financial capital does not include<\/span><\/p>\n

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[removed]A.stock.<\/span><\/p>\n<\/td>\n

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[removed]B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]C.preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

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[removed]A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) An annuity may be defined as<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

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[removed]B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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[removed]C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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[removed]D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/a><\/span><\/p>\n\n\n\n
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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.decreases.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.remains the same.<\/span><\/p>\n<\/td>\n

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[removed]C.increases.<\/span><\/p>\n<\/td>\n

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[removed]D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) Within the capital asset pricing model<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

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[removed]D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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When inflation rises, preferred stock prices fall.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]D.need more information.<\/span><\/p>\n<\/td>\n

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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.It influences their stock price<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

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[removed]D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
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[removed]A.4.41%<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.9.0%<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.1.89%<\/span><\/p>\n<\/td>\n

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[removed]D.6.43%<\/span><\/p>\n<\/td>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.Future value of an annuity<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.Present value of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.Future value of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 5<\/span><\/p>\n

\u00a0<\/p>\n

FINC400<\/span><\/strong><\/p>\n

Week 5 Quiz” for FINC400 I004 Sum 13<\/span><\/strong><\/p>\n

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\u00a0<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.expected value.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.internal rate of return.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.standard deviation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.coefficient of variation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a characteristic of beta?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.Beta measures only the volatility of returns on an individual bond relative to a bond market index.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.A beta of 1.0 is of equal risk with the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.A beta of greater than 1.0 has less risk than the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Two of the above are true.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital rationing<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.is a way of preserving the assets of the firm over the long term.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.is a less than optimal way to arrive at capital budgeting decisions.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.assures stockholder wealth maximization.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.assures maximum potential profitability.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is only a concern of finance and accounting personnel.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Even though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the planner to:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n
\n

[removed]\u00a0A.reduce the standard deviations of projects.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.test possible changes in each variable.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.deal with the uncertainty in forecasting outcome<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

D.b and c.<\/span><\/p>\n\n\n\n
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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital is assumed to contain no risk for the firm.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If three investment alternatives all have some degree of risk and different expected returns, which of the following measures could best be used to rank the risk levels of the projects?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.Coefficient of correlation<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.Coefficient of variation<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.Standard deviation of returns<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Net present value<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

To find the exact internal rate of return for projects with uneven cash flows, we can interpolate between two present value annuity factors from Appendix D.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Projects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Which of the following is a false statement?<\/span><\/p>\n

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[removed]\u00a0A.Risky investments may produce large losses.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Risky investments may produce large gains.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.The coefficient of variation is a risk measure.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Risk-averse investors cannot be induced to invest in risky assets.<\/span><\/p>\n<\/td>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Regardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Cash flow can be said to equal<\/span><\/p>\n

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[removed]\u00a0A.operating income less taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.operating income less taxes.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.operating income before depreciation and taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.operating income after taxes minus depreciation.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

There are several disadvantages to the payback method, among them:<\/span><\/p>\n

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[removed]\u00a0A.payback ignores the time value of money.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.payback emphasizes receiving money back as fast as possible for reinvestment.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.payback is Basic to use and to understand.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.payback can be used in conjunction with time adjusted methods of evaluation.<\/span><\/p>\n<\/td>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/span><\/p>\n

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[removed]\u00a0A.assumes that cash flows are reinvested at the project’s internal rate of return.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.concentrates on the liquidity aspects of investment projects.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.none of these.<\/span><\/p>\n<\/td>\n

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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the cost of capital increases<\/span><\/p>\n

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[removed]\u00a0A.fewer projects are accepted.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.more projects are accepted.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.project selection remains unchanged.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.None of these.<\/span><\/p>\n<\/td>\n

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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The capital budgeting decisions of a firm will have no effect on the share price of the common stock.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False-<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The payback method considers all cash inflows.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is primarily concerned with<\/span><\/p>\n

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[removed]\u00a0A.capital formation in the economy.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.planning future financing needs.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.evaluating investment alternatives.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.minimizing the cost of capital.<\/span><\/p>\n<\/td>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following statements about the “payback method” is true?<\/span><\/p>\n

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[removed]\u00a0A.The payback method considers cash flows after the payback has been reached.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.The payback method does not consider the time value of money.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.The payback method uses discounted cash-flow techniques.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.The payback method generally leads to the same decision as other investment selection methods<\/span><\/p>\n<\/td>\n

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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the analyst to test possible changes in the variables used in the model.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The first step in the capital budgeting process is<\/span><\/p>\n

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[removed]\u00a0A.collection of data.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.idea development.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.assign probabilities.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.determine cashflow.<\/span><\/p>\n<\/td>\n

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Week 7<\/p>\n

Question 1 of 25<\/p>\n

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A bond’s rating can depend on all of the following except<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the corporation’s debt-equity ratio. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the corporation’s size. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the ability of the firm to make interest payments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the coupon rate on the bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 2 of 25<\/p>\n

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The effect of a rights offering on a stockholder is<\/p>\n

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\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to increase his\/her wealth only if the new stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to decrease his\/her wealth unless the stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to decrease his\/her wealth if nothing is done. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 3 of 25<\/p>\n

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Preferred stock dividends are a deductible expense for a corporation.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 4 of 25<\/p>\n

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The costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue.<\/p>\n

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A. True<\/p>\n

B. False<\/p>\n

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Question 5 of 25<\/p>\n

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A “subordinated debenture”<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must be transferred with the bond to which it is attached. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.is used mainly by railroad companies and usually specifies equipment as collateral. \u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.entitles the bondholder to purchase shares of common stock at a specific price. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.is an unsecured bond with an inferior claim on assets in the event of liquidation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 6 of 25<\/p>\n

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Stockholders always have preemptive rights when new issues of stock are offered.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 7 of 25<\/p>\n

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Debentures are commonly issued by small companies.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 8 of 25<\/p>\n

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The subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.higher, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.higher, lower \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.lower, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.lower, lower<\/p>\n

Question 9 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Bondholders never have any control over the actions of a firm.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 10 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The increasing sophistication of individual investors has decreased the role of institutional investors in the stock market.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 11 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The term debenture refers to<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.long-term, secured debt. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long-term, unsecured debt. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the after-acquired property clause. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a 100-page document covering the specific terms of the offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 13 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 14 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

With regard to interest rates and bond prices it can be said that<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.long-term rates are more volatile than short-term rates. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a decrease in interest rates will cause bond prices to fall. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 15 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increasing proportion of shares in the U.S. are owned by:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.individual investors. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.corporations (Treasury Stock). \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.institutions. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.governments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 16 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Under normal operating conditions, the board of directors is elected by<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the common stockholders. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the preferred stockholders. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the bondholders. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 17 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures.<\/p>\n

Question 18 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The higher the bond rating<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the higher the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the lower the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the higher the call premium. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the lower the call premium \u00a0\u00a0\u00a0<\/p>\n

Question 19 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The purpose of cumulative voting is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to maintain majority control of the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to allow minority stockholders the possibility of a voice on the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to obstruct unfriendly mergers and takeover efforts. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to prevent the dilution of common stock through pre-emptive rights offerings. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 20 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 21 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock is the least used of all long-term securities because<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.investors can get higher returns after taxes in other investments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.flotation costs are extremely high compared to bonds. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 22 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not a form of yield on a bond?<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.coupon rate (nominal yield) \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.current yield<\/p>\n

C.dividend yield \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.yield to maturity \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 23 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

There are a number of possible advantages to a rights offering:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.current shareholders are protected against dilution. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the firm has a built-in market of knowledgeable investors. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.distribution costs are lower than a public offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 24 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The yield to maturity is the internal rate of return on a bond.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 25 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

When a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 8<\/strong><\/p>\n

Question 1 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Cash flow is equal to earnings before taxes minus depreciation.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

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Question 2 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following would not be included in the balance sheet investment account?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.stocks of other corporations <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long term government bonds \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.marketable securities \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.investments in other corporations \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 3 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.capital structure. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.earnings volatility. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.sales, profit margins, and earnings. \u00a0\u00a0 <\/strong><\/p>\n

D.all of these. \u00a0 <\/strong><\/p>\n

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Question 4 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.40% \u00a0 <\/strong><\/p>\n

B.12% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.20% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.25% \u00a0 <\/strong><\/p>\n

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Question 5 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) The break-even point can be calculated as<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.variable costs divided by contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.total costs divided by contribution margin. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.variable cost times contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.fixed cost divided by contribution margin. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 6 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

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Question 7 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/strong><\/p>\n

A.$100,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$30,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$15,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$145,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 8 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 3 of 6 – Week 1 Practice Quiz \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 16.0 Points<\/strong><\/p>\n

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Question 9 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

For most firms, the primary motive for holding cash is the transaction motive.A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 10 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

A Just-In-Time (JIT) inventory management program has all but which of the following requirements?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.quality production \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.large safety stocks \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.close ties between suppliers, manufacturers, and customers \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.minimizing inventory levels <\/strong><\/p>\n

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Question 11 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Modos Company has deposited $3,500 in checks received from customers. It has written $1,400 in checks to its suppliers. The initial bank and book balance was $600. If $1,600 of its customer\u2019s checks have cleared but only $600 of its own, calculate its float.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.$1,200 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$1,100 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$300 \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$700 <\/strong><\/p>\n

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Question 12 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Even during slack loan periods, banks will never loan out money at an interest rate lower than the prime rate because the prime rate is their best rate.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Part 4 of 6 – Final Exam 20.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 13 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

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Question 14 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.decreases. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.remains the same. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.increases. \u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Not enough information to tell. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 15 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) Within the capital asset pricing model<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the risk-free rate is usually higher than the return in the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the higher the beta the lower the required rate of return. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.beta measures the volatility of an individual stock relative to a stock market index. \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above are true. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

Question 16 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.4.41% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.9.0% <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.1.89% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

D.6.43% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 17 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If the yield to maturity on a bond is greater than the coupon rate, you can assume:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.interest rates have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the price is below the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the price is above the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.risk premiums have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 5 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 18 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.assumes that cash flows are reinvested at the project’s internal rate of return. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.concentrates on the liquidity aspects of investment projects. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.none of these. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 19 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 20 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

There are several disadvantages to the payback method, among them:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.payback ignores the time value of money. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.payback emphasizes receiving money back as fast as possible for reinvestment. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.payback is Basic to use and to understand. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.payback can be used in conjunction with time adjusted methods of evaluation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

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Question 21 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following is a characteristic of beta?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.A beta of 1.0 is of equal risk with the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.A beta of greater than 1.0 has less risk than the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Two of the above are true. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

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\u00a0<\/strong><\/p>\n

Part 6 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 22 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 23 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Bondholders never have any control over the actions of a firm.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 24 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 25 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following best represents the hierarchy of creditor and stockholder claims?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Common stock, senior secured<\/strong><\/p>\n\n\n\n
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Finc400 quiz 1-8<\/span><\/strong><\/p>\n

