american public university FINC400 quiz 1-8

FINC400 quiz 3

Finc400 quiz 1-8

art 1 of 1 – Week 1 Quiz

Question 1 of 25

4.0 Points

The firm’s price-earnings (P/E) ratio is influenced by its

[removed] A.capital structure. [removed] B.earnings volatility. [removed] C.sales, profit margins, and earnings.

[removed] D.all of these.

Question 2 of 25

4.0 Points

The primary disadvantage of accrual accounting is that

[removed] A.it does not match revenues and expenses in the period in which they are incurred.

[removed] B.it does not appropriately measure accounting profit.

[removed] C.it does not recognize accounts receivable.

[removed] D.it does not adequately show the actual cash flow position of the firm

Q

uestion 3 of 25

4.0 PointsTotal assets of a firm are financed with liabilities and stockholders’ equity. [removed] True[removed] False.

Question 4 of 25

4.0 Points

Gross profit is equal to

[removed] A.sales minus cost of goods sold. [removed] B.sales minus (selling and administrative expenses). [removed] C.sales minus (cost of goods sold and selling and administrative expenses). [removed] D.sales minus (cost of goods sold and depreciation expense).

Question 5 of 25

4.0 Points

The higher the profit of a firm, the higher the value the firm is assured of receiving in the market.

[removed]

A. True

[removed]

B. False

4.0 Points

uestion 6 of 25

Ratios are used to compare different firms in the same industry.

[removed] A. True[removed]

B. False

Question 7 of 25

4.0 Points

The Sarbanes-Oxley Act was passed in an effort to

[removed] A.protect small business from large corporations dominating the market. [removed] B.ensure that partnerships divide profits among partners in a fair manner. [removed] C.guarantee outside auditors can control corporate accounting practices. [removed] D.control corrupt corporate behavior.

4.0 Points

uestion 8 of 25

Which of the following is not subtracted out in arriving at operating income?

Question 9 of 25

4.0 Points

Which of the following is not a primary source of capital to the firm?

Question 10 of 25

4.0 Points

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?

Question 11 of 25

4.0 Points

Debt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power.

[removed] A. True[removed] B. False

4.0 Points

uestion 12 of 25

A firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of

Q

uestion 13 of 25

4.0 Points

The P/E ratio is strongly related to the past performance of the firm.

[removed] A. True[removed] B. False

Question 14 of 25

4.0 Points

Money markets would include which of the following securities?

[removed] D.all of these.

[removed] A.common stock and corporate bonds.

[removed] B.treasury bills and commercial paper.

[removed] C.certificates of deposit and preferred stock.

4.0 Points

uestion 15 of 25

Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders.

[removed] A. True[removed] B. False

Q

uestion 16 of 25

4.0 Points

Preferred stock is excluded from stockholders equity because it does not have full voting rights.

[removed] A. True[removed] B. False

Q

uestion 17 of 25

4.0 Points

Sales minus cost of goods sold is equal to earnings before taxes.

[removed] A. True[removed] B. False

uestion 18 of 25

4.0 PointsAsset utilization ratios [removed] A.relate balance sheet assets to income statement sales. [removed] B.measure how much cash is available for reinvestment into current assets. [removed] C.are most important to stockholders. [removed] D.measures the firm’s ability to generate a profit on sales.

Question 19 of 25

4.0 PointsThe P/E ratio provides no indication of investors’ expectations about the future of a company. [removed] A. True[removed] B. False

Q

uestion 20 of 25

4.0 Points

Asset utilization ratios relate balance sheet assets to income statement sales.

[removed] A. True[removed] B. False

Question 21 of 25

4.0 Points

Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.

[removed] A. True[removed] B. False

Q

uestion 22 of 25

4.0 Points

Which of the following is an outflow of cash?

4.0 Points

uestion 23 of 25

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:

Q

uestion 24 of 25

4.0 Points

The income statement is the major device for measuring the profitability of a firm over a period of time.

[removed] A. True[removed] B. False

Q

uestion 25 of 25

4.0 Points

Which of the following is an inflow of cash?

Week 2

Question 1 of 25 4.0 Points

A lower price for the firm’s product will reduce the firm’s breakeven point.

A. True

B. False

Question 2 of 25 4.0 Points

(point) Profit is generally adequate to finance significant growth.

A. True B. False

Question 3 of 25

4.0 Points

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?

A.$100,000

B.$30,000

C.$15,000

D.$145,000

Question 4 of 25 4.0 Points

(point) The break-even point can be calculated as

A.variable costs divided by contribution margin.

B.total costs divided by contribution margin.

C.variable cost times contribution margin.

D.fixed cost divided by contribution margin.

Question 5 of 25 4.0 Points

The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.

A. True

B. False

Question 6 of 25

4.0 Points

If fixed costs rise while other variables stay constant

A.the breakeven point rises.

B.degree of operating leverage increases.

C.total profit declines.

D.all of these

Question 7 of 25 4.0 Points

Operating leverage emphasizes the impact of using fixed assets in the business.

A. True B. False

Question 8 of 25

4.0 Points

(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced

A.is higher.

B.is lower.

C.is the same.

D.can be either higher or lower.

Question 9 of 25 4.0 Points

The contribution margin is equal to price per unit minus total costs per unit.

A. True B. False

Question 10 of 25 4.0 Points

(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?

A.decrease in inventory.

B.increase in retained earnings.

C.decrease in accounts payable.

D.decrease in accounts receivable.

Question 11 of 25 4.0 Points

An increase in sales and profits generates the necessary cash required for economic growth.

A. True B. False

Question 12 of 25

4.0 Points

The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.

A. True B. False

Question 13 of 25

4.0 Points

Pro forma financial statements are

A.the most comprehensive means of financial forecasting.

B.often required by prospective creditors.

C.projections of financial statements for a future period.

D.all of these.

Question 14 of 25 4.0 Points

(point) When the cost of raw materials is increasing, FIFO accounting

A.yields higher ending inventory values than LIFO.

B.produces higher unit sales than using LIFO.

C.yields higher cost of goods sold than LIFO.

D.All of these

Question 15 of 25

4.0 Points

(point) If sales volume exceeds the break-even point, the firm will experience

A.an operating loss.

B.an operating profit.

C.an increase in plant and equipment.

D.an increase in stock price.

Question 16 of 25

4.0 Points

The value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.

A. True B. False

Question 17 of 25

4.0 Points

(point) Leverage works best when volume is increasing.

A. True B. False

Question 18 of 25

4.0 Points

(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.

A. True B. False

Question 19 of 25 4.0 Points

If the price per unit decreases because of competition but the cost structure remains the same

A.the breakeven point rises.

B.the degree of combined leverage declines.

C.the degree of financial leverage declines.

D.All of these

Question 20 of 25

4.0 Points

Sales (100,000 units) $ 1,000,000

Variable costs 300,000

Contribution margin 700,000

Fixed manufacturing costs 200,000

Operating income 500,000

Interest 75,000

Earnings before taxes 425,000

Taxes (30%) 127,500

Net Income $ 297,500

Refer to the figure above. The Degree of Operating Leverage is

A.1.40x

B.1.56x

C.3.33x

D.2.22x

Question 21 of 25 4.0 Points

(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.

A. True B. False

Question 22 of 25

4.0 Points

(point) As the contribution margin rises, the breakeven point goes down.

A. True B. False

Question 23 of 25

4.0 Points

(point) In the percent-of-sales method, an increase in dividends

A.will increase required new funds.

B.will decrease required new funds.

C.has no effect on required new funds.

D.more information is needed.

Question 24 of 25

4.0 Points

Which of the following is not true about leverage?

A.operating leverage influences the top half of the income statement, determining EBIT.

B.financial leverage deals with the bottom half of the income statement, determining EPS

C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT.

D.none of these

Question 25 of 25

4.0 Points

The finance department should work independently without the input of other departments because there may be significant biases when creating proformas.

A. True B. False

Week 3

FINC400

quiz 3FINC400

Week 4

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.

Question 1 of 254.0 Points

If the inflation premium for a bond goes up, the price of the bond

[removed] A.is unaffected.

[removed] B.goes down.

[removed] C.goes up.

[removed] D.need more information

Question 2 of 254.0 Points

The interest factor for the present value of a single amount is the inverse of the future value interest factor.

[removed] A. True[removed] B. FalseQ

uestion 3 of 254.0 Points

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.

[removed] A. True[removed] B. False

Question 4 of 254.0 Points

(point) The longer the time to maturity:

Question 5 of 254.0 Points

(point)

As the interest rate increases, the interest factor (IF) for the present value of $1 increases.

[removed] A. True[removed] B. False

Question 6 of 254.0 Points

Financial capital does not include

Question 7 of 254.0 Points

The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?

Question 8 of 254.0 Points

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.

[removed] A. True[removed] B. False

Question 9 of 254.0 Points

The calculation of the cost of capital depends upon historical costs of funds.

[removed] A. True[removed] B. False

Question 10 of 254.0 Points

(point) The calculation of the cost of capital depends upon historical costs of funds.

[removed] A. True[removed] B. False

Question 11 of 254.0 Points

As the interest rate increases, the interest factor (IF) for the present value of $1 increases. [removed] A. True[removed] B. False Question 12 of 254.0 Points

(point) An annuity may be defined as

[removed] A.a payment at a fixed interest rate. [removed] B.a series of payments of unequal amount. [removed] C.a series of yearly payments. [removed] D.a series of consecutive payments of equal amounts.

Reset Selection

uestion 13 of 254.0 Points

As the time period until receipt increases, the present value of an amount at a fixed interest rate

[removed] A.decreases. [removed] B.remains the same. [removed] C.increases. [removed] D.Not enough information to tell.

Question 14 of 254.0 Points

(point) Within the capital asset pricing model

[removed] A.the risk-free rate is usually higher than the return in the market. [removed] B.the higher the beta the lower the required rate of return. [removed] C.beta measures the volatility of an individual stock relative to a stock market index. [removed] D.two of the above are true.

Question 15 of 254.0 Points

The risk premium is primarily concerned with business risk, financial risk, and inflation risk.

[removed] A. True[removed] B. False

uestion 16 of 254.0 Points

When inflation rises, preferred stock prices fall.

[removed] A. True[removed] B. False

uestion 17 of 254.0 Points

(point) If the inflation premium for a bond goes up, the price of the bond

[removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up.

[removed] D.need more information.

uestion 18 of 254.0 Points

The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.

[removed] A. True[removed] B. False

Question 19 of 254.0 Points

(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.

[removed] A. True[removed] B. False

uestion 20 of 254.0 Points

The time value of money concept becomes less critical as the prime rate increases.

[removed] A. True[removed] B. False

Question 21 of 254.0 Points

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.

[removed] A. True[removed] B. False Q

uestion 22 of 254.0 Points

The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.

[removed] A. True[removed] B. False

Question 23 of 254.0 Points

The required return by investors is important to financial managers for all of the following reasons except:

uestion 24 of 254.0 Points

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?

[removed] A.4.41%

[removed] B.9.0%

[removed] C.1.89%

[removed] D.6.43%

uestion 25 of 254.0 Points

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?

[removed] A.Present value of an annuity of $1 [removed] B.Future value of an annuity [removed] C.Present value of $1 [removed] D.Future value of $1 Week 4 FINC400Week 4The 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.

Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond

[removed]D.need more information

[removed]A.is unaffected.

[removed]B.goes down.

[removed]C.goes up.

Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.

[removed]A. True[removed]B. False

Question 3 of 254.0 Points

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.

[removed]A. True[removed]B. FalseQuestion 4 of 254.0 Points

(point) The longer the time to maturity:

Question 5 of 254.0 Points

(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.

[removed]A. True[removed]B. FalseQuestion 6 of 254.0 Points

Financial capital does not include

Question 7 of 254.0 Points

The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?

Question 8 of 254.0 Points

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. [removed]A. True[removed]B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds.

[removed]A. True[removed]B. FalseQuestion 10 of 254.0 Points

(point) The calculation of the cost of capital depends upon historical costs of funds.

[removed]A. True[removed]B. FalseQuestion 11 of 254.0 Points

As the interest rate increases, the interest factor (IF) for the present value of $1 increases.

[removed]A. True[removed]B. False

uestion 17 of 254.0 Points

Question 12 of 254.0 Points(point) An annuity may be defined as [removed]A.a payment at a fixed interest rate. [removed]B.a series of payments of unequal amount. [removed]C.a series of yearly payments. [removed]D.a series of consecutive payments of equal amounts. Reset Selectionuestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate [removed]A.decreases. [removed]B.remains the same. [removed]C.increases. [removed]D.Not enough information to tell. Question 14 of 254.0 Points(point) Within the capital asset pricing model [removed]A.the risk-free rate is usually higher than the return in the market. [removed]B.the higher the beta the lower the required rate of return. [removed]C.beta measures the volatility of an individual stock relative to a stock market index. [removed]D.two of the above are true. Question 15 of 254.0 Points The risk premium is primarily concerned with business risk, financial risk, and inflation risk. [removed]A. True[removed]B. Falseuestion 16 of 254.0 Points When inflation rises, preferred stock prices fall. [removed]A. True[removed]B. False

(point) If the inflation premium for a bond goes up, the price of the bond

[removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up.

[removed]D.need more information.

uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return.

[removed]A. True[removed]B. FalseQuestion 19 of 254.0 Points

(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.

[removed]A. True[removed]B. Falseuestion 20 of 254.0 Points

The time value of money concept becomes less critical as the prime rate increases.

[removed]A. True[removed]B. FalseQuestion 21 of 254.0 Points

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.

[removed]A. True[removed]B. False

Question 22 of 254.0 Points

The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.

[removed]A. True[removed]B. FalseQuestion 23 of 254.0 Points

The required return by investors is important to financial managers for all of the following reasons except:

uestion 24 of 254.0 Points

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?

Question 25 of 254.0 Points

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? [removed]A.Present value of an annuity of $1 [removed]B.Future value of an annuity [removed]C.Present value of $1 [removed]D.Future value of $1

Week 5

FINC400

Week 5 Quiz” for FINC400 I004 Sum 13

Question 1 of 254.0 Points

In determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the

Question 2 of 254.0 Points

Which of the following is a characteristic of beta?

uestion 3 of 254.0 Points

Capital rationing

Question 4 of 254.0 Points

Capital budgeting is only a concern of finance and accounting personnel.

[removed] A. True[removed] B. False Question 5 of 254.0 Points

Even though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow.

[removed] A. True[removed] B. False Question 6 of 254.0 Points

Simulation models allow the planner to:

[removed] A.reduce the standard deviations of projects.

[removed] B.test possible changes in each variable.

[removed] C.deal with the uncertainty in forecasting outcome

D.b and c.

Question 7 of 254.0 Points

The selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected.

[removed] A. True[removed] B. False Question 8 of 254.0 Points

The cost of capital is assumed to contain no risk for the firm.

[removed] A. True[removed] B. False Question 9 of 254.0 Points

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?

Question 10 of 254.0 Points

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.

[removed] A. True[removed] B. False Question 11 of 254.0 Points

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.

[removed] A. True[removed] B. False

Question 12 of 254.0 Points

Which of the following is a false statement?

[removed] A.Risky investments may produce large losses. [removed] B.Risky investments may produce large gains. [removed] C.The coefficient of variation is a risk measure. [removed] D.Risk-averse investors cannot be induced to invest in risky assets.

uestion 13 of 254.0 Points

Regardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital.

[removed] A. True[removed] B. False Question 14 of 254.0 Points

Cash flow can be said to equal

Question 15 of 254.0 Points

There are several disadvantages to the payback method, among them:

uestion 16 of 254.0 Points

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

Question 17 of 254.0 Points

As the cost of capital increases

Question 18 of 254.0 Points

The capital budgeting decisions of a firm will have no effect on the share price of the common stock.

[removed] A. True[removed] B. False-

Question 19 of 254.0 Points

The payback method considers all cash inflows.

[removed] A. True[removed] B. False uestion 20 of 254.0 Points

Capital budgeting is primarily concerned with

Question 21 of 254.0 Points

In most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.

[removed] A. True[removed] B. False uestion 22 of 254.0 Points

Which of the following statements about the “payback method” is true?

uestion 23 of 254.0 Points

The internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows.

[removed] A. True[removed] B. False

Question 24 of 254.0 Points

Simulation models allow the analyst to test possible changes in the variables used in the model.

[removed] A. True[removed] B. False uestion 25 of 254.0 Points

The first step in the capital budgeting process is

Week 7

Question 1 of 25

4.0 Points

A bond’s rating can depend on all of the following except

A.the corporation’s debt-equity ratio.

B.the corporation’s size.

C.the ability of the firm to make interest payments.

D.the coupon rate on the bond.

Question 2 of 25 4.0 Points

The effect of a rights offering on a stockholder is

A.to increase his/her wealth.

B.to increase his/her wealth only if the new stock is purchased.

C.to decrease his/her wealth unless the stock is purchased.

D.to decrease his/her wealth if nothing is done.

Question 3 of 25 4.0 Points

Preferred stock dividends are a deductible expense for a corporation.

A. TrueB. FalseQuestion 4 of 25 4.0 Points

The costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue.

A. TrueB. False Question 5 of 25 4.0 Points

A “subordinated debenture”

A.must be transferred with the bond to which it is attached.

B.is used mainly by railroad companies and usually specifies equipment as collateral.

C.entitles the bondholder to purchase shares of common stock at a specific price.

D.is an unsecured bond with an inferior claim on assets in the event of liquidation.

Question 6 of 25 4.0 Points

Stockholders always have preemptive rights when new issues of stock are offered.

A. TrueB. FalseQuestion 7 of 25 4.0 Points

Debentures are commonly issued by small companies.

A. TrueB. FalseQuestion 8 of 25 4.0 Points

The subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price.

A.higher, higher

B.higher, lower

C.lower, higher

D.lower, lower

Question 9 of 25 4.0 Points

Bondholders never have any control over the actions of a firm.

A. TrueB. FalseQuestion 10 of 25 4.0 Points

The increasing sophistication of individual investors has decreased the role of institutional investors in the stock market.

A. TrueB. False Question 11 of 25 4.0 Points

Stock purchased through a rights offering may carry lower margin requirements.

A. TrueB. False Question 12 of 25 4.0 Points

The term debenture refers to

A.long-term, secured debt.

B.long-term, unsecured debt.

C.the after-acquired property clause.

D.a 100-page document covering the specific terms of the offering.

Question 13 of 25 4.0 Points

The difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.

A. TrueB. FalseQuestion 14 of 25 4.0 Points

With regard to interest rates and bond prices it can be said that

A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices.

B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices.

C.long-term rates are more volatile than short-term rates.

D.a decrease in interest rates will cause bond prices to fall.

Question 15 of 25 4.0 Points

An increasing proportion of shares in the U.S. are owned by:

A.individual investors.

B.corporations (Treasury Stock).

C.institutions.

D.governments.

Question 16 of 25 4.0 Points

Under normal operating conditions, the board of directors is elected by

A.the common stockholders.

B.the preferred stockholders.

C.the bondholders.

D.two of the above.

Question 17 of 25 4.0 Points

If a corporate charter includes a provision for preemptive rights, the stockholders

A.must sell their stock to the company.

B.get first option to buy additional issues of common stock.

C.may purchase existing treasury s

tock.

D.cannot utilize cumulative voting procedures.

Question 18 of 25 4.0 Points

The higher the bond rating

A.the higher the interest rate on a bond.

B.the lower the interest rate on a bond.

C.the higher the call premium.

D.the lower the call premium

Question 19 of 25 4.0 Points

The purpose of cumulative voting is

A.to maintain majority control of the board of directors.

B.to allow minority stockholders the possibility of a voice on the board of directors.

C.to obstruct unfriendly mergers and takeover efforts.

D.to prevent the dilution of common stock through pre-emptive rights offerings.

Question 20 of 25 4.0 Points

The weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.

Correct

A. TrueB. FalseQuestion 21 of 25 4.0 Points

Preferred stock is the least used of all long-term securities because

A.investors can get higher returns after taxes in other investments.

B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible.

C.flotation costs are extremely high compared to bonds.

D.all of these.

Question 22 of 25 4.0 Points

Which of the following is not a form of yield on a bond?

A.coupon rate (nominal yield)

B.current yield

C.dividend yield

D.yield to maturity

Question 23 of 25 4.0 Points

There are a number of possible advantages to a rights offering:

A.current shareholders are protected against dilution.

B.the firm has a built-in market of knowledgeable investors.

C.distribution costs are lower than a public offering.

D.all of these. Question 24 of 25 4.0 Points

The yield to maturity is the internal rate of return on a bond.

Correct A. TrueB. FalseQuestion 25 of 25 4.0 Points

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.

Correct A. TrueB. False

Week 8

Question 1 of 25 4.0 Points

Cash flow is equal to earnings before taxes minus depreciation.

A. TrueB. False Question 2 of 25 4.0 Points

Which of the following would not be included in the balance sheet investment account?

A.stocks of other corporations

B.long term government bonds

C.marketable securities

D.investments in other corporations

Question 3 of 25 4.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its

A.capital structure.

B.earnings volatility.

C.sales, profit margins, and earnings.

D.all of these.

Question 4 of 25 4.0 PointsThe 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:

A.40%

B.12%

C.20%

D.25%

Question 5 of 25 4.0 Points(point) The break-even point can be calculated as

A.variable costs divided by contribution margin.

B.total costs divided by contribution margin.

C.variable cost times contribution margin.

D.fixed cost divided by contribution margin.

Question 6 of 25 4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage. A. TrueB. False Question 7 of 25 4.0 PointsIf 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?

A.$100,000

B.$30,000

C.$15,000

D.$145,000

Question 8 of 25 4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit.A. TrueB. False

Part 3 of 6 – Week 1 Practice Quiz 16.0 Points

Question 9 of 25 4.0 Points

For most firms, the primary motive for holding cash is the transaction motive.A. True

B. FalseQuestion 10 of 25 4.0 Points

A Just-In-Time (JIT) inventory management program has all but which of the following requirements?

A.quality production

B.large safety stocks

C.close ties between suppliers, manufacturers, and customers

D.minimizing inventory levels

Question 11 of 25 4.0 Points

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’s checks have cleared but only $600 of its own, calculate its float.

A.$1,200

B.$1,100

C.$300

D.$700

Question 12 of 25 4.0 Points

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.

A. TrueB. False

Part 4 of 6 – Final Exam 20.0 Points

Question 13 of 25 4.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.A. TrueB. False Question 14 of 25 4.0 Points

(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate

A.decreases.

B.remains the same.

C.increases.

D.Not enough information to tell.

Question 15 of 25 4.0 Points(point) Within the capital asset pricing model

A.the risk-free rate is usually higher than the return in the market.

B.the higher the beta the lower the required rate of return.

C.beta measures the volatility of an individual stock relative to a stock market index.

D.two of the above are true.

Question 16 of 25 4.0 PointsLewis, 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?

A.4.41%

B.9.0%

C.1.89%

D.6.43%

Question 17 of 25 4.0 Points

If the yield to maturity on a bond is greater than the coupon rate, you can assume:

A.interest rates have decreased

B.the price is below the par

C.the price is above the par

D.risk premiums have decreased

Part 5 of 6 – Final Exam 16.0 Points

Question 18 of 25 4.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method

A.assumes that cash flows are reinvested at the project’s internal rate of return.

B.concentrates on the liquidity aspects of investment projects.

C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital.

D.none of these.

Question 19 of 25 4.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows. A. TrueB. False Question 20 of 25 4.0 PointsThere are several disadvantages to the payback method, among them:

A.payback ignores the time value of money.

B.payback emphasizes receiving money back as fast as possible for reinvestment.

C.payback is Basic to use and to understand.

D.payback can be used in conjunction with time adjusted methods of evaluation.

Question 21 of 25 4.0 PointsWhich of the following is a characteristic of beta?

A.Beta measures only the volatility of returns on an individual bond relative to a bond market index.

B.A beta of 1.0 is of equal risk with the market.

C.A beta of greater than 1.0 has less risk than the market.

D.Two of the above are true.

Part 6 of 6 – Final Exam 16.0 Points

Question 22 of 25 4.0 PointsStock purchased through a rights offering may carry lower margin requirements. A. TrueB. False Question 23 of 25 4.0 PointsBondholders never have any control over the actions of a firm. A. TrueB. FalseQuestion 24 of 25 4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders

A.must sell their stock to the company.

B.get first option to buy additional issues of common stock.

C.may purchase existing treasury sFinc400 quiz 1-8 art 1 of 1 – Week 1 Quiz

Question 1 of 254.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its [removed] A.capital structure. [removed] B.earnings volatility. [removed] C.sales, profit margins, and earnings. [removed] D.all of these.

Question 2 of 254.0 PointsThe primary disadvantage of accrual accounting is that

[removed] A.it does not match revenues and expenses in the period in which they are incurred. [removed] B.it does not appropriately measure accounting profit. [removed] C.it does not recognize accounts receivable.

[removed] D.it does not adequately show the actual cash flow position of the firm Question 3 of 254.0 PointsTotal assets of a firm are financed with liabilities and stockholders’ equity. [removed] True[removed] False. Question 4 of 254.0 PointsGross profit is equal to [removed] A.sales minus cost of goods sold. [removed] B.sales minus (selling and administrative expenses). [removed] C.sales minus (cost of goods sold and selling and administrative expenses). [removed] D.sales minus (cost of goods sold and depreciation expense).

Question 5 of 254.0 PointsThe higher the profit of a firm, the higher the value the firm is assured of receiving in the market. [removed] A. True[removed] B. False uestion 6 of 254.0 PointsRatios are used to compare different firms in the same industry. [removed] A. True[removed] B. False

Question 7 of 254.0 PointsThe Sarbanes-Oxley Act was passed in an effort to [removed] A.protect small business from large corporations dominating the market. [removed] B.ensure that partnerships divide profits among partners in a fair manner. [removed] C.guarantee outside auditors can control corporate accounting practices. [removed] D.control corrupt corporate behavior.

uestion 8 of 254.0 PointsWhich of the following is not subtracted out in arriving at operating income? [removed] A.interest expense [removed] B.cost of goods sold [removed] C.depreciation [removed] D.selling and administrative expense Question 9 of 254.0 PointsWhich of the following is not a primary source of capital to the firm? [removed] A.assets [removed] B.common stock [removed] C.preferred stock [removed] D.bonds Question 10 of 254.0 PointsA 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? [removed] A.$35 per share [removed] B.$25 per share [removed] C.$15 per share [removed] D.Not enough information to tell Question 11 of 254.0 PointsDebt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power. [removed] A. True[removed] B. False uestion 12 of 254.0 PointsA firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of [removed] A.$60.00 [removed] B.$15.00 [removed] C.$6.67 [removed] D.the market assigns a stock price independent of EPS and the P/E ratio.

Question 13 of 254.0 Points

The P/E ratio is strongly related to the past performance of the firm. [removed] A. True[removed] B. False Question 14 of 254.0 PointsMoney markets would include which of the following securities? [removed] A.common stock and corporate bonds. [removed] B.treasury bills and commercial paper. [removed] C.certificates of deposit and preferred stock. [removed] D.all of these. uestion 15 of 254.0 PointsAgency theory assumes that corporate managers act to increase the wealth of corporate shareholders. [removed] A. True[removed] B. False

Question 16 of 254.0 Points

Preferred stock is excluded from stockholders equity because it does not have full voting rights. [removed] A. True[removed] B. False Question 17 of 254.0 PointsSales minus cost of goods sold is equal to earnings before taxes.

[removed] A. True[removed] B. False Question 18 of 254.0 PointsAsset utilization ratios [removed] A.relate balance sheet assets to income statement sales. [removed] B.measure how much cash is available for reinvestment into current assets. [removed] C.are most important to stockholders. [removed] D.measures the firm’s ability to generate a profit on sales. Question 19 of 254.0 PointsThe P/E ratio provides no indication of investors’ expectations about the future of a company. [removed] A. True[removed] B. False

Question 20 of 254.0 Points

Asset utilization ratios relate balance sheet assets to income statement sales.

[removed] A. True[removed] B. False Question 21 of 254.0 Points

Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.

[removed] A. True[removed] B. False Question 22 of 254.0 Points

Which of the following is an outflow of cash? [removed] A.profitable operations [removed] B.the sale of equipment [removed] C.the sale of the company’s common stock [removed] D.the payment of cash dividends uestion 23 of 254.0 PointsThe 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: [removed] A.40% [removed] B.12% [removed] C.20% [removed] D.25% Question 24 of 254.0 PointsThe income statement is the major device for measuring the profitability of a firm over a period of time. [removed] A. True[removed] B. False Question 25 of 254.0 PointsWhich of the following is an inflow of cash? [removed] A.funds spent in normal business operations [removed] B.the purchase of a new factory [removed] C.the sale of the firm’s bonds [removed] D.the retirement of the firm’s bonds Week 2Question 1 of 25 4.0 PointsA lower price for the firm’s product will reduce the firm’s breakeven point. A. True B. False Question 2 of 25 4.0 Points(point) Profit is generally adequate to finance significant growth. A. True B. False Question 3 of 25 4.0 PointsIf 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? A.$100,000 B.$30,000 C.$15,000 D.$145,000 Question 4 of 25 4.0 Points(point) The break-even point can be calculated as A.variable costs divided by contribution margin. B.total costs divided by contribution margin. C.variable cost times contribution margin. D.fixed cost divided by contribution margin. Question 5 of 25 4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage. A. True B. False

Question 6 of 25 4.0 Points

If fixed costs rise while other variables stay constant A.the breakeven point rises. B.degree of operating leverage increases. C.total profit declines. D.all of theseQuestion 7 of 25 4.0 PointsOperating leverage emphasizes the impact of using fixed assets in the business. A. True B. False

Question 8 of 25 4.0 Points

(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced A.is higher. B.is lower. C.is the same. D.can be either higher or lower.Question 9 of 25 4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit. A. True B. False Question 10 of 25 4.0 Points(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet? A.decrease in inventory. B.increase in retained earnings. C.decrease in accounts payable. D.decrease in accounts receivable. Question 11 of 25 4.0 PointsAn increase in sales and profits generates the necessary cash required for economic growth. A. True B. False

Question 12 of 25 4.0 Points

The percent-of-sales forecast is likely to be most accurate when used with cyclical companies. A. True B. False Question 13 of 25 4.0 PointsPro forma financial statements are A.the most comprehensive means of financial forecasting. B.often required by prospective creditors. C.projections of financial statements for a future period. D.all of these.Question 14 of 25 4.0 Points(point) When the cost of raw materials is increasing, FIFO accounting A.yields higher ending inventory values than LIFO. B.produces higher unit sales than using LIFO. C.yields higher cost of goods sold than LIFO.

D.All of these.

Question 15 of 25 4.0 Points

(point) If sales volume exceeds the break-even point, the firm will experience A.an operating loss. B.an operating profit. C.an increase in plant and equipment. D.an increase in stock price. Question 16 of 25 4.0 PointsThe value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold. A. True B. False Question 17 of 25 4.0 Points(point) Leverage works best when volume is increasing. A. True B. False Question 18 of 25 4.0 Points(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales. A. True B. FalseQuestion 19 of 25 4.0 PointsIf the price per unit decreases because of competition but the cost structure remains the same A.the breakeven point rises. B.the degree of combined leverage declines. C.the degree of financial leverage declines. D.All of these Question 20 of 25 4.0 PointsSales (100,000 units) $ 1,000,000Variable costs 300,000Contribution margin 700,000Fixed manufacturing costs 200,000Operating income 500,000Interest 75,000Earnings before taxes 425,000Taxes (30%) 127,500Net Income $ 297,500 Refer to the figure above. The Degree of Operating Leverage is A.1.40x B.1.56x C.3.33x D.2.22x Question 21 of 25 4.0 Points(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales. A. True B. False Question 22 of 25 4.0 Points(point) As the contribution margin rises, the breakeven point goes down. A. True B. False

Question 23 of 25 4.0 Points

(point) In the percent-of-sales method, an increase in dividends A.will increase required new funds. B.will decrease required new funds. C.has no effect on required new funds. D.more information is needed. Question 24 of 25 4.0 PointsWhich of the following is not true about leverage? A.operating leverage influences the top half of the income statement, determining EBIT. B.financial leverage deals with the bottom half of the income statement, determining EPS C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT. D.none of these Question 25 of 25 4.0 PointsThe finance department should work independently without the input of other departments because there may be significant biases when creating proformas. A. True B. False Week 3

[removed] A.interest expense

[removed] B.cost of goods sold

[removed] C.depreciation

[removed] D.selling and administrative expense

FINC400 Week 4 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.

Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond [removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up. [removed] D.need more information

Question 3 of 254.0 Points

Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor. [removed] A. True[removed] B. False

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.

[removed] A. True[removed] B. False Question 4 of 254.0 Points

(point) The longer the time to maturity: [removed] A.the greater the price increase from an increase in interest rates. [removed] B.the less the price increase from an increase in interest rates. [removed] C.the greater the price increase from a decrease in interest rates. [removed] D.the less the price decrease from a decrease in interest rates. Question 5 of 254.0 Points(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.

[removed] A. True[removed] B. False Question 6 of 254.0 Points

Financial capital does not include

[removed] A.stock. [removed] B.bonds. [removed] C.preferred stock. [removed] D.working capital. Question 7 of 254.0 Points

The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?

[removed] A.$3.00 [removed] B.$37.50 [removed] C.$50.00 [removed] D.none of these Question 8 of 254.0 Points

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. [removed] A. True[removed] B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds.

[removed] A. True[removed] B. False Question 10 of 254.0 Points

(point) The calculation of the cost of capital depends upon historical costs of funds.

[removed] A. True[removed] B. False Question 11 of 254.0 Points

As the interest rate increases, the interest factor (IF) for the present value of $1 increases.

[removed] A. True[removed] B. False

uestion 17 of 254.0 Points

Question 12 of 254.0 Points(point) An annuity may be defined as [removed] A.a payment at a fixed interest rate. [removed] B.a series of payments of unequal amount. [removed] C.a series of yearly payments. [removed] D.a series of consecutive payments of equal amounts. Reset Selection uestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate [removed] A.decreases. [removed] B.remains the same. [removed] C.increases. [removed] D.Not enough information to tell. Question 14 of 254.0 Points(point) Within the capital asset pricing model [removed] A.the risk-free rate is usually higher than the return in the market. [removed] B.the higher the beta the lower the required rate of return. [removed] C.beta measures the volatility of an individual stock relative to a stock market index. [removed] D.two of the above are true. Question 15 of 254.0 Points The risk premium is primarily concerned with business risk, financial risk, and inflation risk. [removed] A. True[removed] B. False uestion 16 of 254.0 Points When inflation rises, preferred stock prices fall. [removed] A. True[removed] B. False

(point) If the inflation premium for a bond goes up, the price of the bond [removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up. [removed] D.need more information. uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return.

[removed] A. True[removed] B. False Question 19 of 254.0 Points

(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.

[removed] A. True[removed] B. False uestion 20 of 254.0 Points

The time value of money concept becomes less critical as the prime rate increases. [removed] A. True[removed] B. False Question 21 of 254.0 Points 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. [removed] A. True[removed] B. False Question 22 of 254.0 Points The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium. [removed] A. True[removed] B. False Question 23 of 254.0 Points The required return by investors is important to financial managers for all of the following reasons except: [removed] A.It influences the firm’s cost of financing [removed] B.It influences their stock price [removed] C.It is the primary driver of their financial ratios [removed] D.It helps when pricing new issues of securities uestion 24 of 254.0 Points 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?

[removed] A.4.41% [removed] B.9.0% [removed] C.1.89% [removed] D.6.43%

Question 25 of 254.0 PointsYou 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? [removed] A.Present value of an annuity of $1 [removed] B.Future value of an annuity [removed] C.Present value of $1 [removed] D.Future value of $1

Week 4 FINC400Week 4The 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.

Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond [removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up. [removed]D.need more information

Question 3 of 254.0 Points

Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor. [removed]A. True[removed]B. False

The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions. [removed]A. True[removed]B. FalseQuestion 4 of 254.0 Points (point) The longer the time to maturity: [removed]A.the greater the price increase from an increase in interest rates. [removed]B.the less the price increase from an increase in interest rates. [removed]C.the greater the price increase from a decrease in interest rates. [removed]D.the less the price decrease from a decrease in interest rates. Question 5 of 254.0 Points(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases. [removed]A. True[removed]B. FalseQuestion 6 of 254.0 Points Financial capital does not include [removed]A.stock. [removed]B.bonds. [removed]C.preferred stock. [removed]D.working capital. Question 7 of 254.0 Points The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%? [removed]A.$3.00 [removed]B.$37.50 [removed]C.$50.00 [removed]D.none of these Question 8 of 254.0 Points 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. [removed]A. True[removed]B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds. [removed]A. True[removed]B. FalseQuestion 10 of 254.0 Points (point) The calculation of the cost of capital depends upon historical costs of funds. [removed]A. True[removed]B. FalseQuestion 11 of 254.0 Points As the interest rate increases, the interest factor (IF) for the present value of $1 increases. [removed]A. True[removed]B. FalseQuestion 12 of 254.0 Points(point) An annuity may be defined as [removed]A.a payment at a fixed interest rate. [removed]B.a series of payments of unequal amount. [removed]C.a series of yearly payments. [removed]D.a series of consecutive payments of equal amounts. Reset Selectionuestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate [removed]A.decreases. [removed]B.remains the same. [removed]C.increases. [removed]D.Not enough information to tell. Question 14 of 254.0 Points(point) Within the capital asset pricing model [removed]A.the risk-free rate is usually higher than the return in the market. [removed]B.the higher the beta the lower the required rate of return. [removed]C.beta measures the volatility of an individual stock relative to a stock market index. [removed]D.two of the above are true. Question 15 of 254.0 Points The risk premium is primarily concerned with business risk, financial risk, and inflation risk. [removed]A. True[removed]B. Falseuestion 16 of 254.0 Points When inflation rises, preferred stock prices fall. [removed]A. True[removed]B. Falseuestion 17 of 254.0 Points (point) If the inflation premium for a bond goes up, the price of the bond [removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up. [removed]D.need more information. uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return. [removed]A. True[removed]B. FalseQuestion 19 of 254.0 Points (point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions. [removed]A. True[removed]B. Falseuestion 20 of 254.0 Points The time value of money concept becomes less critical as the prime rate increases. [removed]A. True[removed]B. FalseQuestion 21 of 254.0 Points 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. [removed]A. True[removed]B. FalseQuestion 22 of 254.0 Points The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium. [removed]A. True[removed]B. FalseQuestion 23 of 254.0 Points The required return by investors is important to financial managers for all of the following reasons except: [removed]A.It influences the firm’s cost of financing [removed]B.It influences their stock price [removed]C.It is the primary driver of their financial ratios [removed]D.It helps when pricing new issues of securities uestion 24 of 254.0 Points 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?

[removed]A.4.41% [removed]B.9.0% [removed]C.1.89% [removed]D.6.43%

Question 25 of 254.0 PointsYou 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? [removed]A.Present value of an annuity of $1 [removed]B.Future value of an annuity [removed]C.Present value of $1 [removed]D.Future value of $1

Week 5 FINC400Week 5 Quiz” for FINC400 I004 Sum 13 Question 1 of 254.0 PointsIn determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the [removed] A.expected value. [removed] B.internal rate of return. [removed] C.standard deviation. [removed] D.coefficient of variation. Question 2 of 254.0 PointsWhich of the following is a characteristic of beta? [removed] A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. [removed] B.A beta of 1.0 is of equal risk with the market. [removed] C.A beta of greater than 1.0 has less risk than the market. [removed] D.Two of the above are true. uestion 3 of 254.0 PointsCapital rationing [removed] A.is a way of preserving the assets of the firm over the long term. [removed] B.is a less than optimal way to arrive at capital budgeting decisions. [removed] C.assures stockholder wealth maximization. [removed] D.assures maximum potential profitability. Question 4 of 254.0 PointsCapital budgeting is only a concern of finance and accounting personnel. [removed] A. True[removed] B. False Question 5 of 254.0 PointsEven though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow. [removed] A. True[removed] B. False Question 6 of 254.0 PointsSimulation models allow the planner to: [removed] A.reduce the standard deviations of projects. [removed] B.test possible changes in each variable. [removed] C.deal with the uncertainty in forecasting outcome D.b and c.Question 7 of 254.0 PointsThe selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected. [removed] A. True[removed] B. False Question 8 of 254.0 PointsThe cost of capital is assumed to contain no risk for the firm. [removed] A. True[removed] B. False Question 9 of 254.0 PointsIf 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? [removed] A.Coefficient of correlation [removed] B.Coefficient of variation [removed] C.Standard deviation of returns [removed] D.Net present value Question 10 of 254.0 PointsTo 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. [removed] A. True[removed] B. False Question 11 of 254.0 PointsProjects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle. [removed] A. True[removed] B. False Question 12 of 254.0 PointsWhich of the following is a false statement? [removed] A.Risky investments may produce large losses. [removed] B.Risky investments may produce large gains. [removed] C.The coefficient of variation is a risk measure. [removed] D.Risk-averse investors cannot be induced to invest in risky assets. uestion 13 of 254.0 PointsRegardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital. [removed] A. True[removed] B. False Question 14 of 254.0 PointsCash flow can be said to equal [removed] A.operating income less taxes plus depreciation. [removed] B.operating income less taxes. [removed] C.operating income before depreciation and taxes plus depreciation. [removed] D.operating income after taxes minus depreciation. Question 15 of 254.0 PointsThere are several disadvantages to the payback method, among them: [removed] A.payback ignores the time value of money. [removed] B.payback emphasizes receiving money back as fast as possible for reinvestment. [removed] C.payback is Basic to use and to understand. [removed] D.payback can be used in conjunction with time adjusted methods of evaluation. uestion 16 of 254.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method [removed] A.assumes that cash flows are reinvested at the project’s internal rate of return. [removed] B.concentrates on the liquidity aspects of investment projects. [removed] C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. [removed] D.none of these. Question 17 of 254.0 PointsAs the cost of capital increases [removed] A.fewer projects are accepted. [removed] B.more projects are accepted. [removed] C.project selection remains unchanged. [removed] D.None of these. Question 18 of 254.0 PointsThe capital budgeting decisions of a firm will have no effect on the share price of the common stock. [removed] A. True[removed] B. False- Question 19 of 254.0 PointsThe payback method considers all cash inflows. [removed] A. True[removed] B. False uestion 20 of 254.0 PointsCapital budgeting is primarily concerned with [removed] A.capital formation in the economy. [removed] B.planning future financing needs. [removed] C.evaluating investment alternatives. [removed] D.minimizing the cost of capital. Question 21 of 254.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows. [removed] A. True[removed] B. False uestion 22 of 254.0 PointsWhich of the following statements about the “payback method” is true? [removed] A.The payback method considers cash flows after the payback has been reached. [removed] B.The payback method does not consider the time value of money. [removed] C.The payback method uses discounted cash-flow techniques. [removed] D.The payback method generally leads to the same decision as other investment selection methods uestion 23 of 254.0 PointsThe internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows. [removed] A. True[removed] B. False Question 24 of 254.0 PointsSimulation models allow the analyst to test possible changes in the variables used in the model. [removed] A. True[removed] B. False uestion 25 of 254.0 PointsThe first step in the capital budgeting process is [removed] A.collection of data. [removed] B.idea development. [removed] C.assign probabilities. [removed] D.determine cashflow. Week 7Question 1 of 25 4.0 PointsA bond’s rating can depend on all of the following except A.the corporation’s debt-equity ratio. B.the corporation’s size. C.the ability of the firm to make interest payments. D.the coupon rate on the bond. Question 2 of 25 4.0 PointsThe effect of a rights offering on a stockholder is A.to increase his/her wealth. B.to increase his/her wealth only if the new stock is purchased. C.to decrease his/her wealth unless the stock is purchased. D.to decrease his/her wealth if nothing is done. Question 3 of 25 4.0 PointsPreferred stock dividends are a deductible expense for a corporation.A. TrueB. FalseQuestion 4 of 25 4.0 PointsThe costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue. A. TrueB. False Question 5 of 25 4.0 PointsA “subordinated debenture” A.must be transferred with the bond to which it is attached. B.is used mainly by railroad companies and usually specifies equipment as collateral. C.entitles the bondholder to purchase shares of common stock at a specific price. D.is an unsecured bond with an inferior claim on assets in the event of liquidation. Question 6 of 25 4.0 PointsStockholders always have preemptive rights when new issues of stock are offered.A. TrueB. FalseQuestion 7 of 25 4.0 PointsDebentures are commonly issued by small companies.A. TrueB. FalseQuestion 8 of 25 4.0 PointsThe subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price. A.higher, higher B.higher, lower C.lower, higher D.lower, lowerQuestion 9 of 25 4.0 PointsBondholders never have any control over the actions of a firm.A. TrueB. FalseQuestion 10 of 25 4.0 PointsThe increasing sophistication of individual investors has decreased the role of institutional investors in the stock market. A. TrueB. False Question 11 of 25 4.0 PointsStock purchased through a rights offering may carry lower margin requirements.A. TrueB. False Question 12 of 25 4.0 PointsThe term debenture refers to A.long-term, secured debt. B.long-term, unsecured debt. C.the after-acquired property clause. D.a 100-page document covering the specific terms of the offering. Question 13 of 25 4.0 PointsThe difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.A. TrueB. FalseQuestion 14 of 25 4.0 PointsWith regard to interest rates and bond prices it can be said that A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices. B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices. C.long-term rates are more volatile than short-term rates. D.a decrease in interest rates will cause bond prices to fall. Question 15 of 25 4.0 PointsAn increasing proportion of shares in the U.S. are owned by: A.individual investors. B.corporations (Treasury Stock). C.institutions. D.governments. Question 16 of 25 4.0 PointsUnder normal operating conditions, the board of directors is elected by A.the common stockholders. B.the preferred stockholders. C.the bondholders. D.two of the above. Question 17 of 25 4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders A.must sell their stock to the company. B.get first option to buy additional issues of common stock.

C.may purchase existing treasury stock.