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art 1 of 1 – Week 1 Quiz<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.capital structure.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.earnings volatility.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.sales, profit margins, and earnings.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The primary disadvantage of accrual accounting is that<\/span><\/p>\n

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[removed]\u00a0A.it does not match revenues and expenses in the period in which they are incurred.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.it does not appropriately measure accounting profit.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.it does not recognize accounts receivable.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.it does not adequately show the actual cash flow position of the firm<\/span><\/p>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Total assets of a firm are financed with liabilities and stockholders’ equity.<\/span><\/p>\n

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[removed]\u00a0True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

.<\/span><\/p>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Gross profit is equal to<\/span><\/p>\n

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[removed]\u00a0A.sales minus cost of goods sold.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.sales minus (selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.sales minus (cost of goods sold and selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.sales minus (cost of goods sold and depreciation expense).<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Ratios are used to compare different firms in the same industry.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Sarbanes-Oxley Act was passed in an effort to<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.protect small business from large corporations dominating the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.ensure that partnerships divide profits among partners in a fair manner.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.guarantee outside auditors can control corporate accounting practices.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.control corrupt corporate behavior.<\/span><\/p>\n<\/td>\n

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uestion 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is not subtracted out in arriving at operating income?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.interest expense<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.cost of goods sold<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.depreciation<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.selling and administrative expense<\/span><\/p>\n<\/td>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is not a primary source of capital to the firm?<\/span><\/p>\n

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[removed]\u00a0A.assets<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.common stock<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.preferred stock<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.bonds<\/span><\/p>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A firm has $1,500,000 in its common stock account and $1,000,000 in its paid-in capital account. The firm issued 100,000 shares of common stock. What was the original issue price if only one stock issue has ever been sold?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.$35 per share<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.$25 per share<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$15 per share<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Not enough information to tell<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Debt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

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uestion 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.$60.00<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.$15.00<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.$6.67<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.the market assigns a stock price independent of EPS and the P\/E ratio.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

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Question 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The P\/E ratio is strongly related to the past performance of the firm.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Money markets would include which of the following securities?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.common stock and corporate bonds.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.treasury bills and commercial paper.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.certificates of deposit and preferred stock.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Preferred stock is excluded from stockholders equity because it does not have full voting rights.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Sales minus cost of goods sold is equal to earnings before taxes.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Asset utilization ratios<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.relate balance sheet assets to income statement sales.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.measure how much cash is available for reinvestment into current assets.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.are most important to stockholders.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.measures the firm’s ability to generate a profit on sales.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The P\/E ratio provides no indication of investors’ expectations about the future of a company.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Question 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Asset utilization ratios relate balance sheet assets to income statement sales.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an outflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.profitable operations<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.the sale of equipment<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.the sale of the company\u2019s common stock<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.the payment of cash dividends<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.40%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.12%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.20%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.25%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The income statement is the major device for measuring the profitability of a firm over a period of time.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an inflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.funds spent in normal business operations<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.the purchase of a new factory<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.the sale of the firm’s bonds<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.the retirement of the firm’s bonds<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 2<\/strong><\/p>\n

Question 1 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A lower price for the firm’s product will reduce the firm’s breakeven point.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 2 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Profit is generally adequate to finance significant growth.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 3 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.$100,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.$30,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.$15,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.$145,000<\/p>\n

\u00a0<\/p>\n

Question 4 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The break-even point can be calculated as<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.variable costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.total costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.variable cost times contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.fixed cost divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 6 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If fixed costs rise while other variables stay constant<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.degree of operating leverage increases.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.total profit declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these<\/p>\n

Question 7 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Operating leverage emphasizes the impact of using fixed assets in the business.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 8 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.is higher.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.is lower.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.is the same.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.can be either higher or lower.<\/p>\n

Question 9 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 10 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.decrease in inventory.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.increase in retained earnings.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.decrease in accounts payable.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.decrease in accounts receivable.<\/p>\n

\u00a0<\/p>\n

Question 11 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increase in sales and profits generates the necessary cash required for economic growth.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 13 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Pro forma financial statements are<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the most comprehensive means of financial forecasting.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.often required by prospective creditors.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.projections of financial statements for a future period.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these.<\/p>\n

Question 14 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) When the cost of raw materials is increasing, FIFO accounting<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.yields higher ending inventory values than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.produces higher unit sales than using LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.yields higher cost of goods sold than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these.<\/p>\n

Question 15 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) If sales volume exceeds the break-even point, the firm will experience<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.an operating loss.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.an operating profit.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.an increase in plant and equipment.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.an increase in stock price.<\/p>\n

\u00a0<\/p>\n

Question 16 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 17 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Leverage works best when volume is increasing.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 18 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

Question 19 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If the price per unit decreases because of competition but the cost structure remains the same<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.the degree of combined leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.the degree of financial leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these<\/p>\n

\u00a0<\/p>\n

Question 20 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Sales (100,000 units)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0 1,000,000<\/p>\n

Variable costs\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300,000<\/p>\n

Contribution margin\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0700,000<\/p>\n

Fixed manufacturing costs\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 200,000<\/p>\n

Operating income \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0500,000<\/p>\n

Interest\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a075,000<\/p>\n

Earnings before taxes\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 425,000<\/p>\n

Taxes (30%)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0127,500<\/p>\n

Net Income\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0\u00a0\u00a0\u00a0 297,500<\/p>\n

\u00a0<\/p>\n

Refer to the figure above. The Degree of Operating Leverage is<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.1.40x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.1.56x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.3.33x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.2.22x<\/p>\n

\u00a0<\/p>\n

Question 21 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 22 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) As the contribution margin rises, the breakeven point goes down.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 23 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In the percent-of-sales method, an increase in dividends<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.will increase required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.will decrease required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.has no effect on required new funds.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.more information is needed.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 24 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not true about leverage?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.operating leverage influences the top half of the income statement, determining EBIT.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.financial leverage deals with the bottom half of the income statement, determining EPS\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT.\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.none of these<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 25 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The finance department should work independently without the input of other departments because there may be significant biases when creating proformas.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 3<\/span><\/p>\n

FINC400 quiz 3<\/span><\/h2>\n

FINC400<\/span><\/strong><\/p>\n

\u00a0<\/span><\/p>\n

Week 4<\/span><\/p>\n

\u00a0<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n
\n

Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.need more information<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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Financial capital does not include<\/span><\/p>\n

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[removed]\u00a0A.stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

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[removed]\u00a0A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]<\/span>\u00a0<\/span>D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) An annuity may be defined as<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/span><\/a><\/span><\/p>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.decreases.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.remains the same.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.increases.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) Within the capital asset pricing model<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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When inflation rises, preferred stock prices fall.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.need more information.<\/span><\/p>\n<\/td>\n

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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

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[removed]\u00a0A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.It influences their stock price<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

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[removed]\u00a0A.4.41%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.9.0%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.1.89%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.6.43%<\/span><\/p>\n<\/td>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

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[removed]\u00a0A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Future value of an annuity<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.Present value of $1<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Future value of $1<\/span><\/p>\n<\/td>\n

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Week 4<\/span><\/p>\n

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FINC400<\/span><\/strong><\/p>\n

Week 4<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]D.need more information<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

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[removed]A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Financial capital does not include<\/span><\/p>\n

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[removed]A.stock.<\/span><\/p>\n<\/td>\n

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[removed]B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]C.preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

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[removed]A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) An annuity may be defined as<\/span><\/p>\n

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[removed]A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

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[removed]B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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[removed]C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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[removed]D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/a><\/span><\/p>\n\n\n\n
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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

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[removed]A.decreases.<\/span><\/p>\n<\/td>\n

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[removed]B.remains the same.<\/span><\/p>\n<\/td>\n

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[removed]C.increases.<\/span><\/p>\n<\/td>\n

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[removed]D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) Within the capital asset pricing model<\/span><\/p>\n

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[removed]A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

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[removed]B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

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[removed]C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

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[removed]D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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When inflation rises, preferred stock prices fall.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]D.need more information.<\/span><\/p>\n<\/td>\n

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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

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[removed]A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

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[removed]B.It influences their stock price<\/span><\/p>\n<\/td>\n

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[removed]C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

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[removed]D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

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[removed]A.4.41%<\/span><\/p>\n<\/td>\n

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[removed]B.9.0%<\/span><\/p>\n<\/td>\n

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[removed]C.1.89%<\/span><\/p>\n<\/td>\n

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[removed]D.6.43%<\/span><\/p>\n<\/td>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

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[removed]A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

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[removed]B.Future value of an annuity<\/span><\/p>\n<\/td>\n

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[removed]C.Present value of $1<\/span><\/p>\n<\/td>\n

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[removed]D.Future value of $1<\/span><\/p>\n<\/td>\n

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Week 5<\/span><\/p>\n

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FINC400<\/span><\/strong><\/p>\n

Week 5 Quiz” for FINC400 I004 Sum 13<\/span><\/strong><\/p>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the<\/span><\/p>\n

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[removed]\u00a0A.expected value.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.internal rate of return.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.standard deviation.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.coefficient of variation.<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a characteristic of beta?<\/span><\/p>\n

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[removed]\u00a0A.Beta measures only the volatility of returns on an individual bond relative to a bond market index.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.A beta of 1.0 is of equal risk with the market.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.A beta of greater than 1.0 has less risk than the market.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Two of the above are true.<\/span><\/p>\n<\/td>\n

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uestion 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital rationing<\/span><\/p>\n

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[removed]\u00a0A.is a way of preserving the assets of the firm over the long term.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.is a less than optimal way to arrive at capital budgeting decisions.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.assures stockholder wealth maximization.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.assures maximum potential profitability.<\/span><\/p>\n<\/td>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is only a concern of finance and accounting personnel.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Even though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the planner to:<\/span><\/p>\n

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[removed]\u00a0A.reduce the standard deviations of projects.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.test possible changes in each variable.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.deal with the uncertainty in forecasting outcome<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

D.b and c.<\/span><\/p>\n\n\n\n
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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital is assumed to contain no risk for the firm.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If three investment alternatives all have some degree of risk and different expected returns, which of the following measures could best be used to rank the risk levels of the projects?<\/span><\/p>\n

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[removed]\u00a0A.Coefficient of correlation<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Coefficient of variation<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.Standard deviation of returns<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Net present value<\/span><\/p>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

To find the exact internal rate of return for projects with uneven cash flows, we can interpolate between two present value annuity factors from Appendix D.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Projects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a false statement?<\/span><\/p>\n

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[removed]\u00a0A.Risky investments may produce large losses.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Risky investments may produce large gains.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.The coefficient of variation is a risk measure.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Risk-averse investors cannot be induced to invest in risky assets.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Regardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Cash flow can be said to equal<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.operating income less taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.operating income less taxes.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.operating income before depreciation and taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.operating income after taxes minus depreciation.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

There are several disadvantages to the payback method, among them:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.payback ignores the time value of money.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.payback emphasizes receiving money back as fast as possible for reinvestment.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.payback is Basic to use and to understand.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.payback can be used in conjunction with time adjusted methods of evaluation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.assumes that cash flows are reinvested at the project’s internal rate of return.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.concentrates on the liquidity aspects of investment projects.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.none of these.<\/span><\/p>\n<\/td>\n