D.cannot utilize cumulative voting procedures.Question 18 of 25 4.0 PointsThe higher the bond rating A.the higher the interest rate on a bond. B.the lower the interest rate on a bond. C.the higher the call premium. D.the lower the call premium Question 19 of 25 4.0 PointsThe purpose of cumulative voting is A.to maintain majority control of the board of directors. B.to allow minority stockholders the possibility of a voice on the board of directors. C.to obstruct unfriendly mergers and takeover efforts. D.to prevent the dilution of common stock through pre-emptive rights offerings. Question 20 of 25 4.0 PointsThe weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.Correct A. TrueB. FalseQuestion 21 of 25 4.0 PointsPreferred stock is the least used of all long-term securities because A.investors can get higher returns after taxes in other investments. B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible. C.flotation costs are extremely high compared to bonds. D.all of these. Question 22 of 25 4.0 PointsWhich of the following is not a form of yield on a bond? A.coupon rate (nominal yield) B.current yieldC.dividend yield D.yield to maturity Question 23 of 25 4.0 PointsThere are a number of possible advantages to a rights offering: A.current shareholders are protected against dilution. B.the firm has a built-in market of knowledgeable investors. C.distribution costs are lower than a public offering. D.all of these. Question 24 of 25 4.0 PointsThe yield to maturity is the internal rate of return on a bond.Correct A. TrueB. FalseQuestion 25 of 25 4.0 PointsWhen a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.Correct A. TrueB. False Week 8Question 1 of 25 4.0 PointsCash flow is equal to earnings before taxes minus depreciation. A. TrueB. False Question 2 of 25 4.0 PointsWhich of the following would not be included in the balance sheet investment account? A.stocks of other corporations B.long term government bonds C.marketable securities D.investments in other corporations Question 3 of 25 4.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its A.capital structure. B.earnings volatility. C.sales, profit margins, and earnings. D.all of these. Question 4 of 25 4.0 PointsThe 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: A.40% B.12% C.20% D.25% Question 5 of 25 4.0 Points(point) The break-even point can be calculated as A.variable costs divided by contribution margin. B.total costs divided by contribution margin. C.variable cost times contribution margin. D.fixed cost divided by contribution margin. Question 6 of 25 4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage. A. TrueB. False Question 7 of 25 4.0 PointsIf 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?A.$100,000 B.$30,000 C.$15,000 D.$145,000 Question 8 of 25 4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit.A. TrueB. False Part 3 of 6 – Week 1 Practice Quiz 16.0 Points Question 9 of 25 4.0 PointsFor most firms, the primary motive for holding cash is the transaction motive.A. TrueB. FalseQuestion 10 of 25 4.0 PointsA Just-In-Time (JIT) inventory management program has all but which of the following requirements? A.quality production B.large safety stocks C.close ties between suppliers, manufacturers, and customers D.minimizing inventory levels Question 11 of 25 4.0 PointsModos 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’s checks have cleared but only $600 of its own, calculate its float. A.$1,200 B.$1,100 C.$300 D.$700 Question 12 of 25 4.0 PointsEven 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.A. TrueB. FalsePart 4 of 6 – Final Exam 20.0 Points Question 13 of 25 4.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.A. TrueB. False Question 14 of 25 4.0 Points(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate A.decreases. B.remains the same. C.increases. D.Not enough information to tell. Question 15 of 25 4.0 Points(point) Within the capital asset pricing model A.the risk-free rate is usually higher than the return in the market. B.the higher the beta the lower the required rate of return. C.beta measures the volatility of an individual stock relative to a stock market index. D.two of the above are true. Question 16 of 25 4.0 PointsLewis, 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? A.4.41% B.9.0% C.1.89% D.6.43% Question 17 of 25 4.0 PointsIf the yield to maturity on a bond is greater than the coupon rate, you can assume: A.interest rates have decreased B.the price is below the par C.the price is above the par D.risk premiums have decreased Part 5 of 6 – Final Exam 16.0 Points Question 18 of 25 4.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method A.assumes that cash flows are reinvested at the project’s internal rate of return. B.concentrates on the liquidity aspects of investment projects. C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. D.none of these. Question 19 of 25 4.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows. A. TrueB. False Question 20 of 25 4.0 PointsThere are several disadvantages to the payback method, among them: A.payback ignores the time value of money. B.payback emphasizes receiving money back as fast as possible for reinvestment. C.payback is Basic to use and to understand. D.payback can be used in conjunction with time adjusted methods of evaluation. Question 21 of 25 4.0 PointsWhich of the following is a characteristic of beta? A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. B.A beta of 1.0 is of equal risk with the market. C.A beta of greater than 1.0 has less risk than the market. D.Two of the above are true. Part 6 of 6 – Final Exam 16.0 Points Question 22 of 25 4.0 PointsStock purchased through a rights offering may carry lower margin requirements. A. TrueB. False Question 23 of 25 4.0 PointsBondholders never have any control over the actions of a firm. A. TrueB. FalseQuestion 24 of 25 4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders A.must sell their stock to the company. B.get first option to buy additional issues of common stock.

C.may purchase existing treasury stock.

                D.cannot utilize cumulative voting procedures.

Question 25 of 25                4.0 Points

Which of the following best rep

resent

s the hierarchy of creditor and stockholder claims?

                A.Common stock, senior secured

debt, s

Finc400 quiz 1-8 art 1 of 1 – Week 1 Quiz Question 1 of 254.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its  [removed] A.capital structure. [removed] B.earnings volatility. [removed] C.sales, profit margins, and earnings. [removed] D.all of these.  Question 2 of 254.0 PointsThe primary disadvantage of accrual accounting is that  [removed] A.it does not match revenues and expenses in the period in which they are incurred. [removed] B.it does not appropriately measure accounting profit. [removed] C.it does not recognize accounts receivable. [removed] D.it does not adequately show the actual cash flow position of the firm Question 3 of 254.0 PointsTotal assets of a firm are financed with liabilities and stockholders’ equity.  [removed] True[removed] False.  Question 4 of 254.0 PointsGross profit is equal to  [removed] A.sales minus cost of goods sold. [removed] B.sales minus (selling and administrative expenses). [removed] C.sales minus (cost of goods sold and selling and administrative expenses). [removed] D.sales minus (cost of goods sold and depreciation expense).    Question 5 of 254.0 PointsThe higher the profit of a firm, the higher the value the firm is assured of receiving in the market.  [removed] A. True[removed] B. False  uestion 6 of 254.0 PointsRatios are used to compare different firms in the same industry.  [removed] A. True[removed] B. False Question 7 of 254.0 PointsThe Sarbanes-Oxley Act was passed in an effort to  [removed] A.protect small business from large corporations dominating the market. [removed] B.ensure that partnerships divide profits among partners in a fair manner. [removed] C.guarantee outside auditors can control corporate accounting practices. [removed] D.control corrupt corporate behavior.   uestion 8 of 254.0 PointsWhich of the following is not subtracted out in arriving at operating income?  [removed] A.interest expense [removed] B.cost of goods sold [removed] C.depreciation [removed] D.selling and administrative expense   Question 9 of 254.0 PointsWhich of the following is not a primary source of capital to the firm?  [removed] A.assets [removed] B.common stock [removed] C.preferred stock [removed] D.bonds   Question 10 of 254.0 PointsA 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?  [removed] A.$35 per share [removed] B.$25 per share [removed] C.$15 per share [removed] D.Not enough information to tell   Question 11 of 254.0 PointsDebt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power.  [removed] A. True[removed] B. False  uestion 12 of 254.0 PointsA firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of  [removed] A.$60.00 [removed] B.$15.00 [removed] C.$6.67 [removed] D.the market assigns a stock price independent of EPS and the P/E ratio.   Question 13 of 254.0 PointsThe P/E ratio is strongly related to the past performance of the firm.  [removed] A. True[removed] B. False  Question 14 of 254.0 PointsMoney markets would include which of the following securities?  [removed] A.common stock and corporate bonds. [removed] B.treasury bills and commercial paper. [removed] C.certificates of deposit and preferred stock. [removed] D.all of these.   uestion 15 of 254.0 PointsAgency theory assumes that corporate managers act to increase the wealth of corporate shareholders.  [removed] A. True[removed] B. False  Question 16 of 254.0 PointsPreferred stock is excluded from stockholders equity because it does not have full voting rights.  [removed] A. True[removed] B. False  Question 17 of 254.0 PointsSales minus cost of goods sold is equal to earnings before taxes.  [removed] A. True[removed] B. False   Question 18 of 254.0 PointsAsset utilization ratios  [removed] A.relate balance sheet assets to income statement sales. [removed] B.measure how much cash is available for reinvestment into current assets. [removed] C.are most important to stockholders. [removed] D.measures the firm’s ability to generate a profit on sales.    Question 19 of 254.0 PointsThe P/E ratio provides no indication of investors’ expectations about the future of a company.  [removed] A. True[removed] B. False Question 20 of 254.0 PointsAsset utilization ratios relate balance sheet assets to income statement sales.  [removed] A. True[removed] B. False Question 21 of 254.0 Points   Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.  [removed] A. True[removed] B. False Question 22 of 254.0 Points   Which of the following is an outflow of cash?  [removed] A.profitable operations [removed] B.the sale of equipment [removed] C.the sale of the company’s common stock [removed] D.the payment of cash dividends  uestion 23 of 254.0 PointsThe 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:  [removed] A.40% [removed] B.12% [removed] C.20% [removed] D.25%   Question 24 of 254.0 PointsThe income statement is the major device for measuring the profitability of a firm over a period of time.  [removed] A. True[removed] B. False  Question 25 of 254.0 PointsWhich of the following is an inflow of cash?  [removed] A.funds spent in normal business operations [removed] B.the purchase of a new factory [removed] C.the sale of the firm’s bonds [removed] D.the retirement of the firm’s bonds   Week 2Question 1 of 25               4.0 PointsA lower price for the firm’s product will reduce the firm’s breakeven point.                A. True  B. False Question 2 of 25               4.0 Points(point) Profit is generally adequate to finance significant growth.                 A. True  B. False  Question 3 of 25               4.0 PointsIf 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?                 A.$100,000                 B.$30,000                 C.$15,000                 D.$145,000 Question 4 of 25               4.0 Points(point) The break-even point can be calculated as                 A.variable costs divided by contribution margin.                 B.total costs divided by contribution margin.                 C.variable cost times contribution margin.                 D.fixed cost divided by contribution margin.  Question 5 of 25               4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.                 A. True  B. False  Question 6 of 25               4.0 PointsIf fixed costs rise while other variables stay constant                 A.the breakeven point rises.                 B.degree of operating leverage increases.                 C.total profit declines.                 D.all of theseQuestion 7 of 25               4.0 PointsOperating leverage emphasizes the impact of using fixed assets in the business.                A. True  B. False Question 8 of 25               4.0 Points(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced                 A.is higher.                 B.is lower.                 C.is the same.                 D.can be either higher or lower.Question 9 of 25               4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit.                A. True  B. False Question 10 of 25             4.0 Points(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?                 A.decrease in inventory.                 B.increase in retained earnings.                 C.decrease in accounts payable.                 D.decrease in accounts receivable. Question 11 of 25             4.0 PointsAn increase in sales and profits generates the necessary cash required for economic growth.                A. True  B. False Question 12 of 25             4.0 PointsThe percent-of-sales forecast is likely to be most accurate when used with cyclical companies.                 A. True  B. False Question 13 of 25             4.0 PointsPro forma financial statements are                 A.the most comprehensive means of financial forecasting.                 B.often required by prospective creditors.                 C.projections of financial statements for a future period.                 D.all of these.Question 14 of 25             4.0 Points(point) When the cost of raw materials is increasing, FIFO accounting                 A.yields higher ending inventory values than LIFO.                 B.produces higher unit sales than using LIFO.                 C.yields higher cost of goods sold than LIFO.                 D.All of these.Question 15 of 25             4.0 Points(point) If sales volume exceeds the break-even point, the firm will experience                 A.an operating loss.                 B.an operating profit.                 C.an increase in plant and equipment.                 D.an increase in stock price. Question 16 of 25             4.0 PointsThe value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.                 A. True  B. False Question 17 of 25             4.0 Points(point) Leverage works best when volume is increasing.                   A. True  B. False Question 18 of 25             4.0 Points(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.                 A. True  B. FalseQuestion 19 of 25             4.0 PointsIf the price per unit decreases because of competition but the cost structure remains the same                 A.the breakeven point rises.                 B.the degree of combined leverage declines.                 C.the degree of financial leverage declines.                 D.All of these Question 20 of 25             4.0 PointsSales (100,000 units)       $   1,000,000Variable costs             300,000Contribution margin                                700,000Fixed manufacturing costs                    200,000Operating income                     500,000Interest                           75,000Earnings before taxes             425,000Taxes (30%)                                                 127,500Net Income        $      297,500 Refer to the figure above. The Degree of Operating Leverage is                 A.1.40x                 B.1.56x                 C.3.33x                 D.2.22x Question 21 of 25             4.0 Points(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.                 A. True  B. False  Question 22 of 25             4.0 Points(point) As the contribution margin rises, the breakeven point goes down.                 A. True  B. False   Question 23 of 25             4.0 Points(point) In the percent-of-sales method, an increase in dividends                 A.will increase required new funds.                 B.will decrease required new funds.                 C.has no effect on required new funds.                              D.more information is needed.  Question 24 of 25             4.0 PointsWhich of the following is not true about leverage?                 A.operating leverage influences the top half of the income statement, determining EBIT.                           B.financial leverage deals with the bottom half of the income statement, determining EPS                         C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT.                   D.none of these    Question 25 of 25             4.0 PointsThe finance department should work independently without the input of other departments because there may be significant biases when creating proformas.                  A. True  B. False  Week 3FINC400 quiz 3FINC400 Week 4 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. Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond  [removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up. [removed] D.need more information  Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.  [removed] A. True[removed] B. FalseQuestion 3 of 254.0 PointsThe time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.  [removed] A. True[removed] B. False Question 4 of 254.0 Points   (point) The longer the time to maturity:  [removed] A.the greater the price increase from an increase in interest rates. [removed] B.the less the price increase from an increase in interest rates. [removed] C.the greater the price increase from a decrease in interest rates. [removed] D.the less the price decrease from a decrease in interest rates.  Question 5 of 254.0 Points(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.  [removed] A. True[removed] B. False Question 6 of 254.0 Points   Financial capital does not include  [removed] A.stock.  [removed] B.bonds.  [removed] C.preferred stock.  [removed] D.working capital.  Question 7 of 254.0 Points    The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?  [removed] A.$3.00  [removed] B.$37.50  [removed] C.$50.00  [removed] D.none of these  Question 8 of 254.0 Points    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.  [removed] A. True[removed] B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds.  [removed] A. True[removed] B. False Question 10 of 254.0 Points   (point) The calculation of the cost of capital depends upon historical costs of funds.  [removed] A. True[removed] B. False Question 11 of 254.0 Points   As the interest rate increases, the interest factor (IF) for the present value of $1 increases.  [removed] A. True[removed] B. False Question 12 of 254.0 Points(point) An annuity may be defined as  [removed] A.a payment at a fixed interest rate. [removed] B.a series of payments of unequal amount. [removed] C.a series of yearly payments. [removed] D.a series of consecutive payments of equal amounts. Reset Selection uestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate  [removed] A.decreases. [removed] B.remains the same. [removed] C.increases. [removed] D.Not enough information to tell.  Question 14 of 254.0 Points(point) Within the capital asset pricing model  [removed] A.the risk-free rate is usually higher than the return in the market.  [removed] B.the higher the beta the lower the required rate of return.  [removed] C.beta measures the volatility of an individual stock relative to a stock market index.  [removed] D.two of the above are true.  Question 15 of 254.0 Points          The risk premium is primarily concerned with business risk, financial risk, and inflation risk.  [removed] A. True[removed] B. False uestion 16 of 254.0 Points        When inflation rises, preferred stock prices fall.  [removed] A. True[removed] B. False uestion 17 of 254.0 Points    (point) If the inflation premium for a bond goes up, the price of the bond  [removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up. [removed] D.need more information.  uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return.  [removed] A. True[removed] B. False Question 19 of 254.0 Points   (point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.  [removed] A. True[removed] B. False uestion 20 of 254.0 Points   The time value of money concept becomes less critical as the prime rate increases.  [removed] A. True[removed] B. False Question 21 of 254.0 Points   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.  [removed] A. True[removed] B. False Question 22 of 254.0 Points   The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.  [removed] A. True[removed] B. False Question 23 of 254.0 Points   The required return by investors is important to financial managers for all of the following reasons except:  [removed] A.It influences the firm’s cost of financing  [removed] B.It influences their stock price  [removed] C.It is the primary driver of their financial ratios  [removed] D.It helps when pricing new issues of securities  uestion 24 of 254.0 Points    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?  [removed] A.4.41% [removed] B.9.0% [removed] C.1.89% [removed] D.6.43%   Question 25 of 254.0 PointsYou 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?  [removed] A.Present value of an annuity of $1 [removed] B.Future value of an annuity [removed] C.Present value of $1 [removed] D.Future value of $1    Week 4 FINC400Week 4The 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.Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond  [removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up. [removed]D.need more information  Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.  [removed]A. True[removed]B. FalseQuestion 3 of 254.0 PointsThe time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.  [removed]A. True[removed]B. FalseQuestion 4 of 254.0 Points   (point) The longer the time to maturity:  [removed]A.the greater the price increase from an increase in interest rates. [removed]B.the less the price increase from an increase in interest rates. [removed]C.the greater the price increase from a decrease in interest rates. [removed]D.the less the price decrease from a decrease in interest rates.  Question 5 of 254.0 Points(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.  [removed]A. True[removed]B. FalseQuestion 6 of 254.0 Points   Financial capital does not include  [removed]A.stock. [removed]B.bonds. [removed]C.preferred stock. [removed]D.working capital. Question 7 of 254.0 Points    The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?  [removed]A.$3.00 [removed]B.$37.50 [removed]C.$50.00 [removed]D.none of these Question 8 of 254.0 Points    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.  [removed]A. True[removed]B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds.  [removed]A. True[removed]B. FalseQuestion 10 of 254.0 Points   (point) The calculation of the cost of capital depends upon historical costs of funds.  [removed]A. True[removed]B. FalseQuestion 11 of 254.0 Points   As the interest rate increases, the interest factor (IF) for the present value of $1 increases.  [removed]A. True[removed]B. FalseQuestion 12 of 254.0 Points(point) An annuity may be defined as  [removed]A.a payment at a fixed interest rate. [removed]B.a series of payments of unequal amount. [removed]C.a series of yearly payments. [removed]D.a series of consecutive payments of equal amounts. Reset Selectionuestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate  [removed]A.decreases. [removed]B.remains the same. [removed]C.increases. [removed]D.Not enough information to tell.  Question 14 of 254.0 Points(point) Within the capital asset pricing model  [removed]A.the risk-free rate is usually higher than the return in the market. [removed]B.the higher the beta the lower the required rate of return. [removed]C.beta measures the volatility of an individual stock relative to a stock market index. [removed]D.two of the above are true. Question 15 of 254.0 Points     The risk premium is primarily concerned with business risk, financial risk, and inflation risk.  [removed]A. True[removed]B. Falseuestion 16 of 254.0 Points    When inflation rises, preferred stock prices fall.  [removed]A. True[removed]B. Falseuestion 17 of 254.0 Points    (point) If the inflation premium for a bond goes up, the price of the bond  [removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up. [removed]D.need more information.  uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return.  [removed]A. True[removed]B. FalseQuestion 19 of 254.0 Points   (point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.  [removed]A. True[removed]B. Falseuestion 20 of 254.0 Points   The time value of money concept becomes less critical as the prime rate increases.  [removed]A. True[removed]B. FalseQuestion 21 of 254.0 Points   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.  [removed]A. True[removed]B. FalseQuestion 22 of 254.0 Points   The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.  [removed]A. True[removed]B. FalseQuestion 23 of 254.0 Points   The required return by investors is important to financial managers for all of the following reasons except:  [removed]A.It influences the firm’s cost of financing [removed]B.It influences their stock price [removed]C.It is the primary driver of their financial ratios [removed]D.It helps when pricing new issues of securities uestion 24 of 254.0 Points    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?  [removed]A.4.41% [removed]B.9.0% [removed]C.1.89% [removed]D.6.43% Question 25 of 254.0 PointsYou 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?  [removed]A.Present value of an annuity of $1 [removed]B.Future value of an annuity [removed]C.Present value of $1 [removed]D.Future value of $1    Week 5 FINC400Week 5 Quiz” for FINC400 I004 Sum 13  Question 1 of 254.0 PointsIn determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the  [removed] A.expected value. [removed] B.internal rate of return. [removed] C.standard deviation. [removed] D.coefficient of variation.  Question 2 of 254.0 PointsWhich of the following is a characteristic of beta?  [removed] A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. [removed] B.A beta of 1.0 is of equal risk with the market. [removed] C.A beta of greater than 1.0 has less risk than the market. [removed] D.Two of the above are true.  uestion 3 of 254.0 PointsCapital rationing  [removed] A.is a way of preserving the assets of the firm over the long term. [removed] B.is a less than optimal way to arrive at capital budgeting decisions. [removed] C.assures stockholder wealth maximization. [removed] D.assures maximum potential profitability.   Question 4 of 254.0 PointsCapital budgeting is only a concern of finance and accounting personnel.  [removed] A. True[removed] B. False Question 5 of 254.0 PointsEven though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow.  [removed] A. True[removed] B. False Question 6 of 254.0 PointsSimulation models allow the planner to:  [removed] A.reduce the standard deviations of projects. [removed] B.test possible changes in each variable. [removed] C.deal with the uncertainty in forecasting outcome D.b and c.Question 7 of 254.0 PointsThe selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected.  [removed] A. True[removed] B. False Question 8 of 254.0 PointsThe cost of capital is assumed to contain no risk for the firm.  [removed] A. True[removed] B. False Question 9 of 254.0 PointsIf 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?  [removed] A.Coefficient of correlation [removed] B.Coefficient of variation [removed] C.Standard deviation of returns [removed] D.Net present value  Question 10 of 254.0 PointsTo 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.  [removed] A. True[removed] B. False Question 11 of 254.0 PointsProjects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle.  [removed] A. True[removed] B. False  Question 12 of 254.0 PointsWhich of the following is a false statement?  [removed] A.Risky investments may produce large losses. [removed] B.Risky investments may produce large gains. [removed] C.The coefficient of variation is a risk measure. [removed] D.Risk-averse investors cannot be induced to invest in risky assets.  uestion 13 of 254.0 PointsRegardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital.  [removed] A. True[removed] B. False Question 14 of 254.0 PointsCash flow can be said to equal  [removed] A.operating income less taxes plus depreciation. [removed] B.operating income less taxes. [removed] C.operating income before depreciation and taxes plus depreciation. [removed] D.operating income after taxes minus depreciation.  Question 15 of 254.0 PointsThere are several disadvantages to the payback method, among them:  [removed] A.payback ignores the time value of money. [removed] B.payback emphasizes receiving money back as fast as possible for reinvestment. [removed] C.payback is Basic to use and to understand. [removed] D.payback can be used in conjunction with time adjusted methods of evaluation.  uestion 16 of 254.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method  [removed] A.assumes that cash flows are reinvested at the project’s internal rate of return. [removed] B.concentrates on the liquidity aspects of investment projects. [removed] C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. [removed] D.none of these.  Question 17 of 254.0 PointsAs the cost of capital increases  [removed] A.fewer projects are accepted. [removed] B.more projects are accepted. [removed] C.project selection remains unchanged. [removed] D.None of these.  Question 18 of 254.0 PointsThe capital budgeting decisions of a firm will have no effect on the share price of the common stock.  [removed] A. True[removed] B. False- Question 19 of 254.0 PointsThe payback method considers all cash inflows.  [removed] A. True[removed] B. False  uestion 20 of 254.0 PointsCapital budgeting is primarily concerned with  [removed] A.capital formation in the economy. [removed] B.planning future financing needs. [removed] C.evaluating investment alternatives. [removed] D.minimizing the cost of capital.  Question 21 of 254.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.  [removed] A. True[removed] B. False uestion 22 of 254.0 PointsWhich of the following statements about the “payback method” is true?  [removed] A.The payback method considers cash flows after the payback has been reached. [removed] B.The payback method does not consider the time value of money. [removed] C.The payback method uses discounted cash-flow techniques. [removed] D.The payback method generally leads to the same decision as other investment selection methods  uestion 23 of 254.0 PointsThe internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows.  [removed] A. True[removed] B. False Question 24 of 254.0 PointsSimulation models allow the analyst to test possible changes in the variables used in the model.  [removed] A. True[removed] B. False uestion 25 of 254.0 PointsThe first step in the capital budgeting process is  [removed] A.collection of data. [removed] B.idea development. [removed] C.assign probabilities. [removed] D.determine cashflow.   Week 7Question 1 of 25                4.0 PointsA bond’s rating can depend on all of the following except                A.the corporation’s debt-equity ratio.                   B.the corporation’s size.                              C.the ability of the firm to make interest payments.                       D.the coupon rate on the bond.               Question 2 of 25                4.0 PointsThe effect of a rights offering on a stockholder is                A.to increase his/her wealth.                    B.to increase his/her wealth only if the new stock is purchased.                               C.to decrease his/her wealth unless the stock is purchased.                       D.to decrease his/her wealth if nothing is done.               Question 3 of 25                4.0 PointsPreferred stock dividends are a deductible expense for a corporation.A. TrueB. FalseQuestion 4 of 25                4.0 PointsThe costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue.               A. TrueB. False  Question 5 of 25                4.0 PointsA “subordinated debenture”                A.must be transferred with the bond to which it is attached.                      B.is used mainly by railroad companies and usually specifies equipment as collateral.                     C.entitles the bondholder to purchase shares of common stock at a specific price.                           D.is an unsecured bond with an inferior claim on assets in the event of liquidation.         Question 6 of 25                4.0 PointsStockholders always have preemptive rights when new issues of stock are offered.A. TrueB. FalseQuestion 7 of 25                4.0 PointsDebentures are commonly issued by small companies.A. TrueB. FalseQuestion 8 of 25                4.0 PointsThe subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price.                A.higher, higher                              B.higher, lower                                C.lower, higher                                D.lower, lowerQuestion 9 of 25                4.0 PointsBondholders never have any control over the actions of a firm.A. TrueB. FalseQuestion 10 of 25                4.0 PointsThe increasing sophistication of individual investors has decreased the role of institutional investors in the stock market.               A. TrueB. False Question 11 of 25                4.0 PointsStock purchased through a rights offering may carry lower margin requirements.A. TrueB. False Question 12 of 25                4.0 PointsThe term debenture refers to                A.long-term, secured debt.                        B.long-term, unsecured debt.                   C.the after-acquired property clause.                    D.a 100-page document covering the specific terms of the offering.       Question 13 of 25                4.0 PointsThe difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.A. TrueB. FalseQuestion 14 of 25                4.0 PointsWith regard to interest rates and bond prices it can be said that                A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices.                       B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices.                       C.long-term rates are more volatile than short-term rates.                          D.a decrease in interest rates will cause bond prices to fall.         Question 15 of 25                4.0 PointsAn increasing proportion of shares in the U.S. are owned by:                A.individual investors.                  B.corporations (Treasury Stock).                              C.institutions.                   D.governments.              Question 16 of 25                4.0 PointsUnder normal operating conditions, the board of directors is elected by                A.the common stockholders.                    B.the preferred stockholders.                   C.the bondholders.                        D.two of the above.      Question 17 of 25                4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders                A.must sell their stock to the company.                                B.get first option to buy additional issues of common stock.                       C.may purchase existing treasury stock.                               D.cannot utilize cumulative voting procedures.Question 18 of 25                4.0 PointsThe higher the bond rating                A.the higher the interest rate on a bond.                             B.the lower the interest rate on a bond.                              C.the higher the call premium.                  D.the lower the call premium    Question 19 of 25                4.0 PointsThe purpose of cumulative voting is                A.to maintain majority control of the board of directors.                              B.to allow minority stockholders the possibility of a voice on the board of directors.                        C.to obstruct unfriendly mergers and takeover efforts.                                D.to prevent the dilution of common stock through pre-emptive rights offerings.            Question 20 of 25                4.0 PointsThe weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.Correct               A. TrueB. FalseQuestion 21 of 25                4.0 PointsPreferred stock is the least used of all long-term securities because                A.investors can get higher returns after taxes in other investments.                       B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible.                      C.flotation costs are extremely high compared to bonds.                             D.all of these.   Question 22 of 25                4.0 PointsWhich of the following is not a form of yield on a bond?                A.coupon rate (nominal yield)                   B.current yieldC.dividend yield                               D.yield to maturity         Question 23 of 25                4.0 PointsThere are a number of possible advantages to a rights offering:                A.current shareholders are protected against dilution.                  B.the firm has a built-in market of knowledgeable investors.                      C.distribution costs are lower than a public offering.                       D.all of these.   Question 24 of 25                4.0 PointsThe yield to maturity is the internal rate of return on a bond.Correct               A. TrueB. FalseQuestion 25 of 25                4.0 PointsWhen a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.Correct               A. TrueB. False  Week 8Question 1 of 25                4.0 PointsCash flow is equal to earnings before taxes minus depreciation.                A. TrueB. False  Question 2 of 25                4.0 PointsWhich of the following would not be included in the balance sheet investment account?                A.stocks of other corporations                 B.long term government bonds                                C.marketable securities                               D.investments in other corporations      Question 3 of 25                4.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its                A.capital structure.                         B.earnings volatility.                      C.sales, profit margins, and earnings.    D.all of these. Question 4 of 25                4.0 PointsThe 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:                A.40% B.12%                    C.20%                    D.25%    Question 5 of 25                4.0 Points(point) The break-even point can be calculated as                A.variable costs divided by contribution margin.                              B.total costs divided by contribution margin.                     C.variable cost times contribution margin.                          D.fixed cost divided by contribution margin.      Question 6 of 25                4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.                A. TrueB. False  Question 7 of 25                4.0 PointsIf 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?A.$100,000                          B.$30,000                             C.$15,000                             D.$145,000          Question 8 of 25                4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit.A. TrueB. False  Part 3 of 6 – Week 1 Practice Quiz             16.0 Points Question 9 of 25                4.0 PointsFor most firms, the primary motive for holding cash is the transaction motive.A. TrueB. FalseQuestion 10 of 25                4.0 PointsA Just-In-Time (JIT) inventory management program has all but which of the following requirements?                A.quality production                      B.large safety stocks                      C.close ties between suppliers, manufacturers, and customers                                D.minimizing inventory levels   Question 11 of 25                4.0 PointsModos 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’s checks have cleared but only $600 of its own, calculate its float.                A.$1,200                               B.$1,100                               C.$300                 D.$700 Question 12 of 25                4.0 PointsEven 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.A. TrueB. FalsePart 4 of 6 – Final Exam 20.0 Points Question 13 of 25                4.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.A. TrueB. False Question 14 of 25                4.0 Points(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate                A.decreases.                      B.remains the same.                      C.increases.                       D.Not enough information to tell.             Question 15 of 25                4.0 Points(point) Within the capital asset pricing model                A.the risk-free rate is usually higher than the return in the market.                        B.the higher the beta the lower the required rate of return.                      C.beta measures the volatility of an individual stock relative to a stock market index.                 D.two of the above are true.      Question 16 of 25                4.0 PointsLewis, 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?                A.4.41%                                B.9.0%                 C.1.89%                D.6.43%                Question 17 of 25                4.0 PointsIf the yield to maturity on a bond is greater than the coupon rate, you can assume:                A.interest rates have decreased                               B.the price is below the par                        C.the price is above the par                        D.risk premiums have decreased             Part 5 of 6 – Final Exam 16.0 Points Question 18 of 25                4.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method                A.assumes that cash flows are reinvested at the project’s internal rate of return.                            B.concentrates on the liquidity aspects of investment projects.                               C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital.                             D.none of these.              Question 19 of 25                4.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.                A. TrueB. False  Question 20 of 25                4.0 PointsThere are several disadvantages to the payback method, among them:                A.payback ignores the time value of money.                      B.payback emphasizes receiving money back as fast as possible for reinvestment.                         C.payback is Basic to use and to understand.                      D.payback can be used in conjunction with time adjusted methods of evaluation.            Question 21 of 25                4.0 PointsWhich of the following is a characteristic of beta?                A.Beta measures only the volatility of returns on an individual bond relative to a bond market index.                 B.A beta of 1.0 is of equal risk with the market.                                C.A beta of greater than 1.0 has less risk than the market.                           D.Two of the above are true.       Part 6 of 6 – Final Exam 16.0 Points Question 22 of 25                4.0 PointsStock purchased through a rights offering may carry lower margin requirements.                A. TrueB. False Question 23 of 25                4.0 PointsBondholders never have any control over the actions of a firm.                A. TrueB. FalseQuestion 24 of 25                4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders                A.must sell their stock to the company.                                B.get first option to buy additional issues of common stock.                      C.may purchase existing treasury stock.                               D.cannot utilize cumulative voting procedures.                Question 25 of 25                4.0 Points

Which of the following best represents the hierarchy of creditor and stockholder claims?