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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the cost of capital increases<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.fewer projects are accepted.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.more projects are accepted.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.project selection remains unchanged.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.None of these.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n\n\n\n
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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The capital budgeting decisions of a firm will have no effect on the share price of the common stock.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False-<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The payback method considers all cash inflows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is primarily concerned with<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.capital formation in the economy.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.planning future financing needs.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.evaluating investment alternatives.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.minimizing the cost of capital.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n\n\n\n
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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following statements about the “payback method” is true?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.The payback method considers cash flows after the payback has been reached.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.The payback method does not consider the time value of money.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.The payback method uses discounted cash-flow techniques.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.The payback method generally leads to the same decision as other investment selection methods<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the analyst to test possible changes in the variables used in the model.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The first step in the capital budgeting process is<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.collection of data.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.idea development.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.assign probabilities.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.determine cashflow.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 7<\/p>\n

Question 1 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A bond’s rating can depend on all of the following except<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the corporation’s debt-equity ratio. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the corporation’s size. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the ability of the firm to make interest payments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the coupon rate on the bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 2 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The effect of a rights offering on a stockholder is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to increase his\/her wealth. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to increase his\/her wealth only if the new stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to decrease his\/her wealth unless the stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to decrease his\/her wealth if nothing is done. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 3 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock dividends are a deductible expense for a corporation.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 4 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A “subordinated debenture”<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must be transferred with the bond to which it is attached. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.is used mainly by railroad companies and usually specifies equipment as collateral. \u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.entitles the bondholder to purchase shares of common stock at a specific price. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.is an unsecured bond with an inferior claim on assets in the event of liquidation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 6 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stockholders always have preemptive rights when new issues of stock are offered.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 7 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Debentures are commonly issued by small companies.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 8 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.higher, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.higher, lower \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.lower, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.lower, lower<\/p>\n

Question 9 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Bondholders never have any control over the actions of a firm.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 10 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The increasing sophistication of individual investors has decreased the role of institutional investors in the stock market.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 11 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The term debenture refers to<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.long-term, secured debt. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long-term, unsecured debt. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the after-acquired property clause. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a 100-page document covering the specific terms of the offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 13 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 14 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

With regard to interest rates and bond prices it can be said that<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.long-term rates are more volatile than short-term rates. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a decrease in interest rates will cause bond prices to fall. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 15 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increasing proportion of shares in the U.S. are owned by:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.individual investors. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.corporations (Treasury Stock). \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.institutions. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.governments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 16 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Under normal operating conditions, the board of directors is elected by<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the common stockholders. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the preferred stockholders. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the bondholders. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 17 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures.<\/p>\n

Question 18 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The higher the bond rating<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the higher the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the lower the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the higher the call premium. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the lower the call premium \u00a0\u00a0\u00a0<\/p>\n

Question 19 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The purpose of cumulative voting is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to maintain majority control of the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to allow minority stockholders the possibility of a voice on the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to obstruct unfriendly mergers and takeover efforts. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to prevent the dilution of common stock through pre-emptive rights offerings. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 20 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 21 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock is the least used of all long-term securities because<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.investors can get higher returns after taxes in other investments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.flotation costs are extremely high compared to bonds. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 22 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not a form of yield on a bond?<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.coupon rate (nominal yield) \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.current yield<\/p>\n

C.dividend yield \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.yield to maturity \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 23 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

There are a number of possible advantages to a rights offering:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.current shareholders are protected against dilution. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the firm has a built-in market of knowledgeable investors. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.distribution costs are lower than a public offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 24 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The yield to maturity is the internal rate of return on a bond.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 25 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

When a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 8<\/strong><\/p>\n

Question 1 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Cash flow is equal to earnings before taxes minus depreciation.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 2 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following would not be included in the balance sheet investment account?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.stocks of other corporations <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long term government bonds \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.marketable securities \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.investments in other corporations \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 3 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.capital structure. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.earnings volatility. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.sales, profit margins, and earnings. \u00a0\u00a0 <\/strong><\/p>\n

D.all of these. \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 4 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.40% \u00a0 <\/strong><\/p>\n

B.12% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.20% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.25% \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 5 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) The break-even point can be calculated as<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.variable costs divided by contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.total costs divided by contribution margin. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.variable cost times contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.fixed cost divided by contribution margin. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 6 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 7 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/strong><\/p>\n

A.$100,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$30,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$15,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$145,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 8 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 3 of 6 – Week 1 Practice Quiz \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 9 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

For most firms, the primary motive for holding cash is the transaction motive.A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 10 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

A Just-In-Time (JIT) inventory management program has all but which of the following requirements?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.quality production \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.large safety stocks \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.close ties between suppliers, manufacturers, and customers \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.minimizing inventory levels <\/strong><\/p>\n

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Question 11 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Modos Company has deposited $3,500 in checks received from customers. It has written $1,400 in checks to its suppliers. The initial bank and book balance was $600. If $1,600 of its customer\u2019s checks have cleared but only $600 of its own, calculate its float.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.$1,200 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$1,100 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$300 \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$700 <\/strong><\/p>\n

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Question 12 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Even during slack loan periods, banks will never loan out money at an interest rate lower than the prime rate because the prime rate is their best rate.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Part 4 of 6 – Final Exam 20.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 13 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 14 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.decreases. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.remains the same. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.increases. \u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Not enough information to tell. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 15 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) Within the capital asset pricing model<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the risk-free rate is usually higher than the return in the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the higher the beta the lower the required rate of return. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.beta measures the volatility of an individual stock relative to a stock market index. \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above are true. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

Question 16 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.4.41% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.9.0% <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.1.89% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

D.6.43% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 17 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If the yield to maturity on a bond is greater than the coupon rate, you can assume:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.interest rates have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the price is below the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the price is above the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.risk premiums have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 5 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 18 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.assumes that cash flows are reinvested at the project’s internal rate of return. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.concentrates on the liquidity aspects of investment projects. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.none of these. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 19 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

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Question 20 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

There are several disadvantages to the payback method, among them:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.payback ignores the time value of money. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.payback emphasizes receiving money back as fast as possible for reinvestment. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.payback is Basic to use and to understand. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.payback can be used in conjunction with time adjusted methods of evaluation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

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Question 21 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following is a characteristic of beta?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.A beta of 1.0 is of equal risk with the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.A beta of greater than 1.0 has less risk than the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Two of the above are true. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Part 6 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

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Question 22 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 23 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Bondholders never have any control over the actions of a firm.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 24 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 25 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following best represent<\/strong><\/p>\n\n\n\n
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Finc400 quiz 1-8<\/span><\/strong><\/p>\n

\u00a0<\/span><\/strong><\/p>\n

art 1 of 1 – Week 1 Quiz<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.capital structure.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.earnings volatility.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.sales, profit margins, and earnings.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The primary disadvantage of accrual accounting is that<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.it does not match revenues and expenses in the period in which they are incurred.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.it does not appropriately measure accounting profit.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.it does not recognize accounts receivable.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.it does not adequately show the actual cash flow position of the firm<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Total assets of a firm are financed with liabilities and stockholders’ equity.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

.<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Gross profit is equal to<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.sales minus cost of goods sold.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.sales minus (selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.sales minus (cost of goods sold and selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.sales minus (cost of goods sold and depreciation expense).<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Ratios are used to compare different firms in the same industry.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0
<\/span><\/a><\/span><\/p>\n\n\n\n
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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Sarbanes-Oxley Act was passed in an effort to<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.protect small business from large corporations dominating the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.ensure that partnerships divide profits among partners in a fair manner.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.guarantee outside auditors can control corporate accounting practices.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.control corrupt corporate behavior.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is not subtracted out in arriving at operating income?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.interest expense<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.cost of goods sold<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.depreciation<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.selling and administrative expense<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is not a primary source of capital to the firm?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.assets<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.common stock<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.preferred stock<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.bonds<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A firm has $1,500,000 in its common stock account and $1,000,000 in its paid-in capital account. The firm issued 100,000 shares of common stock. What was the original issue price if only one stock issue has ever been sold?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.$35 per share<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.$25 per share<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.$15 per share<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Not enough information to tell<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Debt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.$60.00<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.$15.00<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.$6.67<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.the market assigns a stock price independent of EPS and the P\/E ratio.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The P\/E ratio is strongly related to the past performance of the firm.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Money markets would include which of the following securities?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.common stock and corporate bonds.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.treasury bills and commercial paper.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.certificates of deposit and preferred stock.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Preferred stock is excluded from stockholders equity because it does not have full voting rights.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Sales minus cost of goods sold is equal to earnings before taxes.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Asset utilization ratios<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.relate balance sheet assets to income statement sales.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.measure how much cash is available for reinvestment into current assets.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.are most important to stockholders.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.measures the firm’s ability to generate a profit on sales.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The P\/E ratio provides no indication of investors’ expectations about the future of a company.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Question 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Asset utilization ratios relate balance sheet assets to income statement sales.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an outflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.profitable operations<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B.the sale of equipment<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0C.the sale of the company\u2019s common stock<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0D.the payment of cash dividends<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

\n

4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.40%<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B.12%<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0C.20%<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0D.25%<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

\n

4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The income statement is the major device for measuring the profitability of a firm over a period of time.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

\n

4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an inflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.funds spent in normal business operations<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B.the purchase of a new factory<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0C.the sale of the firm’s bonds<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0D.the retirement of the firm’s bonds<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 2<\/strong><\/p>\n

Question 1 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A lower price for the firm’s product will reduce the firm’s breakeven point.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 2 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Profit is generally adequate to finance significant growth.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 3 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.$100,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.$30,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.$15,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.$145,000<\/p>\n

\u00a0<\/p>\n

Question 4 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The break-even point can be calculated as<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.variable costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.total costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.variable cost times contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.fixed cost divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 6 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If fixed costs rise while other variables stay constant<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.degree of operating leverage increases.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.total profit declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these<\/p>\n

Question 7 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Operating leverage emphasizes the impact of using fixed assets in the business.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 8 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.is higher.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.is lower.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.is the same.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.can be either higher or lower.<\/p>\n

Question 9 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 10 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.decrease in inventory.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.increase in retained earnings.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.decrease in accounts payable.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.decrease in accounts receivable.<\/p>\n

\u00a0<\/p>\n

Question 11 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increase in sales and profits generates the necessary cash required for economic growth.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 13 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Pro forma financial statements are<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the most comprehensive means of financial forecasting.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.often required by prospective creditors.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.projections of financial statements for a future period.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these.<\/p>\n

Question 14 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) When the cost of raw materials is increasing, FIFO accounting<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.yields higher ending inventory values than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.produces higher unit sales than using LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.yields higher cost of goods sold than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these.<\/p>\n

Question 15 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) If sales volume exceeds the break-even point, the firm will experience<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.an operating loss.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.an operating profit.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.an increase in plant and equipment.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.an increase in stock price.<\/p>\n

\u00a0<\/p>\n

Question 16 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 17 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Leverage works best when volume is increasing.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 18 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

Question 19 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If the price per unit decreases because of competition but the cost structure remains the same<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.the degree of combined leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.the degree of financial leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these<\/p>\n

\u00a0<\/p>\n

Question 20 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Sales (100,000 units)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0 1,000,000<\/p>\n

Variable costs\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300,000<\/p>\n

Contribution margin\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0700,000<\/p>\n

Fixed manufacturing costs\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 200,000<\/p>\n

Operating income \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0500,000<\/p>\n

Interest\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a075,000<\/p>\n

Earnings before taxes\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 425,000<\/p>\n

Taxes (30%)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0127,500<\/p>\n

Net Income\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0\u00a0\u00a0\u00a0 297,500<\/p>\n

\u00a0<\/p>\n

Refer to the figure above. The Degree of Operating Leverage is<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.1.40x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.1.56x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.3.33x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.2.22x<\/p>\n

\u00a0<\/p>\n

Question 21 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 22 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) As the contribution margin rises, the breakeven point goes down.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 23 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In the percent-of-sales method, an increase in dividends<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.will increase required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.will decrease required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.has no effect on required new funds.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.more information is needed.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 24 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not true about leverage?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.operating leverage influences the top half of the income statement, determining EBIT.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.financial leverage deals with the bottom half of the income statement, determining EPS\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT.\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.none of these<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 25 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The finance department should work independently without the input of other departments because there may be significant biases when creating proformas.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 3<\/span><\/p>\n

FINC400 quiz 3<\/span><\/h2>\n

FINC400<\/span><\/strong><\/p>\n

\u00a0<\/span><\/p>\n

Week 4<\/span><\/p>\n

\u00a0<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.need more information<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Financial capital does not include<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]<\/span>\u00a0<\/span>D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) An annuity may be defined as<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/span><\/a><\/span><\/p>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.decreases.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.remains the same.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.increases.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) Within the capital asset pricing model<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

When inflation rises, preferred stock prices fall.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.need more information.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.It influences their stock price<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
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[removed]\u00a0A.4.41%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.9.0%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.1.89%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.6.43%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.Future value of an annuity<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.Present value of $1<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Future value of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

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Week 4<\/span><\/p>\n

\u00a0<\/p>\n

FINC400<\/span><\/strong><\/p>\n

Week 4<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.need more information<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Financial capital does not include<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.stock.<\/span><\/p>\n<\/td>\n

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[removed]B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]C.preferred stock.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

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[removed]A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) An annuity may be defined as<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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[removed]C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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[removed]D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/a><\/span><\/p>\n\n\n\n
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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.decreases.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.remains the same.<\/span><\/p>\n<\/td>\n

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[removed]C.increases.<\/span><\/p>\n<\/td>\n

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[removed]D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n\n\n\n
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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) Within the capital asset pricing model<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

When inflation rises, preferred stock prices fall.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]D.need more information.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n\n\n\n
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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
\n

[removed]A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
\n

[removed]B.It influences their stock price<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
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[removed]A.4.41%<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.9.0%<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.1.89%<\/span><\/p>\n<\/td>\n

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[removed]D.6.43%<\/span><\/p>\n<\/td>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.Future value of an annuity<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.Present value of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.Future value of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 5<\/span><\/p>\n

\u00a0<\/p>\n

FINC400<\/span><\/strong><\/p>\n

Week 5 Quiz” for FINC400 I004 Sum 13<\/span><\/strong><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.expected value.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.internal rate of return.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.standard deviation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.coefficient of variation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a characteristic of beta?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.Beta measures only the volatility of returns on an individual bond relative to a bond market index.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.A beta of 1.0 is of equal risk with the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.A beta of greater than 1.0 has less risk than the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Two of the above are true.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital rationing<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.is a way of preserving the assets of the firm over the long term.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B.is a less than optimal way to arrive at capital budgeting decisions.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.assures stockholder wealth maximization.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.assures maximum potential profitability.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is only a concern of finance and accounting personnel.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Even though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the planner to:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n
\n

[removed]\u00a0A.reduce the standard deviations of projects.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.test possible changes in each variable.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.deal with the uncertainty in forecasting outcome<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

D.b and c.<\/span><\/p>\n\n\n\n
\n

Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital is assumed to contain no risk for the firm.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If three investment alternatives all have some degree of risk and different expected returns, which of the following measures could best be used to rank the risk levels of the projects?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.Coefficient of correlation<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.Coefficient of variation<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.Standard deviation of returns<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Net present value<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

To find the exact internal rate of return for projects with uneven cash flows, we can interpolate between two present value annuity factors from Appendix D.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Projects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a false statement?<\/span><\/p>\n

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[removed]\u00a0A.Risky investments may produce large losses.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Risky investments may produce large gains.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.The coefficient of variation is a risk measure.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Risk-averse investors cannot be induced to invest in risky assets.<\/span><\/p>\n<\/td>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Regardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Cash flow can be said to equal<\/span><\/p>\n

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[removed]\u00a0A.operating income less taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.operating income less taxes.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.operating income before depreciation and taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.operating income after taxes minus depreciation.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

There are several disadvantages to the payback method, among them:<\/span><\/p>\n

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[removed]\u00a0A.payback ignores the time value of money.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.payback emphasizes receiving money back as fast as possible for reinvestment.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.payback is Basic to use and to understand.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.payback can be used in conjunction with time adjusted methods of evaluation.<\/span><\/p>\n<\/td>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.assumes that cash flows are reinvested at the project’s internal rate of return.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.concentrates on the liquidity aspects of investment projects.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.none of these.<\/span><\/p>\n<\/td>\n

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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the cost of capital increases<\/span><\/p>\n

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[removed]\u00a0A.fewer projects are accepted.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.more projects are accepted.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.project selection remains unchanged.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.None of these.<\/span><\/p>\n<\/td>\n

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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The capital budgeting decisions of a firm will have no effect on the share price of the common stock.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False-<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The payback method considers all cash inflows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is primarily concerned with<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.capital formation in the economy.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.planning future financing needs.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.evaluating investment alternatives.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.minimizing the cost of capital.<\/span><\/p>\n<\/td>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following statements about the “payback method” is true?<\/span><\/p>\n

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[removed]\u00a0A.The payback method considers cash flows after the payback has been reached.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.The payback method does not consider the time value of money.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.The payback method uses discounted cash-flow techniques.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.The payback method generally leads to the same decision as other investment selection methods<\/span><\/p>\n<\/td>\n

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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the analyst to test possible changes in the variables used in the model.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The first step in the capital budgeting process is<\/span><\/p>\n

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[removed]\u00a0A.collection of data.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.idea development.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.assign probabilities.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.determine cashflow.<\/span><\/p>\n<\/td>\n

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Week 7<\/p>\n

Question 1 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A bond’s rating can depend on all of the following except<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the corporation’s debt-equity ratio. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the corporation’s size. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the ability of the firm to make interest payments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the coupon rate on the bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 2 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The effect of a rights offering on a stockholder is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to increase his\/her wealth. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to increase his\/her wealth only if the new stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to decrease his\/her wealth unless the stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to decrease his\/her wealth if nothing is done. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 3 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock dividends are a deductible expense for a corporation.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 4 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A “subordinated debenture”<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must be transferred with the bond to which it is attached. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.is used mainly by railroad companies and usually specifies equipment as collateral. \u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.entitles the bondholder to purchase shares of common stock at a specific price. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.is an unsecured bond with an inferior claim on assets in the event of liquidation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 6 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stockholders always have preemptive rights when new issues of stock are offered.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 7 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Debentures are commonly issued by small companies.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 8 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.higher, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.higher, lower \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.lower, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.lower, lower<\/p>\n

Question 9 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Bondholders never have any control over the actions of a firm.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 10 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The increasing sophistication of individual investors has decreased the role of institutional investors in the stock market.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 11 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The term debenture refers to<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.long-term, secured debt. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long-term, unsecured debt. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the after-acquired property clause. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a 100-page document covering the specific terms of the offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 13 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 14 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

With regard to interest rates and bond prices it can be said that<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.long-term rates are more volatile than short-term rates. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a decrease in interest rates will cause bond prices to fall. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 15 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increasing proportion of shares in the U.S. are owned by:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.individual investors. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.corporations (Treasury Stock). \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.institutions. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.governments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 16 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Under normal operating conditions, the board of directors is elected by<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the common stockholders. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the preferred stockholders. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the bondholders. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 17 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures.<\/p>\n

Question 18 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The higher the bond rating<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the higher the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the lower the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the higher the call premium. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the lower the call premium \u00a0\u00a0\u00a0<\/p>\n

Question 19 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The purpose of cumulative voting is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to maintain majority control of the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to allow minority stockholders the possibility of a voice on the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to obstruct unfriendly mergers and takeover efforts. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to prevent the dilution of common stock through pre-emptive rights offerings. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 20 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 21 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock is the least used of all long-term securities because<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.investors can get higher returns after taxes in other investments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.flotation costs are extremely high compared to bonds. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 22 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not a form of yield on a bond?<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.coupon rate (nominal yield) \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.current yield<\/p>\n

C.dividend yield \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.yield to maturity \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 23 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

There are a number of possible advantages to a rights offering:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.current shareholders are protected against dilution. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the firm has a built-in market of knowledgeable investors. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.distribution costs are lower than a public offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 24 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The yield to maturity is the internal rate of return on a bond.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 25 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

When a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 8<\/strong><\/p>\n

Question 1 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Cash flow is equal to earnings before taxes minus depreciation.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 2 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following would not be included in the balance sheet investment account?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.stocks of other corporations <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long term government bonds \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.marketable securities \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.investments in other corporations \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 3 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.capital structure. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.earnings volatility. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.sales, profit margins, and earnings. \u00a0\u00a0 <\/strong><\/p>\n

D.all of these. \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 4 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.40% \u00a0 <\/strong><\/p>\n

B.12% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.20% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.25% \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 5 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) The break-even point can be calculated as<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.variable costs divided by contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.total costs divided by contribution margin. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.variable cost times contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.fixed cost divided by contribution margin. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 6 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 7 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/strong><\/p>\n

A.$100,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$30,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$15,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$145,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 8 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 3 of 6 – Week 1 Practice Quiz \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 9 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

For most firms, the primary motive for holding cash is the transaction motive.A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 10 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

A Just-In-Time (JIT) inventory management program has all but which of the following requirements?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.quality production \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.large safety stocks \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.close ties between suppliers, manufacturers, and customers \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.minimizing inventory levels <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 11 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Modos Company has deposited $3,500 in checks received from customers. It has written $1,400 in checks to its suppliers. The initial bank and book balance was $600. If $1,600 of its customer\u2019s checks have cleared but only $600 of its own, calculate its float.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.$1,200 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$1,100 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$300 \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$700 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 12 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Even during slack loan periods, banks will never loan out money at an interest rate lower than the prime rate because the prime rate is their best rate.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Part 4 of 6 – Final Exam 20.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 13 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 14 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.decreases. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.remains the same. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.increases. \u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Not enough information to tell. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 15 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) Within the capital asset pricing model<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the risk-free rate is usually higher than the return in the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the higher the beta the lower the required rate of return. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.beta measures the volatility of an individual stock relative to a stock market index. \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above are true. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