A.Common stock, senior securedFinc400 quiz 1-8 art 1 of 1 – Week 1 Quiz Question 1 of 254.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its [removed] A.capital structure. [removed] B.earnings volatility. [removed] C.sales, profit margins, and earnings. [removed] D.all of these. Question 2 of 254.0 PointsThe primary disadvantage of accrual accounting is that [removed] A.it does not match revenues and expenses in the period in which they are incurred. [removed] B.it does not appropriately measure accounting profit. [removed] C.it does not recognize accounts receivable. [removed] D.it does not adequately show the actual cash flow position of the firm Question 3 of 254.0 PointsTotal assets of a firm are financed with liabilities and stockholders’ equity. [removed] True[removed] False. Question 4 of 254.0 PointsGross profit is equal to [removed] A.sales minus cost of goods sold. [removed] B.sales minus (selling and administrative expenses). [removed] C.sales minus (cost of goods sold and selling and administrative expenses). [removed] D.sales minus (cost of goods sold and depreciation expense). Question 5 of 254.0 PointsThe higher the profit of a firm, the higher the value the firm is assured of receiving in the market. [removed] A. True[removed] B. False uestion 6 of 254.0 PointsRatios are used to compare different firms in the same industry. [removed] A. True[removed] B. False Question 7 of 254.0 PointsThe Sarbanes-Oxley Act was passed in an effort to [removed] A.protect small business from large corporations dominating the market. [removed] B.ensure that partnerships divide profits among partners in a fair manner. [removed] C.guarantee outside auditors can control corporate accounting practices. [removed] D.control corrupt corporate behavior. uestion 8 of 254.0 PointsWhich of the following is not subtracted out in arriving at operating income? [removed] A.interest expense [removed] B.cost of goods sold [removed] C.depreciation [removed] D.selling and administrative expense Question 9 of 254.0 PointsWhich of the following is not a primary source of capital to the firm? [removed] A.assets [removed] B.common stock [removed] C.preferred stock [removed] D.bonds Question 10 of 254.0 PointsA 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? [removed] A.$35 per share [removed] B.$25 per share [removed] C.$15 per share [removed] D.Not enough information to tell Question 11 of 254.0 PointsDebt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power. [removed] A. True[removed] B. False uestion 12 of 254.0 PointsA firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of [removed] A.$60.00 [removed] B.$15.00 [removed] C.$6.67 [removed] D.the market assigns a stock price independent of EPS and the P/E ratio. Question 13 of 254.0 PointsThe P/E ratio is strongly related to the past performance of the firm. [removed] A. True[removed] B. False Question 14 of 254.0 PointsMoney markets would include which of the following securities? [removed] A.common stock and corporate bonds. [removed] B.treasury bills and commercial paper. [removed] C.certificates of deposit and preferred stock. [removed] D.all of these. uestion 15 of 254.0 PointsAgency theory assumes that corporate managers act to increase the wealth of corporate shareholders. [removed] A. True[removed] B. False Question 16 of 254.0 PointsPreferred stock is excluded from stockholders equity because it does not have full voting rights. [removed] A. True[removed] B. False Question 17 of 254.0 PointsSales minus cost of goods sold is equal to earnings before taxes. [removed] A. True[removed] B. False Question 18 of 254.0 PointsAsset utilization ratios [removed] A.relate balance sheet assets to income statement sales. [removed] B.measure how much cash is available for reinvestment into current assets. [removed] C.are most important to stockholders. [removed] D.measures the firm’s ability to generate a profit on sales. Question 19 of 254.0 PointsThe P/E ratio provides no indication of investors’ expectations about the future of a company. [removed] A. True[removed] B. False Question 20 of 254.0 PointsAsset utilization ratios relate balance sheet assets to income statement sales. [removed] A. True[removed] B. False Question 21 of 254.0 Points Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide. [removed] A. True[removed] B. False Question 22 of 254.0 Points Which of the following is an outflow of cash? [removed] A.profitable operations [removed] B.the sale of equipment [removed] C.the sale of the company’s common stock [removed] D.the payment of cash dividends uestion 23 of 254.0 PointsThe 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: [removed] A.40% [removed] B.12% [removed] C.20% [removed] D.25% Question 24 of 254.0 PointsThe income statement is the major device for measuring the profitability of a firm over a period of time. [removed] A. True[removed] B. False Question 25 of 254.0 PointsWhich of the following is an inflow of cash? [removed] A.funds spent in normal business operations [removed] B.the purchase of a new factory [removed] C.the sale of the firm’s bonds [removed] D.the retirement of the firm’s bonds Week 2Question 1 of 25 4.0 PointsA lower price for the firm’s product will reduce the firm’s breakeven point. A. True B. False Question 2 of 25 4.0 Points(point) Profit is generally adequate to finance significant growth. A. True B. False Question 3 of 25 4.0 PointsIf 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? A.$100,000 B.$30,000 C.$15,000 D.$145,000 Question 4 of 25 4.0 Points(point) The break-even point can be calculated as A.variable costs divided by contribution margin. B.total costs divided by contribution margin. C.variable cost times contribution margin. D.fixed cost divided by contribution margin. Question 5 of 25 4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage. A. True B. False Question 6 of 25 4.0 PointsIf fixed costs rise while other variables stay constant A.the breakeven point rises. B.degree of operating leverage increases. C.total profit declines. D.all of theseQuestion 7 of 25 4.0 PointsOperating leverage emphasizes the impact of using fixed assets in the business. A. True B. False Question 8 of 25 4.0 Points(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced A.is higher. B.is lower. C.is the same. D.can be either higher or lower.Question 9 of 25 4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit. A. True B. False Question 10 of 25 4.0 Points(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet? A.decrease in inventory. B.increase in retained earnings. C.decrease in accounts payable. D.decrease in accounts receivable. Question 11 of 25 4.0 PointsAn increase in sales and profits generates the necessary cash required for economic growth. A. True B. False Question 12 of 25 4.0 PointsThe percent-of-sales forecast is likely to be most accurate when used with cyclical companies. A. True B. False Question 13 of 25 4.0 PointsPro forma financial statements are A.the most comprehensive means of financial forecasting. B.often required by prospective creditors. C.projections of financial statements for a future period. D.all of these.Question 14 of 25 4.0 Points(point) When the cost of raw materials is increasing, FIFO accounting A.yields higher ending inventory values than LIFO. B.produces higher unit sales than using LIFO. C.yields higher cost of goods sold than LIFO. D.All of these.Question 15 of 25 4.0 Points(point) If sales volume exceeds the break-even point, the firm will experience A.an operating loss. B.an operating profit. C.an increase in plant and equipment. D.an increase in stock price. Question 16 of 25 4.0 PointsThe value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold. A. True B. False Question 17 of 25 4.0 Points(point) Leverage works best when volume is increasing. A. True B. False Question 18 of 25 4.0 Points(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales. A. True B. FalseQuestion 19 of 25 4.0 PointsIf the price per unit decreases because of competition but the cost structure remains the same A.the breakeven point rises. B.the degree of combined leverage declines. C.the degree of financial leverage declines. D.All of these Question 20 of 25 4.0 PointsSales (100,000 units) $ 1,000,000Variable costs 300,000Contribution margin 700,000Fixed manufacturing costs 200,000Operating income 500,000Interest 75,000Earnings before taxes 425,000Taxes (30%) 127,500Net Income $ 297,500 Refer to the figure above. The Degree of Operating Leverage is A.1.40x B.1.56x C.3.33x D.2.22x Question 21 of 25 4.0 Points(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales. A. True B. False Question 22 of 25 4.0 Points(point) As the contribution margin rises, the breakeven point goes down. A. True B. False Question 23 of 25 4.0 Points(point) In the percent-of-sales method, an increase in dividends A.will increase required new funds. B.will decrease required new funds. C.has no effect on required new funds. D.more information is needed. Question 24 of 25 4.0 PointsWhich of the following is not true about leverage? A.operating leverage influences the top half of the income statement, determining EBIT. B.financial leverage deals with the bottom half of the income statement, determining EPS C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT. D.none of these Question 25 of 25 4.0 PointsThe finance department should work independently without the input of other departments because there may be significant biases when creating proformas. A. True B. False Week 3FINC400 quiz 3FINC400 Week 4 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. Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond [removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up. [removed] D.need more information Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor. [removed] A. True[removed] B. FalseQuestion 3 of 254.0 PointsThe time value of money is not a useful concept in determining the value of a bond or in capital investment decisions. [removed] A. True[removed] B. False Question 4 of 254.0 Points (point) The longer the time to maturity: [removed] A.the greater the price increase from an increase in interest rates. [removed] B.the less the price increase from an increase in interest rates. [removed] C.the greater the price increase from a decrease in interest rates. [removed] D.the less the price decrease from a decrease in interest rates. Question 5 of 254.0 Points(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases. [removed] A. True[removed] B. False Question 6 of 254.0 Points Financial capital does not include [removed] A.stock. [removed] B.bonds. [removed] C.preferred stock. [removed] D.working capital. Question 7 of 254.0 Points The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%? [removed] A.$3.00 [removed] B.$37.50 [removed] C.$50.00 [removed] D.none of these Question 8 of 254.0 Points 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. [removed] A. True[removed] B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds. [removed] A. True[removed] B. False Question 10 of 254.0 Points (point) The calculation of the cost of capital depends upon historical costs of funds. [removed] A. True[removed] B. False Question 11 of 254.0 Points As the interest rate increases, the interest factor (IF) for the present value of $1 increases. [removed] A. True[removed] B. False Question 12 of 254.0 Points(point) An annuity may be defined as [removed] A.a payment at a fixed interest rate. [removed] B.a series of payments of unequal amount. [removed] C.a series of yearly payments. [removed] D.a series of consecutive payments of equal amounts. Reset Selection uestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate [removed] A.decreases. [removed] B.remains the same. [removed] C.increases. [removed] D.Not enough information to tell. Question 14 of 254.0 Points(point) Within the capital asset pricing model [removed] A.the risk-free rate is usually higher than the return in the market. [removed] B.the higher the beta the lower the required rate of return. [removed] C.beta measures the volatility of an individual stock relative to a stock market index. [removed] D.two of the above are true. Question 15 of 254.0 Points The risk premium is primarily concerned with business risk, financial risk, and inflation risk. [removed] A. True[removed] B. False uestion 16 of 254.0 Points When inflation rises, preferred stock prices fall. [removed] A. True[removed] B. False uestion 17 of 254.0 Points (point) If the inflation premium for a bond goes up, the price of the bond [removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up. [removed] D.need more information. uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return. [removed] A. True[removed] B. False Question 19 of 254.0 Points (point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions. [removed] A. True[removed] B. False uestion 20 of 254.0 Points The time value of money concept becomes less critical as the prime rate increases. [removed] A. True[removed] B. False Question 21 of 254.0 Points 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. [removed] A. True[removed] B. False Question 22 of 254.0 Points The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium. [removed] A. True[removed] B. False Question 23 of 254.0 Points The required return by investors is important to financial managers for all of the following reasons except: [removed] A.It influences the firm’s cost of financing [removed] B.It influences their stock price [removed] C.It is the primary driver of their financial ratios [removed] D.It helps when pricing new issues of securities uestion 24 of 254.0 Points 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? [removed] A.4.41% [removed] B.9.0% [removed] C.1.89% [removed] D.6.43% Question 25 of 254.0 PointsYou 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? [removed] A.Present value of an annuity of $1 [removed] B.Future value of an annuity [removed] C.Present value of $1 [removed] D.Future value of $1 Week 4 FINC400Week 4The 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.Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond [removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up. [removed]D.need more information Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor. [removed]A. True[removed]B. FalseQuestion 3 of 254.0 PointsThe time value of money is not a useful concept in determining the value of a bond or in capital investment decisions. [removed]A. True[removed]B. FalseQuestion 4 of 254.0 Points (point) The longer the time to maturity: [removed]A.the greater the price increase from an increase in interest rates. [removed]B.the less the price increase from an increase in interest rates. [removed]C.the greater the price increase from a decrease in interest rates. [removed]D.the less the price decrease from a decrease in interest rates. Question 5 of 254.0 Points(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases. [removed]A. True[removed]B. FalseQuestion 6 of 254.0 Points Financial capital does not include [removed]A.stock. [removed]B.bonds. [removed]C.preferred stock. [removed]D.working capital. Question 7 of 254.0 Points The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%? [removed]A.$3.00 [removed]B.$37.50 [removed]C.$50.00 [removed]D.none of these Question 8 of 254.0 Points 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. [removed]A. True[removed]B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds. [removed]A. True[removed]B. FalseQuestion 10 of 254.0 Points (point) The calculation of the cost of capital depends upon historical costs of funds. [removed]A. True[removed]B. FalseQuestion 11 of 254.0 Points As the interest rate increases, the interest factor (IF) for the present value of $1 increases. [removed]A. True[removed]B. FalseQuestion 12 of 254.0 Points(point) An annuity may be defined as [removed]A.a payment at a fixed interest rate. [removed]B.a series of payments of unequal amount. [removed]C.a series of yearly payments. [removed]D.a series of consecutive payments of equal amounts. Reset Selectionuestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate [removed]A.decreases. [removed]B.remains the same. [removed]C.increases. [removed]D.Not enough information to tell. Question 14 of 254.0 Points(point) Within the capital asset pricing model [removed]A.the risk-free rate is usually higher than the return in the market. [removed]B.the higher the beta the lower the required rate of return. [removed]C.beta measures the volatility of an individual stock relative to a stock market index. [removed]D.two of the above are true. Question 15 of 254.0 Points The risk premium is primarily concerned with business risk, financial risk, and inflation risk. [removed]A. True[removed]B. Falseuestion 16 of 254.0 Points When inflation rises, preferred stock prices fall. [removed]A. True[removed]B. Falseuestion 17 of 254.0 Points (point) If the inflation premium for a bond goes up, the price of the bond [removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up. [removed]D.need more information. uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return. [removed]A. True[removed]B. FalseQuestion 19 of 254.0 Points (point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions. [removed]A. True[removed]B. Falseuestion 20 of 254.0 Points The time value of money concept becomes less critical as the prime rate increases. [removed]A. True[removed]B. FalseQuestion 21 of 254.0 Points 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. [removed]A. True[removed]B. FalseQuestion 22 of 254.0 Points The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium. [removed]A. True[removed]B. FalseQuestion 23 of 254.0 Points The required return by investors is important to financial managers for all of the following reasons except: [removed]A.It influences the firm’s cost of financing [removed]B.It influences their stock price [removed]C.It is the primary driver of their financial ratios [removed]D.It helps when pricing new issues of securities uestion 24 of 254.0 Points 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? [removed]A.4.41% [removed]B.9.0% [removed]C.1.89% [removed]D.6.43% Question 25 of 254.0 PointsYou 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? [removed]A.Present value of an annuity of $1 [removed]B.Future value of an annuity [removed]C.Present value of $1 [removed]D.Future value of $1 Week 5 FINC400Week 5 Quiz” for FINC400 I004 Sum 13 Question 1 of 254.0 PointsIn determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the [removed] A.expected value. [removed] B.internal rate of return. [removed] C.standard deviation. [removed] D.coefficient of variation. Question 2 of 254.0 PointsWhich of the following is a characteristic of beta? [removed] A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. [removed] B.A beta of 1.0 is of equal risk with the market. [removed] C.A beta of greater than 1.0 has less risk than the market. [removed] D.Two of the above are true. uestion 3 of 254.0 PointsCapital rationing [removed] A.is a way of preserving the assets of the firm over the long term. [removed] B.is a less than optimal way to arrive at capital budgeting decisions. [removed] C.assures stockholder wealth maximization. [removed] D.assures maximum potential profitability. Question 4 of 254.0 PointsCapital budgeting is only a concern of finance and accounting personnel. [removed] A. True[removed] B. False Question 5 of 254.0 PointsEven though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow. [removed] A. True[removed] B. False Question 6 of 254.0 PointsSimulation models allow the planner to: [removed] A.reduce the standard deviations of projects. [removed] B.test possible changes in each variable. [removed] C.deal with the uncertainty in forecasting outcome D.b and c.Question 7 of 254.0 PointsThe selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected. [removed] A. True[removed] B. False Question 8 of 254.0 PointsThe cost of capital is assumed to contain no risk for the firm. [removed] A. True[removed] B. False Question 9 of 254.0 PointsIf 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? [removed] A.Coefficient of correlation [removed] B.Coefficient of variation [removed] C.Standard deviation of returns [removed] D.Net present value Question 10 of 254.0 PointsTo 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. [removed] A. True[removed] B. False Question 11 of 254.0 PointsProjects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle. [removed] A. True[removed] B. False Question 12 of 254.0 PointsWhich of the following is a false statement? [removed] A.Risky investments may produce large losses. [removed] B.Risky investments may produce large gains. [removed] C.The coefficient of variation is a risk measure. [removed] D.Risk-averse investors cannot be induced to invest in risky assets. uestion 13 of 254.0 PointsRegardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital. [removed] A. True[removed] B. False Question 14 of 254.0 PointsCash flow can be said to equal [removed] A.operating income less taxes plus depreciation. [removed] B.operating income less taxes. [removed] C.operating income before depreciation and taxes plus depreciation. [removed] D.operating income after taxes minus depreciation. Question 15 of 254.0 PointsThere are several disadvantages to the payback method, among them: [removed] A.payback ignores the time value of money. [removed] B.payback emphasizes receiving money back as fast as possible for reinvestment. [removed] C.payback is Basic to use and to understand. [removed] D.payback can be used in conjunction with time adjusted methods of evaluation. uestion 16 of 254.