Question 16 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.4.41% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.9.0% <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.1.89% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

D.6.43% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 17 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If the yield to maturity on a bond is greater than the coupon rate, you can assume:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.interest rates have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the price is below the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the price is above the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.risk premiums have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 5 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 18 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.assumes that cash flows are reinvested at the project’s internal rate of return. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.concentrates on the liquidity aspects of investment projects. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.none of these. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 19 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 20 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

There are several disadvantages to the payback method, among them:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.payback ignores the time value of money. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.payback emphasizes receiving money back as fast as possible for reinvestment. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.payback is Basic to use and to understand. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.payback can be used in conjunction with time adjusted methods of evaluation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

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Question 21 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following is a characteristic of beta?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.A beta of 1.0 is of equal risk with the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.A beta of greater than 1.0 has less risk than the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Two of the above are true. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Part 6 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 22 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

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Question 23 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Bondholders never have any control over the actions of a firm.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 24 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 25 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following best represents the hierarchy of creditor and stockholder claims?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Common stock, senior secured debt, subordinated debentures \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.Senior debentures, subordinated debentures, junior secured debt \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.Senior secured debt, subordinated debentures, common stock \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Preferred stock, secured debt, debentures. \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n\n\n\n
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Finc400 quiz 1-8<\/span><\/strong><\/p>\n

\u00a0<\/span><\/strong><\/p>\n

art 1 of 1 – Week 1 Quiz<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.capital structure.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.earnings volatility.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.sales, profit margins, and earnings.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The primary disadvantage of accrual accounting is that<\/span><\/p>\n

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[removed]\u00a0A.it does not match revenues and expenses in the period in which they are incurred.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.it does not appropriately measure accounting profit.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.it does not recognize accounts receivable.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.it does not adequately show the actual cash flow position of the firm<\/span><\/p>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Total assets of a firm are financed with liabilities and stockholders’ equity.<\/span><\/p>\n

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[removed]\u00a0True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

.<\/span><\/p>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Gross profit is equal to<\/span><\/p>\n

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[removed]\u00a0A.sales minus cost of goods sold.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.sales minus (selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.sales minus (cost of goods sold and selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.sales minus (cost of goods sold and depreciation expense).<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Ratios are used to compare different firms in the same industry.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Sarbanes-Oxley Act was passed in an effort to<\/span><\/p>\n

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[removed]\u00a0A.protect small business from large corporations dominating the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.ensure that partnerships divide profits among partners in a fair manner.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.guarantee outside auditors can control corporate accounting practices.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.control corrupt corporate behavior.<\/span><\/p>\n<\/td>\n

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uestion 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is not subtracted out in arriving at operating income?<\/span><\/p>\n

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[removed]\u00a0A.interest expense<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.cost of goods sold<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.depreciation<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.selling and administrative expense<\/span><\/p>\n<\/td>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is not a primary source of capital to the firm?<\/span><\/p>\n

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[removed]\u00a0A.assets<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.common stock<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.preferred stock<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.bonds<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A firm has $1,500,000 in its common stock account and $1,000,000 in its paid-in capital account. The firm issued 100,000 shares of common stock. What was the original issue price if only one stock issue has ever been sold?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.$35 per share<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.$25 per share<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.$15 per share<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Not enough information to tell<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Debt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.$60.00<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.$15.00<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.$6.67<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.the market assigns a stock price independent of EPS and the P\/E ratio.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The P\/E ratio is strongly related to the past performance of the firm.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Money markets would include which of the following securities?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.common stock and corporate bonds.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.treasury bills and commercial paper.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.certificates of deposit and preferred stock.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Preferred stock is excluded from stockholders equity because it does not have full voting rights.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Sales minus cost of goods sold is equal to earnings before taxes.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Asset utilization ratios<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.relate balance sheet assets to income statement sales.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.measure how much cash is available for reinvestment into current assets.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.are most important to stockholders.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.measures the firm’s ability to generate a profit on sales.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The P\/E ratio provides no indication of investors’ expectations about the future of a company.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Question 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Asset utilization ratios relate balance sheet assets to income statement sales.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an outflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.profitable operations<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.the sale of equipment<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.the sale of the company\u2019s common stock<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.the payment of cash dividends<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.40%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.12%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.20%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.25%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The income statement is the major device for measuring the profitability of a firm over a period of time.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an inflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.funds spent in normal business operations<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.the purchase of a new factory<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0C.the sale of the firm’s bonds<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0D.the retirement of the firm’s bonds<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 2<\/strong><\/p>\n

Question 1 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A lower price for the firm’s product will reduce the firm’s breakeven point.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 2 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Profit is generally adequate to finance significant growth.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 3 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.$100,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.$30,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.$15,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.$145,000<\/p>\n

\u00a0<\/p>\n

Question 4 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The break-even point can be calculated as<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.variable costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.total costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.variable cost times contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.fixed cost divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 6 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If fixed costs rise while other variables stay constant<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.degree of operating leverage increases.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.total profit declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these<\/p>\n

Question 7 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Operating leverage emphasizes the impact of using fixed assets in the business.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 8 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.is higher.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.is lower.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.is the same.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.can be either higher or lower.<\/p>\n

Question 9 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 10 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.decrease in inventory.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.increase in retained earnings.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.decrease in accounts payable.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.decrease in accounts receivable.<\/p>\n

\u00a0<\/p>\n

Question 11 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increase in sales and profits generates the necessary cash required for economic growth.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 13 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Pro forma financial statements are<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the most comprehensive means of financial forecasting.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.often required by prospective creditors.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.projections of financial statements for a future period.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these.<\/p>\n

Question 14 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) When the cost of raw materials is increasing, FIFO accounting<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.yields higher ending inventory values than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.produces higher unit sales than using LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.yields higher cost of goods sold than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these.<\/p>\n

Question 15 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) If sales volume exceeds the break-even point, the firm will experience<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.an operating loss.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.an operating profit.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.an increase in plant and equipment.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.an increase in stock price.<\/p>\n

\u00a0<\/p>\n

Question 16 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 17 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Leverage works best when volume is increasing.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 18 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

Question 19 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If the price per unit decreases because of competition but the cost structure remains the same<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.the degree of combined leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.the degree of financial leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these<\/p>\n

\u00a0<\/p>\n

Question 20 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Sales (100,000 units)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0 1,000,000<\/p>\n

Variable costs\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300,000<\/p>\n

Contribution margin\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0700,000<\/p>\n

Fixed manufacturing costs\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 200,000<\/p>\n

Operating income \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0500,000<\/p>\n

Interest\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a075,000<\/p>\n

Earnings before taxes\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 425,000<\/p>\n

Taxes (30%)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0127,500<\/p>\n

Net Income\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0\u00a0\u00a0\u00a0 297,500<\/p>\n

\u00a0<\/p>\n

Refer to the figure above. The Degree of Operating Leverage is<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.1.40x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.1.56x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.3.33x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.2.22x<\/p>\n

\u00a0<\/p>\n

Question 21 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 22 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) As the contribution margin rises, the breakeven point goes down.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 23 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In the percent-of-sales method, an increase in dividends<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.will increase required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.will decrease required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.has no effect on required new funds.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.more information is needed.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 24 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not true about leverage?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.operating leverage influences the top half of the income statement, determining EBIT.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.financial leverage deals with the bottom half of the income statement, determining EPS\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT.\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.none of these<\/p>\n

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Question 25 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The finance department should work independently without the input of other departments because there may be significant biases when creating proformas.<\/p>\n

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\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

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\u00a0B. False<\/p>\n

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Week 3<\/span><\/p>\n

FINC400 quiz 3<\/span><\/h2>\n

FINC400<\/span><\/strong><\/p>\n

\u00a0<\/span><\/p>\n

Week 4<\/span><\/p>\n

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The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.need more information<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

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[removed]\u00a0A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Financial capital does not include<\/span><\/p>\n

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[removed]\u00a0A.stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

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[removed]\u00a0A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]<\/span>\u00a0<\/span>D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) An annuity may be defined as<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/span><\/a><\/span><\/p>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.decreases.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.remains the same.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.increases.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) Within the capital asset pricing model<\/span><\/p>\n

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[removed]\u00a0A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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When inflation rises, preferred stock prices fall.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.need more information.<\/span><\/p>\n<\/td>\n

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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.It influences their stock price<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

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[removed]\u00a0A.4.41%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.9.0%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.1.89%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.6.43%<\/span><\/p>\n<\/td>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

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[removed]\u00a0A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Future value of an annuity<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.Present value of $1<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Future value of $1<\/span><\/p>\n<\/td>\n

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Week 4<\/span><\/p>\n

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FINC400<\/span><\/strong><\/p>\n

Week 4<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]D.need more information<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Financial capital does not include<\/span><\/p>\n

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[removed]A.stock.<\/span><\/p>\n<\/td>\n

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[removed]B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]C.preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

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[removed]A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) An annuity may be defined as<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

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[removed]B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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[removed]C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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[removed]D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/a><\/span><\/p>\n\n\n\n
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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.decreases.<\/span><\/p>\n<\/td>\n

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[removed]B.remains the same.<\/span><\/p>\n<\/td>\n

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[removed]C.increases.<\/span><\/p>\n<\/td>\n

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[removed]D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) Within the capital asset pricing model<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

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[removed]B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

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[removed]C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

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[removed]D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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When inflation rises, preferred stock prices fall.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]D.need more information.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n\n\n\n
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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.It influences their stock price<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

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[removed]D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
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[removed]A.4.41%<\/span><\/p>\n<\/td>\n

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[removed]B.9.0%<\/span><\/p>\n<\/td>\n

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[removed]C.1.89%<\/span><\/p>\n<\/td>\n

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[removed]D.6.43%<\/span><\/p>\n<\/td>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

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[removed]B.Future value of an annuity<\/span><\/p>\n<\/td>\n

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[removed]C.Present value of $1<\/span><\/p>\n<\/td>\n

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[removed]D.Future value of $1<\/span><\/p>\n<\/td>\n

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Week 5<\/span><\/p>\n

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FINC400<\/span><\/strong><\/p>\n

Week 5 Quiz” for FINC400 I004 Sum 13<\/span><\/strong><\/p>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.expected value.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.internal rate of return.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.standard deviation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.coefficient of variation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a characteristic of beta?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.Beta measures only the volatility of returns on an individual bond relative to a bond market index.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.A beta of 1.0 is of equal risk with the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.A beta of greater than 1.0 has less risk than the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Two of the above are true.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital rationing<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.is a way of preserving the assets of the firm over the long term.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.is a less than optimal way to arrive at capital budgeting decisions.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.assures stockholder wealth maximization.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.assures maximum potential profitability.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is only a concern of finance and accounting personnel.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Even though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the planner to:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n
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[removed]\u00a0A.reduce the standard deviations of projects.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.test possible changes in each variable.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.deal with the uncertainty in forecasting outcome<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