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method [removed] A.assumes that cash flows are reinvested at the project’s internal rate of return. [removed] B.concentrates on the liquidity aspects of investment projects. [removed] C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. [removed] D.none of these. Question 17 of 254.0 PointsAs the cost of capital increases [removed] A.fewer projects are accepted. [removed] B.more projects are accepted. [removed] C.project selection remains unchanged. [removed] D.None of these. Question 18 of 254.0 PointsThe capital budgeting decisions of a firm will have no effect on the share price of the common stock. [removed] A. True[removed] B. False- Question 19 of 254.0 PointsThe payback method considers all cash inflows. [removed] A. True[removed] B. False uestion 20 of 254.0 PointsCapital budgeting is primarily concerned with [removed] A.capital formation in the economy. [removed] B.planning future financing needs. [removed] C.evaluating investment alternatives. [removed] D.minimizing the cost of capital. Question 21 of 254.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows. [removed] A. True[removed] B. False uestion 22 of 254.0 PointsWhich of the following statements about the “payback method” is true? [removed] A.The payback method considers cash flows after the payback has been reached. [removed] B.The payback method does not consider the time value of money. [removed] C.The payback method uses discounted cash-flow techniques. [removed] D.The payback method generally leads to the same decision as other investment selection methods uestion 23 of 254.0 PointsThe internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows. [removed] A. True[removed] B. False Question 24 of 254.0 PointsSimulation models allow the analyst to test possible changes in the variables used in the model. [removed] A. True[removed] B. False uestion 25 of 254.0 PointsThe first step in the capital budgeting process is [removed] A.collection of data. [removed] B.idea development. [removed] C.assign probabilities. [removed] D.determine cashflow. Week 7Question 1 of 25 4.0 PointsA bond’s rating can depend on all of the following except A.the corporation’s debt-equity ratio. B.the corporation’s size. C.the ability of the firm to make interest payments. D.the coupon rate on the bond. Question 2 of 25 4.0 PointsThe effect of a rights offering on a stockholder is A.to increase his/her wealth. B.to increase his/her wealth only if the new stock is purchased. C.to decrease his/her wealth unless the stock is purchased. D.to decrease his/her wealth if nothing is done. Question 3 of 25 4.0 PointsPreferred stock dividends are a deductible expense for a corporation.A. TrueB. FalseQuestion 4 of 25 4.0 PointsThe costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue. A. TrueB. False Question 5 of 25 4.0 PointsA “subordinated debenture” A.must be transferred with the bond to which it is attached. B.is used mainly by railroad companies and usually specifies equipment as collateral. C.entitles the bondholder to purchase shares of common stock at a specific price. D.is an unsecured bond with an inferior claim on assets in the event of liquidation. Question 6 of 25 4.0 PointsStockholders always have preemptive rights when new issues of stock are offered.A. TrueB. FalseQuestion 7 of 25 4.0 PointsDebentures are commonly issued by small companies.A. TrueB. FalseQuestion 8 of 25 4.0 PointsThe subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price. A.higher, higher B.higher, lower C.lower, higher D.lower, lowerQuestion 9 of 25 4.0 PointsBondholders never have any control over the actions of a firm.A. TrueB. FalseQuestion 10 of 25 4.0 PointsThe increasing sophistication of individual investors has decreased the role of institutional investors in the stock market. A. TrueB. False Question 11 of 25 4.0 PointsStock purchased through a rights offering may carry lower margin requirements.A. TrueB. False Question 12 of 25 4.0 PointsThe term debenture refers to A.long-term, secured debt. B.long-term, unsecured debt. C.the after-acquired property clause. D.a 100-page document covering the specific terms of the offering. Question 13 of 25 4.0 PointsThe difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.A. TrueB. FalseQuestion 14 of 25 4.0 PointsWith regard to interest rates and bond prices it can be said that A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices. B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices. C.long-term rates are more volatile than short-term rates. D.a decrease in interest rates will cause bond prices to fall. Question 15 of 25 4.0 PointsAn increasing proportion of shares in the U.S. are owned by: A.individual investors. B.corporations (Treasury Stock). C.institutions. D.governments. Question 16 of 25 4.0 PointsUnder normal operating conditions, the board of directors is elected by A.the common stockholders. B.the preferred stockholders. C.the bondholders. D.two of the above. Question 17 of 25 4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders A.must sell their stock to the company. B.get first option to buy additional issues of common stock. C.may purchase existing treasury stock. D.cannot utilize cumulative voting procedures.Question 18 of 25 4.0 PointsThe higher the bond rating A.the higher the interest rate on a bond. B.the lower the interest rate on a bond. C.the higher the call premium. D.the lower the call premium Question 19 of 25 4.0 PointsThe purpose of cumulative voting is A.to maintain majority control of the board of directors. B.to allow minority stockholders the possibility of a voice on the board of directors. C.to obstruct unfriendly mergers and takeover efforts. D.to prevent the dilution of common stock through pre-emptive rights offerings. Question 20 of 25 4.0 PointsThe weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.Correct A. TrueB. FalseQuestion 21 of 25 4.0 PointsPreferred stock is the least used of all long-term securities because A.investors can get higher returns after taxes in other investments. B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible. C.flotation costs are extremely high compared to bonds. D.all of these. Question 22 of 25 4.0 PointsWhich of the following is not a form of yield on a bond? A.coupon rate (nominal yield) B.current yieldC.dividend yield D.yield to maturity Question 23 of 25 4.0 PointsThere are a number of possible advantages to a rights offering: A.current shareholders are protected against dilution. B.the firm has a built-in market of knowledgeable investors. C.distribution costs are lower than a public offering. D.all of these. Question 24 of 25 4.0 PointsThe yield to maturity is the internal rate of return on a bond.Correct A. TrueB. FalseQuestion 25 of 25 4.0 PointsWhen a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.Correct A. TrueB. False Week 8Question 1 of 25 4.0 PointsCash flow is equal to earnings before taxes minus depreciation. A. TrueB. False Question 2 of 25 4.0 PointsWhich of the following would not be included in the balance sheet investment account? A.stocks of other corporations B.long term government bonds C.marketable securities D.investments in other corporations Question 3 of 25 4.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its A.capital structure. B.earnings volatility. C.sales, profit margins, and earnings. D.all of these. Question 4 of 25 4.0 PointsThe 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: A.40% B.12% C.20% D.25% Question 5 of 25 4.0 Points(point) The break-even point can be calculated as A.variable costs divided by contribution margin. B.total costs divided by contribution margin. C.variable cost times contribution margin. D.fixed cost divided by contribution margin. Question 6 of 25 4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage. A. TrueB. False Question 7 of 25 4.0 PointsIf 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?A.$100,000 B.$30,000 C.$15,000 D.$145,000 Question 8 of 25 4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit.A. TrueB. False Part 3 of 6 – Week 1 Practice Quiz 16.0 Points Question 9 of 25 4.0 PointsFor most firms, the primary motive for holding cash is the transaction motive.A. TrueB. FalseQuestion 10 of 25 4.0 PointsA Just-In-Time (JIT) inventory management program has all but which of the following requirements? A.quality production B.large safety stocks C.close ties between suppliers, manufacturers, and customers D.minimizing inventory levels Question 11 of 25 4.0 PointsModos 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’s checks have cleared but only $600 of its own, calculate its float. A.$1,200 B.$1,100 C.$300 D.$700 Question 12 of 25 4.0 PointsEven 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.A. TrueB. FalsePart 4 of 6 – Final Exam 20.0 Points Question 13 of 25 4.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.A. TrueB. False Question 14 of 25 4.0 Points(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate A.decreases. B.remains the same. C.increases. D.Not enough information to tell. Question 15 of 25 4.0 Points(point) Within the capital asset pricing model A.the risk-free rate is usually higher than the return in the market. B.the higher the beta the lower the required rate of return. C.beta measures the volatility of an individual stock relative to a stock market index. D.two of the above are true. Question 16 of 25 4.0 PointsLewis, 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? A.4.41% B.9.0% C.1.89% D.6.43% Question 17 of 25 4.0 PointsIf the yield to maturity on a bond is greater than the coupon rate, you can assume: A.interest rates have decreased B.the price is below the par C.the price is above the par D.risk premiums have decreased Part 5 of 6 – Final Exam 16.0 Points Question 18 of 25 4.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method A.assumes that cash flows are reinvested at the project’s internal rate of return. B.concentrates on the liquidity aspects of investment projects. C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. D.none of these. Question 19 of 25 4.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows. A. TrueB. False Question 20 of 25 4.0 PointsThere are several disadvantages to the payback method, among them: A.payback ignores the time value of money. B.payback emphasizes receiving money back as fast as possible for reinvestment. C.payback is Basic to use and to understand. D.payback can be used in conjunction with time adjusted methods of evaluation. Question 21 of 25 4.0 PointsWhich of the following is a characteristic of beta? A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. B.A beta of 1.0 is of equal risk with the market. C.A beta of greater than 1.0 has less risk than the market. D.Two of the above are true. Part 6 of 6 – Final Exam 16.0 Points Question 22 of 25 4.0 PointsStock purchased through a rights offering may carry lower margin requirements. A. TrueB. False Question 23 of 25 4.0 PointsBondholders never have any control over the actions of a firm. A. TrueB. FalseQuestion 24 of 25 4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders A.must sell their stock to the company. B.get first option to buy additional issues of common stock. C.may purchase existing treasury stock. D.cannot utilize cumulative voting procedures. Question 25 of 25 4.0 PointsWhich of the following best representFinc400 quiz 1-8 art 1 of 1 – Week 1 Quiz Question 1 of 254.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its [removed] A.capital structure. [removed] B.earnings volatility. [removed] C.sales, profit margins, and earnings. [removed] D.all of these. Question 2 of 254.0 PointsThe primary disadvantage of accrual accounting is that [removed] A.it does not match revenues and expenses in the period in which they are incurred. [removed] B.it does not appropriately measure accounting profit. [removed] C.it does not recognize accounts receivable. [removed] D.it does not adequately show the actual cash flow position of the firm Question 3 of 254.0 PointsTotal assets of a firm are financed with liabilities and stockholders’ equity. [removed] True[removed] False. Question 4 of 254.0 PointsGross profit is equal to [removed] A.sales minus cost of goods sold. [removed] B.sales minus (selling and administrative expenses). [removed] C.sales minus (cost of goods sold and selling and administrative expenses). [removed] D.sales minus (cost of goods sold and depreciation expense). Question 5 of 254.0 PointsThe higher the profit of a firm, the higher the value the firm is assured of receiving in the market. [removed] A. True[removed] B. False uestion 6 of 254.0 PointsRatios are used to compare different firms in the same industry. [removed] A. True[removed] B. False Question 7 of 254.0 PointsThe Sarbanes-Oxley Act was passed in an effort to [removed] A.protect small business from large corporations dominating the market. [removed] B.ensure that partnerships divide profits among partners in a fair manner. [removed] C.guarantee outside auditors can control corporate accounting practices. [removed] D.control corrupt corporate behavior. uestion 8 of 254.0 PointsWhich of the following is not subtracted out in arriving at operating income? [removed] A.interest expense [removed] B.cost of goods sold [removed] C.depreciation [removed] D.selling and administrative expense Question 9 of 254.0 PointsWhich of the following is not a primary source of capital to the firm? [removed] A.assets [removed] B.common stock [removed] C.preferred stock [removed] D.bonds Question 10 of 254.0 PointsA 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? [removed] A.$35 per share [removed] B.$25 per share [removed] C.$15 per share [removed] D.Not enough information to tell Question 11 of 254.0 PointsDebt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power. [removed] A. True[removed] B. False uestion 12 of 254.0 PointsA firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of [removed] A.$60.00 [removed] B.$15.00 [removed] C.$6.67 [removed] D.the market assigns a stock price independent of EPS and the P/E ratio. Question 13 of 254.0 PointsThe P/E ratio is strongly related to the past performance of the firm. [removed] A. True[removed] B. False Question 14 of 254.0 PointsMoney markets would include which of the following securities? [removed] A.common stock and corporate bonds. [removed] B.treasury bills and commercial paper. [removed] C.certificates of deposit and preferred stock. [removed] D.all of these. uestion 15 of 254.0 PointsAgency theory assumes that corporate managers act to increase the wealth of corporate shareholders. [removed] A. True[removed] B. False Question 16 of 254.0 PointsPreferred stock is excluded from stockholders equity because it does not have full voting rights. [removed] A. True[removed] B. False Question 17 of 254.0 PointsSales minus cost of goods sold is equal to earnings before taxes. [removed] A. True[removed] B. False Question 18 of 254.0 PointsAsset utilization ratios [removed] A.relate balance sheet assets to income statement sales. [removed] B.measure how much cash is available for reinvestment into current assets. [removed] C.are most important to stockholders. [removed] D.measures the firm’s ability to generate a profit on sales. Question 19 of 254.0 PointsThe P/E ratio provides no indication of investors’ expectations about the future of a company. [removed] A. True[removed] B. False Question 20 of 254.0 PointsAsset utilization ratios relate balance sheet assets to income statement sales. [removed] A. True[removed] B. False Question 21 of 254.0 Points Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide. [removed] A. True[removed] B. False Question 22 of 254.0 Points Which of the following is an outflow of cash? [removed] A.profitable operations [removed] B.the sale of equipment [removed] C.the sale of the company’s common stock [removed] D.the payment of cash dividends uestion 23 of 254.0 PointsThe 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: [removed] A.40% [removed] B.12% [removed] C.20% [removed] D.25% Question 24 of 254.0 PointsThe income statement is the major device for measuring the profitability of a firm over a period of time. [removed] A. True[removed] B. False Question 25 of 254.0 PointsWhich of the following is an inflow of cash? [removed] A.funds spent in normal business operations [removed] B.the purchase of a new factory [removed] C.the sale of the firm’s bonds [removed] D.the retirement of the firm’s bonds Week 2Question 1 of 25 4.0 PointsA lower price for the firm’s product will reduce the firm’s breakeven point. A. True B. False Question 2 of 25 4.0 Points(point) Profit is generally adequate to finance significant growth. A. True B. False Question 3 of 25 4.0 PointsIf 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? A.$100,000 B.$30,000 C.$15,000 D.