D.b and c.<\/span><\/p>\n\n\n\n
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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital is assumed to contain no risk for the firm.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If three investment alternatives all have some degree of risk and different expected returns, which of the following measures could best be used to rank the risk levels of the projects?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.Coefficient of correlation<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.Coefficient of variation<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.Standard deviation of returns<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Net present value<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

To find the exact internal rate of return for projects with uneven cash flows, we can interpolate between two present value annuity factors from Appendix D.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Projects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a false statement?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.Risky investments may produce large losses.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.Risky investments may produce large gains.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.The coefficient of variation is a risk measure.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Risk-averse investors cannot be induced to invest in risky assets.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Regardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Cash flow can be said to equal<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.operating income less taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.operating income less taxes.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.operating income before depreciation and taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.operating income after taxes minus depreciation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

There are several disadvantages to the payback method, among them:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.payback ignores the time value of money.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.payback emphasizes receiving money back as fast as possible for reinvestment.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.payback is Basic to use and to understand.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.payback can be used in conjunction with time adjusted methods of evaluation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.assumes that cash flows are reinvested at the project’s internal rate of return.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.concentrates on the liquidity aspects of investment projects.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.none of these.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the cost of capital increases<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.fewer projects are accepted.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.more projects are accepted.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.project selection remains unchanged.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.None of these.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The capital budgeting decisions of a firm will have no effect on the share price of the common stock.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False-<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The payback method considers all cash inflows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is primarily concerned with<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.capital formation in the economy.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.planning future financing needs.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.evaluating investment alternatives.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.minimizing the cost of capital.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following statements about the “payback method” is true?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.The payback method considers cash flows after the payback has been reached.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.The payback method does not consider the time value of money.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.The payback method uses discounted cash-flow techniques.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.The payback method generally leads to the same decision as other investment selection methods<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the analyst to test possible changes in the variables used in the model.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The first step in the capital budgeting process is<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.collection of data.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.idea development.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.assign probabilities.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.determine cashflow.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 7<\/p>\n

Question 1 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A bond’s rating can depend on all of the following except<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the corporation’s debt-equity ratio. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the corporation’s size. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the ability of the firm to make interest payments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the coupon rate on the bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 2 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The effect of a rights offering on a stockholder is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to increase his\/her wealth. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to increase his\/her wealth only if the new stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to decrease his\/her wealth unless the stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to decrease his\/her wealth if nothing is done. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 3 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock dividends are a deductible expense for a corporation.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 4 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A “subordinated debenture”<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must be transferred with the bond to which it is attached. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.is used mainly by railroad companies and usually specifies equipment as collateral. \u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.entitles the bondholder to purchase shares of common stock at a specific price. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.is an unsecured bond with an inferior claim on assets in the event of liquidation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 6 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stockholders always have preemptive rights when new issues of stock are offered.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 7 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Debentures are commonly issued by small companies.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 8 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.higher, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.higher, lower \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.lower, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.lower, lower<\/p>\n

Question 9 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Bondholders never have any control over the actions of a firm.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 10 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The increasing sophistication of individual investors has decreased the role of institutional investors in the stock market.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 11 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The term debenture refers to<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.long-term, secured debt. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long-term, unsecured debt. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the after-acquired property clause. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a 100-page document covering the specific terms of the offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 13 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 14 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

With regard to interest rates and bond prices it can be said that<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.long-term rates are more volatile than short-term rates. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a decrease in interest rates will cause bond prices to fall. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 15 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increasing proportion of shares in the U.S. are owned by:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.individual investors. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.corporations (Treasury Stock). \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.institutions. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.governments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 16 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Under normal operating conditions, the board of directors is elected by<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the common stockholders. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the preferred stockholders. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the bondholders. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 17 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures.<\/p>\n

Question 18 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The higher the bond rating<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the higher the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the lower the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the higher the call premium. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the lower the call premium \u00a0\u00a0\u00a0<\/p>\n

Question 19 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The purpose of cumulative voting is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to maintain majority control of the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to allow minority stockholders the possibility of a voice on the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to obstruct unfriendly mergers and takeover efforts. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to prevent the dilution of common stock through pre-emptive rights offerings. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 20 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 21 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock is the least used of all long-term securities because<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.investors can get higher returns after taxes in other investments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.flotation costs are extremely high compared to bonds. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 22 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not a form of yield on a bond?<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.coupon rate (nominal yield) \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.current yield<\/p>\n

C.dividend yield \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.yield to maturity \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 23 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

There are a number of possible advantages to a rights offering:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.current shareholders are protected against dilution. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the firm has a built-in market of knowledgeable investors. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.distribution costs are lower than a public offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 24 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The yield to maturity is the internal rate of return on a bond.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 25 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

When a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 8<\/strong><\/p>\n

Question 1 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Cash flow is equal to earnings before taxes minus depreciation.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 2 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following would not be included in the balance sheet investment account?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.stocks of other corporations <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long term government bonds \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.marketable securities \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.investments in other corporations \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 3 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.capital structure. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.earnings volatility. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.sales, profit margins, and earnings. \u00a0\u00a0 <\/strong><\/p>\n

D.all of these. \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 4 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.40% \u00a0 <\/strong><\/p>\n

B.12% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.20% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.25% \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 5 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) The break-even point can be calculated as<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.variable costs divided by contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.total costs divided by contribution margin. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.variable cost times contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.fixed cost divided by contribution margin. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 6 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 7 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/strong><\/p>\n

A.$100,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$30,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$15,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$145,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 8 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 3 of 6 – Week 1 Practice Quiz \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 9 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

For most firms, the primary motive for holding cash is the transaction motive.A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 10 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

A Just-In-Time (JIT) inventory management program has all but which of the following requirements?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.quality production \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.large safety stocks \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.close ties between suppliers, manufacturers, and customers \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.minimizing inventory levels <\/strong><\/p>\n

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Question 11 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Modos Company has deposited $3,500 in checks received from customers. It has written $1,400 in checks to its suppliers. The initial bank and book balance was $600. If $1,600 of its customer\u2019s checks have cleared but only $600 of its own, calculate its float.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.$1,200 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$1,100 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$300 \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$700 <\/strong><\/p>\n

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Question 12 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Even during slack loan periods, banks will never loan out money at an interest rate lower than the prime rate because the prime rate is their best rate.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Part 4 of 6 – Final Exam 20.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 13 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

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Question 14 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.decreases. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.remains the same. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.increases. \u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Not enough information to tell. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 15 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) Within the capital asset pricing model<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the risk-free rate is usually higher than the return in the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the higher the beta the lower the required rate of return. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.beta measures the volatility of an individual stock relative to a stock market index. \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above are true. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

Question 16 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.4.41% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.9.0% <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.1.89% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

D.6.43% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 17 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If the yield to maturity on a bond is greater than the coupon rate, you can assume:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.interest rates have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the price is below the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the price is above the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.risk premiums have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Part 5 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

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Question 18 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.assumes that cash flows are reinvested at the project’s internal rate of return. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.concentrates on the liquidity aspects of investment projects. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.none of these. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 19 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

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Question 20 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

There are several disadvantages to the payback method, among them:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.payback ignores the time value of money. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.payback emphasizes receiving money back as fast as possible for reinvestment. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.payback is Basic to use and to understand. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.payback can be used in conjunction with time adjusted methods of evaluation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Question 21 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following is a characteristic of beta?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.A beta of 1.0 is of equal risk with the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.A beta of greater than 1.0 has less risk than the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Two of the above are true. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

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Part 6 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 22 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 23 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Bondholders never have any control over the actions of a firm.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 24 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 25 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following best rep<\/strong><\/p>\n\n\n\n
\n

Finc400 quiz 1-8<\/span><\/strong><\/p>\n

\u00a0<\/span><\/strong><\/p>\n

art 1 of 1 – Week 1 Quiz<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.capital structure.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.earnings volatility.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.sales, profit margins, and earnings.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The primary disadvantage of accrual accounting is that<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.it does not match revenues and expenses in the period in which they are incurred.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.it does not appropriately measure accounting profit.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.it does not recognize accounts receivable.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.it does not adequately show the actual cash flow position of the firm<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Total assets of a firm are financed with liabilities and stockholders’ equity.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

.<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Gross profit is equal to<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.sales minus cost of goods sold.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.sales minus (selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.sales minus (cost of goods sold and selling and administrative expenses).<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.sales minus (cost of goods sold and depreciation expense).<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

uestion 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

\n

4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Ratios are used to compare different firms in the same industry.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0
<\/span><\/a><\/span><\/p>\n\n\n\n
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\n

Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Sarbanes-Oxley Act was passed in an effort to<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.protect small business from large corporations dominating the market.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.ensure that partnerships divide profits among partners in a fair manner.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.guarantee outside auditors can control corporate accounting practices.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.control corrupt corporate behavior.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

\n

4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is not subtracted out in arriving at operating income?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.interest expense<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.cost of goods sold<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.depreciation<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.selling and administrative expense<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is not a primary source of capital to the firm?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.assets<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.common stock<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.preferred stock<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.bonds<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A firm has $1,500,000 in its common stock account and $1,000,000 in its paid-in capital account. The firm issued 100,000 shares of common stock. What was the original issue price if only one stock issue has ever been sold?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.$35 per share<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.$25 per share<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.$15 per share<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Not enough information to tell<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Debt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

A firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.$60.00<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.$15.00<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.$6.67<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.the market assigns a stock price independent of EPS and the P\/E ratio.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The P\/E ratio is strongly related to the past performance of the firm.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Money markets would include which of the following securities?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.common stock and corporate bonds.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.treasury bills and commercial paper.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.certificates of deposit and preferred stock.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.all of these.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

uestion 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Preferred stock is excluded from stockholders equity because it does not have full voting rights.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Sales minus cost of goods sold is equal to earnings before taxes.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Asset utilization ratios<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.relate balance sheet assets to income statement sales.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.measure how much cash is available for reinvestment into current assets.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.are most important to stockholders.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0D.measures the firm’s ability to generate a profit on sales.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The P\/E ratio provides no indication of investors’ expectations about the future of a company.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Question 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Asset utilization ratios relate balance sheet assets to income statement sales.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an outflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.profitable operations<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.the sale of equipment<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.the sale of the company\u2019s common stock<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.the payment of cash dividends<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.40%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.12%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.20%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.25%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The income statement is the major device for measuring the profitability of a firm over a period of time.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is an inflow of cash?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.funds spent in normal business operations<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.the purchase of a new factory<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.the sale of the firm’s bonds<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.the retirement of the firm’s bonds<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 2<\/strong><\/p>\n

Question 1 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A lower price for the firm’s product will reduce the firm’s breakeven point.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 2 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Profit is generally adequate to finance significant growth.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 3 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.$100,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.$30,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.$15,000<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.$145,000<\/p>\n

\u00a0<\/p>\n

Question 4 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The break-even point can be calculated as<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.variable costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.total costs divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.variable cost times contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.fixed cost divided by contribution margin.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 6 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If fixed costs rise while other variables stay constant<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.degree of operating leverage increases.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.total profit declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these<\/p>\n

Question 7 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Operating leverage emphasizes the impact of using fixed assets in the business.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 8 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.is higher.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.is lower.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.is the same.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.can be either higher or lower.<\/p>\n

Question 9 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 10 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.decrease in inventory.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.increase in retained earnings.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.decrease in accounts payable.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.decrease in accounts receivable.<\/p>\n

\u00a0<\/p>\n

Question 11 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increase in sales and profits generates the necessary cash required for economic growth.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 13 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Pro forma financial statements are<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the most comprehensive means of financial forecasting.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.often required by prospective creditors.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.projections of financial statements for a future period.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.all of these.<\/p>\n

Question 14 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) When the cost of raw materials is increasing, FIFO accounting<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.yields higher ending inventory values than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.produces higher unit sales than using LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.yields higher cost of goods sold than LIFO.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these.<\/p>\n

Question 15 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) If sales volume exceeds the break-even point, the firm will experience<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.an operating loss.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.an operating profit.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.an increase in plant and equipment.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.an increase in stock price.<\/p>\n

\u00a0<\/p>\n

Question 16 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 17 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) Leverage works best when volume is increasing.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

Question 18 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

Question 19 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If the price per unit decreases because of competition but the cost structure remains the same<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.the breakeven point rises.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.the degree of combined leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.the degree of financial leverage declines.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.All of these<\/p>\n

\u00a0<\/p>\n

Question 20 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Sales (100,000 units)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0 1,000,000<\/p>\n

Variable costs\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 300,000<\/p>\n

Contribution margin\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0700,000<\/p>\n

Fixed manufacturing costs\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 200,000<\/p>\n

Operating income \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0500,000<\/p>\n

Interest\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a075,000<\/p>\n

Earnings before taxes\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 425,000<\/p>\n

Taxes (30%)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0127,500<\/p>\n

Net Income\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 $\u00a0\u00a0\u00a0\u00a0\u00a0 297,500<\/p>\n

\u00a0<\/p>\n

Refer to the figure above. The Degree of Operating Leverage is<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.1.40x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.1.56x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.3.33x<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.2.22x<\/p>\n

\u00a0<\/p>\n

Question 21 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 22 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) As the contribution margin rises, the breakeven point goes down.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

\u00a0<\/p>\n

\u00a0B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 23 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

(point) In the percent-of-sales method, an increase in dividends<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.will increase required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.will decrease required new funds.<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.has no effect on required new funds.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.more information is needed.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 24 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not true about leverage?<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A.operating leverage influences the top half of the income statement, determining EBIT.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0B.financial leverage deals with the bottom half of the income statement, determining EPS\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT.\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0D.none of these<\/p>\n

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Question 25 of 25\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The finance department should work independently without the input of other departments because there may be significant biases when creating proformas.<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0A. True<\/p>\n

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\u00a0B. False<\/p>\n

\u00a0<\/p>\n

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Week 3<\/span><\/p>\n

FINC400 quiz 3<\/span><\/h2>\n

FINC400<\/span><\/strong><\/p>\n

\u00a0<\/span><\/p>\n

Week 4<\/span><\/p>\n

\u00a0<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n

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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.need more information<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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Financial capital does not include<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.bonds.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.preferred stock.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]\u00a0A.$3.00<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]<\/span>\u00a0<\/span>D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) An annuity may be defined as<\/span><\/p>\n

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[removed]\u00a0A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/span><\/a><\/span><\/p>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.decreases.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.remains the same.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.increases.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) Within the capital asset pricing model<\/span><\/p>\n

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[removed]\u00a0A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.two of the above are true.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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When inflation rises, preferred stock prices fall.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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\u00a0<\/p>\n<\/td>\n<\/tr>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.is unaffected.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.goes down.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.goes up.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.need more information.<\/span><\/p>\n<\/td>\n

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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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\u00a0<\/span><\/p>\n<\/td>\n

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The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

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[removed]\u00a0A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.It influences their stock price<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
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[removed]\u00a0A.4.41%<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.9.0%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.1.89%<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.6.43%<\/span><\/p>\n<\/td>\n

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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

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[removed]\u00a0A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Future value of an annuity<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.Present value of $1<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Future value of $1<\/span><\/p>\n<\/td>\n

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Week 4<\/span><\/p>\n

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FINC400<\/span><\/strong><\/p>\n

Week 4<\/span><\/p>\n

The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

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[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]D.need more information<\/span><\/p>\n<\/td>\n

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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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(point) The longer the time to maturity:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.the greater the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]B.the less the price increase from an increase in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]C.the greater the price increase from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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[removed]D.the less the price decrease from a decrease in interest rates.<\/span><\/p>\n<\/td>\n

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Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Financial capital does not include<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.stock.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.bonds.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.preferred stock.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.working capital.<\/span><\/p>\n<\/td>\n

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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The growth rate for the firm’s common stock is 7%. The firm\u2019s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.$3.00<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.$37.50<\/span><\/p>\n<\/td>\n

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[removed]C.$50.00<\/span><\/p>\n<\/td>\n

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[removed]D.none of these<\/span><\/p>\n<\/td>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) The calculation of the cost of capital depends upon historical costs of funds.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

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As the interest rate increases, the interest factor (IF) for the present value of $1 increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) An annuity may be defined as<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.a payment at a fixed interest rate.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.a series of payments of unequal amount.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.a series of yearly payments.<\/span><\/p>\n<\/td>\n

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[removed]D.a series of consecutive payments of equal amounts.<\/span><\/p>\n<\/td>\n

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Reset Selection<\/a><\/span><\/p>\n\n\n\n
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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]A.decreases.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.remains the same.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.increases.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.Not enough information to tell.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) Within the capital asset pricing model<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
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[removed]A.the risk-free rate is usually higher than the return in the market.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
\n

[removed]B.the higher the beta the lower the required rate of return.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.beta measures the volatility of an individual stock relative to a stock market index.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.two of the above are true.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is primarily concerned with business risk, financial risk, and inflation risk.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

When inflation rises, preferred stock prices fall.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) If the inflation premium for a bond goes up, the price of the bond<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]A.is unaffected.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]B.goes down.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]C.goes up.<\/span><\/p>\n<\/td>\n

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[removed]D.need more information.<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The time value of money concept becomes less critical as the prime rate increases.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n

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Question 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The required return by investors is important to financial managers for all of the following reasons except:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n\n
\n

[removed]A.It influences the firm’s cost of financing<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
\n

[removed]B.It influences their stock price<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
\n

[removed]C.It is the primary driver of their financial ratios<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
\n

[removed]D.It helps when pricing new issues of securities<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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uestion 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n

\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n\n
\n

[removed]A.4.41%<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
\n

[removed]B.9.0%<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
\n

[removed]C.1.89%<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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[removed]D.6.43%<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
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Question 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]A.Present value of an annuity of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
\n

[removed]B.Future value of an annuity<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
\n

[removed]C.Present value of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n
\n

[removed]D.Future value of $1<\/span><\/p>\n<\/td>\n

\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n\u00a0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 5<\/span><\/p>\n

\u00a0<\/p>\n

FINC400<\/span><\/strong><\/p>\n

Week 5 Quiz” for FINC400 I004 Sum 13<\/span><\/strong><\/p>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 1 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.expected value.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.internal rate of return.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.standard deviation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.coefficient of variation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 2 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a characteristic of beta?<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.Beta measures only the volatility of returns on an individual bond relative to a bond market index.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B.A beta of 1.0 is of equal risk with the market.<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0C.A beta of greater than 1.0 has less risk than the market.<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.Two of the above are true.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
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uestion 3 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital rationing<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
\n

[removed]\u00a0A.is a way of preserving the assets of the firm over the long term.<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B.is a less than optimal way to arrive at capital budgeting decisions.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.assures stockholder wealth maximization.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.assures maximum potential profitability.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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Question 4 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is only a concern of finance and accounting personnel.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

Question 5 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Even though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
\n\n\n\n\n
\n

[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n\n\n\n
\n

Question 6 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the planner to:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n
\n

[removed]\u00a0A.reduce the standard deviations of projects.<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.test possible changes in each variable.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.deal with the uncertainty in forecasting outcome<\/span><\/p>\n<\/td>\n

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D.b and c.<\/span><\/p>\n\n\n\n
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Question 7 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 8 of 25<\/span><\/strong><\/p>\n<\/td>\n

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The cost of capital is assumed to contain no risk for the firm.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 9 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If three investment alternatives all have some degree of risk and different expected returns, which of the following measures could best be used to rank the risk levels of the projects?<\/span><\/p>\n

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[removed]\u00a0A.Coefficient of correlation<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Coefficient of variation<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.Standard deviation of returns<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Net present value<\/span><\/p>\n<\/td>\n

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Question 10 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

To find the exact internal rate of return for projects with uneven cash flows, we can interpolate between two present value annuity factors from Appendix D.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 11 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Projects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle.<\/span><\/p>\n

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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 12 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following is a false statement?<\/span><\/p>\n

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[removed]\u00a0A.Risky investments may produce large losses.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.Risky investments may produce large gains.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.The coefficient of variation is a risk measure.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.Risk-averse investors cannot be induced to invest in risky assets.<\/span><\/p>\n<\/td>\n

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uestion 13 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Regardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 14 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Cash flow can be said to equal<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.operating income less taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.operating income less taxes.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.operating income before depreciation and taxes plus depreciation.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.operating income after taxes minus depreciation.<\/span><\/p>\n<\/td>\n

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Question 15 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

There are several disadvantages to the payback method, among them:<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.payback ignores the time value of money.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.payback emphasizes receiving money back as fast as possible for reinvestment.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.payback is Basic to use and to understand.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.payback can be used in conjunction with time adjusted methods of evaluation.<\/span><\/p>\n<\/td>\n

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uestion 16 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.assumes that cash flows are reinvested at the project’s internal rate of return.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.concentrates on the liquidity aspects of investment projects.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.none of these.<\/span><\/p>\n<\/td>\n

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Question 17 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As the cost of capital increases<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.fewer projects are accepted.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0B.more projects are accepted.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.project selection remains unchanged.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.None of these.<\/span><\/p>\n<\/td>\n

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Question 18 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The capital budgeting decisions of a firm will have no effect on the share price of the common stock.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False-<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 19 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The payback method considers all cash inflows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/p>\n

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uestion 20 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Capital budgeting is primarily concerned with<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.capital formation in the economy.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.planning future financing needs.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0C.evaluating investment alternatives.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.minimizing the cost of capital.<\/span><\/p>\n<\/td>\n

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Question 21 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 22 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Which of the following statements about the “payback method” is true?<\/span><\/p>\n

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[removed]\u00a0A.The payback method considers cash flows after the payback has been reached.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.The payback method does not consider the time value of money.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.The payback method uses discounted cash-flow techniques.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0D.The payback method generally leads to the same decision as other investment selection methods<\/span><\/p>\n<\/td>\n

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uestion 23 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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Question 24 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Simulation models allow the analyst to test possible changes in the variables used in the model.<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n
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[removed]\u00a0A. True<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B. False<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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uestion 25 of 25<\/span><\/strong><\/p>\n<\/td>\n

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4.0 Points<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The first step in the capital budgeting process is<\/span><\/p>\n

\u00a0<\/span><\/p>\n\n\n\n\n\n\n
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[removed]\u00a0A.collection of data.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0B.idea development.<\/span><\/p>\n<\/td>\n

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[removed]\u00a0C.assign probabilities.<\/span><\/p>\n<\/td>\n

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\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

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[removed]\u00a0D.determine cashflow.<\/span><\/p>\n<\/td>\n

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Week 7<\/p>\n

Question 1 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A bond’s rating can depend on all of the following except<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the corporation’s debt-equity ratio. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the corporation’s size. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the ability of the firm to make interest payments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the coupon rate on the bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 2 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The effect of a rights offering on a stockholder is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to increase his\/her wealth. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to increase his\/her wealth only if the new stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to decrease his\/her wealth unless the stock is purchased. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to decrease his\/her wealth if nothing is done. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 3 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock dividends are a deductible expense for a corporation.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 4 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Question 5 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

A “subordinated debenture”<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must be transferred with the bond to which it is attached. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.is used mainly by railroad companies and usually specifies equipment as collateral. \u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.entitles the bondholder to purchase shares of common stock at a specific price. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.is an unsecured bond with an inferior claim on assets in the event of liquidation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 6 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stockholders always have preemptive rights when new issues of stock are offered.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 7 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Debentures are commonly issued by small companies.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 8 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.higher, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.higher, lower \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.lower, higher \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.lower, lower<\/p>\n

Question 9 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Bondholders never have any control over the actions of a firm.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 10 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The increasing sophistication of individual investors has decreased the role of institutional investors in the stock market.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 11 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

Question 12 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The term debenture refers to<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.long-term, secured debt. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long-term, unsecured debt. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the after-acquired property clause. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a 100-page document covering the specific terms of the offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 13 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 14 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

With regard to interest rates and bond prices it can be said that<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.long-term rates are more volatile than short-term rates. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.a decrease in interest rates will cause bond prices to fall. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 15 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

An increasing proportion of shares in the U.S. are owned by:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.individual investors. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.corporations (Treasury Stock). \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.institutions. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.governments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 16 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Under normal operating conditions, the board of directors is elected by<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the common stockholders. \u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the preferred stockholders. \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the bondholders. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 17 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures.<\/p>\n

Question 18 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The higher the bond rating<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the higher the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the lower the interest rate on a bond. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the higher the call premium. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.the lower the call premium \u00a0\u00a0\u00a0<\/p>\n

Question 19 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The purpose of cumulative voting is<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.to maintain majority control of the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.to allow minority stockholders the possibility of a voice on the board of directors. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.to obstruct unfriendly mergers and takeover efforts. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.to prevent the dilution of common stock through pre-emptive rights offerings. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 20 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 21 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Preferred stock is the least used of all long-term securities because<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.investors can get higher returns after taxes in other investments. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.flotation costs are extremely high compared to bonds. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 22 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

Which of the following is not a form of yield on a bond?<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.coupon rate (nominal yield) \u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.current yield<\/p>\n

C.dividend yield \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.yield to maturity \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

Question 23 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

There are a number of possible advantages to a rights offering:<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.current shareholders are protected against dilution. \u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the firm has a built-in market of knowledgeable investors. \u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.distribution costs are lower than a public offering. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.all of these. \u00a0\u00a0<\/p>\n

Question 24 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

The yield to maturity is the internal rate of return on a bond.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

Question 25 of 25<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/p>\n

When a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.<\/p>\n

Correct<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n

A. True<\/p>\n

B. False<\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

Week 8<\/strong><\/p>\n

Question 1 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Cash flow is equal to earnings before taxes minus depreciation.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 2 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following would not be included in the balance sheet investment account?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.stocks of other corporations <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.long term government bonds \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.marketable securities \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.investments in other corporations \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 3 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The firm\u2019s price-earnings (P\/E) ratio is influenced by its<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.capital structure. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.earnings volatility. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.sales, profit margins, and earnings. \u00a0\u00a0 <\/strong><\/p>\n

D.all of these. \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 4 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Bubba Corp. had earnings before taxes of $400,000 and sales of $2,000,000. If it is in the 40% tax bracket its after-tax profit margin is:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.40% \u00a0 <\/strong><\/p>\n

B.12% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.20% \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.25% \u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 5 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) The break-even point can be calculated as<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.variable costs divided by contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.total costs divided by contribution margin. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.variable cost times contribution margin. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.fixed cost divided by contribution margin. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 6 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 7 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a firm has a break-even point of 40,000 units and the contribution margin on the firm’s single product is $4.00 per unit and fixed costs are $60,000, what will the firm’s operating profit be at sales of 40,000 units?<\/strong><\/p>\n

A.$100,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$30,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$15,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$145,000 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 8 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The contribution margin is equal to price per unit minus total costs per unit.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 3 of 6 – Week 1 Practice Quiz \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 9 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

For most firms, the primary motive for holding cash is the transaction motive.A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 10 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

A Just-In-Time (JIT) inventory management program has all but which of the following requirements?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.quality production \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.large safety stocks \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.close ties between suppliers, manufacturers, and customers \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.minimizing inventory levels <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 11 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Modos Company has deposited $3,500 in checks received from customers. It has written $1,400 in checks to its suppliers. The initial bank and book balance was $600. If $1,600 of its customer\u2019s checks have cleared but only $600 of its own, calculate its float.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.$1,200 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.$1,100 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.$300 \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.$700 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 12 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Even during slack loan periods, banks will never loan out money at an interest rate lower than the prime rate because the prime rate is their best rate.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Part 4 of 6 – Final Exam 20.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 13 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The interest factor for the present value of a single amount is the inverse of the future value interest factor.<\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 14 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.decreases. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.remains the same. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.increases. \u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Not enough information to tell. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 15 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

(point) Within the capital asset pricing model<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.the risk-free rate is usually higher than the return in the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the higher the beta the lower the required rate of return. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.beta measures the volatility of an individual stock relative to a stock market index. \u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.two of the above are true. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

Question 16 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.4.41% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.9.0% <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.1.89% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

D.6.43% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 17 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If the yield to maturity on a bond is greater than the coupon rate, you can assume:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.interest rates have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.the price is below the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.the price is above the par \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.risk premiums have decreased \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 5 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 18 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

The Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.assumes that cash flows are reinvested at the project’s internal rate of return. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.concentrates on the liquidity aspects of investment projects. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.none of these. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 19 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 20 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

There are several disadvantages to the payback method, among them:<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.payback ignores the time value of money. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.payback emphasizes receiving money back as fast as possible for reinvestment. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.payback is Basic to use and to understand. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.payback can be used in conjunction with time adjusted methods of evaluation. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 21 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following is a characteristic of beta?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.A beta of 1.0 is of equal risk with the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.A beta of greater than 1.0 has less risk than the market. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Two of the above are true. \u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Part 6 of 6 – Final Exam 16.0 Points<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 22 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Stock purchased through a rights offering may carry lower margin requirements.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 23 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Bondholders never have any control over the actions of a firm.<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

A. True<\/strong><\/p>\n

B. False<\/strong><\/p>\n

Question 24 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

If a corporate charter includes a provision for preemptive rights, the stockholders<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.must sell their stock to the company. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.get first option to buy additional issues of common stock. \u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.may purchase existing treasury stock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 25 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following best represents the hierarchy of creditor and stockholder claims?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Common stock, senior secured debt, subordinated debentures \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.Senior debentures,<\/strong><\/p>\n

American Public University FINC<\/a>American Public University FINC<\/a>American Public University FINC<\/a>American Public University FINC<\/a>American Public University FINC<\/a>vv<\/h4>\n

\u00a0subordinated debentures, junior secured debt \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.Senior secured debt, subordinated debentures, common stock \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Preferred stock, secured debt, debentures. \u00a0 <\/strong><\/p>\n

\u00a0vvvvvvvvvvvvvvvvv<\/strong>resents the hierarchy of creditor and stockholder claims?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Common stock, senior secured debt, subordinated debentures \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.Senior debentures, subordinated debentures, junior secured debt \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.Senior secured debt, subordinated debentures, common stock \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Preferred stock, secured debt, debentures. \u00a0 <\/strong><\/p>\n

\u00a0<\/strong>s the hierarchy of creditor and stockholder claims?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Common stock, senior secured debt, subordinated debentures \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.Senior debentures, subordinated debentures, junior secured debt \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.Senior secured debt, subordinated debentures, common stock \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Preferred stock, secured debt, debentures. \u00a0 <\/strong><\/p>\n

\u00a0<\/strong>\u00a0debt, subordinated debentures \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.Senior debentures, subordinated debentures, junior secured debt \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.Senior secured debt, subordinated debentures, common stock \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Preferred stock, secured debt, debentures. \u00a0 <\/strong><\/p>\n

\u00a0<\/strong>ubordinated debentures \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.Senior debentures, subordinated debentures, junior secured debt \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.Senior secured debt, subordinated debentures, common stock \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Preferred stock, secured debt, debentures. \u00a0 <\/strong><\/p>\n

\u00a0<\/strong>tock. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.cannot utilize cumulative voting procedures. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0<\/strong><\/p>\n

Question 25 of 25<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 4.0 Points<\/strong><\/p>\n

Which of the following best represents the hierarchy of creditor and stockholder claims?<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A.Common stock, senior secured debt, subordinated debentures \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 B.Senior debentures, subordinated debentures, junior secured debt \u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 C.Senior secured debt, subordinated debentures, common stock \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 D.Preferred stock, secured debt, debentures. \u00a0 <\/strong><\/p>\n

\u00a0<\/p>\n

\u00a0<\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Finc400 quiz 1-8 \u00a0 art 1 of 1 – Week 1 Quiz \u00a0 Question 1 of 25 4.0 Points The firm\u2019s price-earnings (P\/E) ratio is influenced by its \u00a0 [removed]\u00a0A.capital structure. \u00a0 [removed]\u00a0B.earnings volatility. \u00a0 [removed]\u00a0C.sales, profit margins, and earnings. \u00a0 [removed]\u00a0D.all of these. \u00a0 \u00a0 Question 2 of 25 4.0 Points The primary disadvantage […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-9525","post","type-post","status-publish","format-standard","hentry","category-homework-help"],"_links":{"self":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/9525","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/comments?post=9525"}],"version-history":[{"count":0,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/9525\/revisions"}],"wp:attachment":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/media?parent=9525"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/categories?post=9525"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/tags?post=9525"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}