$145,000 Question 4 of 25 4.0 Points(point) The break-even point can be calculated as A.variable costs divided by contribution margin. B.total costs divided by contribution margin. C.variable cost times contribution margin. D.fixed cost divided by contribution margin. Question 5 of 25 4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage. A. True B. False Question 6 of 25 4.0 PointsIf fixed costs rise while other variables stay constant A.the breakeven point rises. B.degree of operating leverage increases. C.total profit declines. D.all of theseQuestion 7 of 25 4.0 PointsOperating leverage emphasizes the impact of using fixed assets in the business. A. True B. False Question 8 of 25 4.0 Points(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced A.is higher. B.is lower. C.is the same. D.can be either higher or lower.Question 9 of 25 4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit. A. True B. False Question 10 of 25 4.0 Points(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet? A.decrease in inventory. B.increase in retained earnings. C.decrease in accounts payable. D.decrease in accounts receivable. Question 11 of 25 4.0 PointsAn increase in sales and profits generates the necessary cash required for economic growth. A. True B. False Question 12 of 25 4.0 PointsThe percent-of-sales forecast is likely to be most accurate when used with cyclical companies. A. True B. False Question 13 of 25 4.0 PointsPro forma financial statements are A.the most comprehensive means of financial forecasting. B.often required by prospective creditors. C.projections of financial statements for a future period. D.all of these.Question 14 of 25 4.0 Points(point) When the cost of raw materials is increasing, FIFO accounting A.yields higher ending inventory values than LIFO. B.produces higher unit sales than using LIFO. C.yields higher cost of goods sold than LIFO. D.All of these.Question 15 of 25 4.0 Points(point) If sales volume exceeds the break-even point, the firm will experience A.an operating loss. B.an operating profit. C.an increase in plant and equipment. D.an increase in stock price. Question 16 of 25 4.0 PointsThe value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold. A. True B. False Question 17 of 25 4.0 Points(point) Leverage works best when volume is increasing. A. True B. False Question 18 of 25 4.0 Points(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales. A. True B. FalseQuestion 19 of 25 4.0 PointsIf the price per unit decreases because of competition but the cost structure remains the same A.the breakeven point rises. B.the degree of combined leverage declines. C.the degree of financial leverage declines. D.All of these Question 20 of 25 4.0 PointsSales (100,000 units) $ 1,000,000Variable costs 300,000Contribution margin 700,000Fixed manufacturing costs 200,000Operating income 500,000Interest 75,000Earnings before taxes 425,000Taxes (30%) 127,500Net Income $ 297,500 Refer to the figure above. The Degree of Operating Leverage is A.1.40x B.1.56x C.3.33x D.2.22x Question 21 of 25 4.0 Points(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales. A. True B. False Question 22 of 25 4.0 Points(point) As the contribution margin rises, the breakeven point goes down. A. True B. False Question 23 of 25 4.0 Points(point) In the percent-of-sales method, an increase in dividends A.will increase required new funds. B.will decrease required new funds. C.has no effect on required new funds. D.more information is needed. Question 24 of 25 4.0 PointsWhich of the following is not true about leverage? A.operating leverage influences the top half of the income statement, determining EBIT. B.financial leverage deals with the bottom half of the income statement, determining EPS C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT. D.none of these Question 25 of 25 4.0 PointsThe finance department should work independently without the input of other departments because there may be significant biases when creating proformas. A. True B. False Week 3FINC400 quiz 3FINC400 Week 4 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. Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond [removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up. [removed] D.need more information Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor. [removed] A. True[removed] B. FalseQuestion 3 of 254.0 PointsThe time value of money is not a useful concept in determining the value of a bond or in capital investment decisions. [removed] A. True[removed] B. False Question 4 of 254.0 Points (point) The longer the time to maturity: [removed] A.the greater the price increase from an increase in interest rates. [removed] B.the less the price increase from an increase in interest rates. [removed] C.the greater the price increase from a decrease in interest rates. [removed] D.the less the price decrease from a decrease in interest rates. Question 5 of 254.0 Points(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases. [removed] A. True[removed] B. False Question 6 of 254.0 Points Financial capital does not include [removed] A.stock. [removed] B.bonds. [removed] C.preferred stock. [removed] D.working capital. Question 7 of 254.0 Points The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%? [removed] A.$3.00 [removed] B.$37.50 [removed] C.$50.00 [removed] D.none of these Question 8 of 254.0 Points 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. [removed] A. True[removed] B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds. [removed] A. True[removed] B. False Question 10 of 254.0 Points (point) The calculation of the cost of capital depends upon historical costs of funds. [removed] A. True[removed] B. False Question 11 of 254.0 Points As the interest rate increases, the interest factor (IF) for the present value of $1 increases. [removed] A. True[removed] B. False Question 12 of 254.0 Points(point) An annuity may be defined as [removed] A.a payment at a fixed interest rate. [removed] B.a series of payments of unequal amount. [removed] C.a series of yearly payments. [removed] D.a series of consecutive payments of equal amounts. Reset Selection uestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate [removed] A.decreases. [removed] B.remains the same. [removed] C.increases. [removed] D.Not enough information to tell. Question 14 of 254.0 Points(point) Within the capital asset pricing model [removed] A.the risk-free rate is usually higher than the return in the market. [removed] B.the higher the beta the lower the required rate of return. [removed] C.beta measures the volatility of an individual stock relative to a stock market index. [removed] D.two of the above are true. Question 15 of 254.0 Points The risk premium is primarily concerned with business risk, financial risk, and inflation risk. [removed] A. True[removed] B. False uestion 16 of 254.0 Points When inflation rises, preferred stock prices fall. [removed] A. True[removed] B. False uestion 17 of 254.0 Points (point) If the inflation premium for a bond goes up, the price of the bond [removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up. [removed] D.need more information. uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return. [removed] A. True[removed] B. False Question 19 of 254.0 Points (point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions. [removed] A. True[removed] B. False uestion 20 of 254.0 Points The time value of money concept becomes less critical as the prime rate increases. [removed] A. True[removed] B. False Question 21 of 254.0 Points 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. [removed] A. True[removed] B. False Question 22 of 254.0 Points The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium. [removed] A. True[removed] B. False Question 23 of 254.0 Points The required return by investors is important to financial managers for all of the following reasons except: [removed] A.It influences the firm’s cost of financing [removed] B.It influences their stock price [removed] C.It is the primary driver of their financial ratios [removed] D.It helps when pricing new issues of securities uestion 24 of 254.0 Points 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? [removed] A.4.41% [removed] B.9.0% [removed] C.1.89% [removed] D.6.43% Question 25 of 254.0 PointsYou 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? [removed] A.Present value of an annuity of $1 [removed] B.Future value of an annuity [removed] C.Present value of $1 [removed] D.Future value of $1 Week 4 FINC400Week 4The 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.Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond [removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up. [removed]D.need more information Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor. [removed]A. True[removed]B. FalseQuestion 3 of 254.0 PointsThe time value of money is not a useful concept in determining the value of a bond or in capital investment decisions. [removed]A. True[removed]B. FalseQuestion 4 of 254.0 Points (point) The longer the time to maturity: [removed]A.the greater the price increase from an increase in interest rates. [removed]B.the less the price increase from an increase in interest rates. [removed]C.the greater the price increase from a decrease in interest rates. [removed]D.the less the price decrease from a decrease in interest rates. Question 5 of 254.0 Points(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases. [removed]A. True[removed]B. FalseQuestion 6 of 254.0 Points Financial capital does not include [removed]A.stock. [removed]B.bonds. [removed]C.preferred stock. [removed]D.working capital. Question 7 of 254.0 Points The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%? [removed]A.$3.00 [removed]B.$37.50 [removed]C.$50.00 [removed]D.none of these Question 8 of 254.0 Points 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. [removed]A. True[removed]B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds. [removed]A. True[removed]B. FalseQuestion 10 of 254.0 Points (point) The calculation of the cost of capital depends upon historical costs of funds. [removed]A. True[removed]B. FalseQuestion 11 of 254.0 Points As the interest rate increases, the interest factor (IF) for the present value of $1 increases. [removed]A. True[removed]B. FalseQuestion 12 of 254.0 Points(point) An annuity may be defined as [removed]A.a payment at a fixed interest rate. [removed]B.a series of payments of unequal amount. [removed]C.a series of yearly payments. [removed]D.a series of consecutive payments of equal amounts. Reset Selectionuestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate [removed]A.decreases. [removed]B.remains the same. [removed]C.increases. [removed]D.Not enough information to tell. Question 14 of 254.0 Points(point) Within the capital asset pricing model [removed]A.the risk-free rate is usually higher than the return in the market. [removed]B.the higher the beta the lower the required rate of return. [removed]C.beta measures the volatility of an individual stock relative to a stock market index. [removed]D.two of the above are true. Question 15 of 254.0 Points The risk premium is primarily concerned with business risk, financial risk, and inflation risk. [removed]A. True[removed]B. Falseuestion 16 of 254.0 Points When inflation rises, preferred stock prices fall. [removed]A. True[removed]B. Falseuestion 17 of 254.0 Points (point) If the inflation premium for a bond goes up, the price of the bond [removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up. [removed]D.need more information. uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return. [removed]A. True[removed]B. FalseQuestion 19 of 254.0 Points (point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions. [removed]A. True[removed]B. Falseuestion 20 of 254.0 Points The time value of money concept becomes less critical as the prime rate increases. [removed]A. True[removed]B. FalseQuestion 21 of 254.0 Points 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. [removed]A. True[removed]B. FalseQuestion 22 of 254.0 Points The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium. [removed]A. True[removed]B. FalseQuestion 23 of 254.0 Points The required return by investors is important to financial managers for all of the following reasons except: [removed]A.It influences the firm’s cost of financing [removed]B.It influences their stock price [removed]C.It is the primary driver of their financial ratios [removed]D.It helps when pricing new issues of securities uestion 24 of 254.0 Points 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? [removed]A.4.41% [removed]B.9.0% [removed]C.1.89% [removed]D.6.43% Question 25 of 254.0 PointsYou 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? [removed]A.Present value of an annuity of $1 [removed]B.Future value of an annuity [removed]C.Present value of $1 [removed]D.Future value of $1 Week 5 FINC400Week 5 Quiz” for FINC400 I004 Sum 13 Question 1 of 254.0 PointsIn determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the [removed] A.expected value. [removed] B.internal rate of return. [removed] C.standard deviation. [removed] D.coefficient of variation. Question 2 of 254.0 PointsWhich of the following is a characteristic of beta? [removed] A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. [removed] B.A beta of 1.0 is of equal risk with the market. [removed] C.A beta of greater than 1.0 has less risk than the market. [removed] D.Two of the above are true. uestion 3 of 254.0 PointsCapital rationing [removed] A.is a way of preserving the assets of the firm over the long term. [removed] B.is a less than optimal way to arrive at capital budgeting decisions. [removed] C.assures stockholder wealth maximization. [removed] D.assures maximum potential profitability. Question 4 of 254.0 PointsCapital budgeting is only a concern of finance and accounting personnel. [removed] A. True[removed] B. False Question 5 of 254.0 PointsEven though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow. [removed] A. True[removed] B. False Question 6 of 254.0 PointsSimulation models allow the planner to: [removed] A.reduce the standard deviations of projects. [removed] B.test possible changes in each variable. [removed] C.deal with the uncertainty in forecasting outcome D.b and c.Question 7 of 254.0 PointsThe selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected. [removed] A. True[removed] B. False Question 8 of 254.0 PointsThe cost of capital is assumed to contain no risk for the firm. [removed] A. True[removed] B. False Question 9 of 254.0 PointsIf 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? [removed] A.Coefficient of correlation [removed] B.Coefficient of variation [removed] C.Standard deviation of returns [removed] D.Net present value Question 10 of 254.0 PointsTo 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. [removed] A. True[removed] B. False Question 11 of 254.0 PointsProjects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle. [removed] A. True[removed] B. False Question 12 of 254.0 PointsWhich of the following is a false statement? [removed] A.Risky investments may produce large losses. [removed] B.Risky investments may produce large gains. [removed] C.The coefficient of variation is a risk measure. [removed] D.Risk-averse investors cannot be induced to invest in risky assets. uestion 13 of 254.0 PointsRegardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital. [removed] A. True[removed] B. False Question 14 of 254.0 PointsCash flow can be said to equal [removed] A.operating income less taxes plus depreciation. [removed] B.operating income less taxes. [removed] C.operating income before depreciation and taxes plus depreciation. [removed] D.operating income after taxes minus depreciation. Question 15 of 254.0 PointsThere are several disadvantages to the payback method, among them: [removed] A.payback ignores the time value of money. [removed] B.payback emphasizes receiving money back as fast as possible for reinvestment. [removed] C.payback is Basic to use and to understand. [removed] D.payback can be used in conjunction with time adjusted methods of evaluation. uestion 16 of 254.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method [removed] A.assumes that cash flows are reinvested at the project’s internal rate of return. [removed] B.concentrates on the liquidity aspects of investment projects. [removed] C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. [removed] D.none of these. Question 17 of 254.0 PointsAs the cost of capital increases [removed] A.fewer projects are accepted. [removed] B.more projects are accepted. [removed] C.project selection remains unchanged. [removed] D.None of these. Question 18 of 254.0 PointsThe capital budgeting decisions of a firm will have no effect on the share price of the common stock. [removed] A. True[removed] B. False- Question 19 of 254.0 PointsThe payback method considers all cash inflows. [removed] A. True[removed] B. False uestion 20 of 254.0 PointsCapital budgeting is primarily concerned with [removed] A.capital formation in the economy. [removed] B.planning future financing needs. [removed] C.evaluating investment alternatives. [removed] D.minimizing the cost of capital. Question 21 of 254.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows. [removed] A. True[removed] B. False uestion 22 of 254.0 PointsWhich of the following statements about the “payback method” is true? [removed] A.The payback method considers cash flows after the payback has been reached. [removed] B.The payback method does not consider the time value of money. [removed] C.The payback method uses discounted cash-flow techniques. [removed] D.The payback method generally leads to the same decision as other investment selection methods uestion 23 of 254.0 PointsThe internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows. [removed] A. True[removed] B. False Question 24 of 254.0 PointsSimulation models allow the analyst to test possible changes in the variables used in the model. [removed] A. True[removed] B. False uestion 25 of 254.0 PointsThe first step in the capital budgeting process is [removed] A.collection of data. [removed] B.idea development. [removed] C.assign probabilities. [removed] D.determine cashflow. Week 7Question 1 of 25 4.0 PointsA bond’s rating can depend on all of the following except A.the corporation’s debt-equity ratio. B.the corporation’s size. C.the ability of the firm to make interest payments. D.the coupon rate on the bond. Question 2 of 25 4.0 PointsThe effect of a rights offering on a stockholder is A.to increase his/her wealth. B.to increase his/her wealth only if the new stock is purchased. C.to decrease his/her wealth unless the stock is purchased. D.to decrease his/her wealth if nothing is done. Question 3 of 25 4.0 PointsPreferred stock dividends are a deductible expense for a corporation.A. TrueB. FalseQuestion 4 of 25 4.0 PointsThe costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue. A. TrueB. False Question 5 of 25 4.0 PointsA “subordinated debenture” A.must be transferred with the bond to which it is attached. B.is used mainly by railroad companies and usually specifies equipment as collateral. C.entitles the bondholder to purchase shares of common stock at a specific price. D.is an unsecured bond with an inferior claim on assets in the event of liquidation. Question 6 of 25 4.0 PointsStockholders always have preemptive rights when new issues of stock are offered.A. TrueB. FalseQuestion 7 of 25 4.0 PointsDebentures are commonly issued by small companies.A. TrueB. FalseQuestion 8 of 25 4.0 PointsThe subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price. A.higher, higher B.higher, lower C.lower, higher D.lower, lowerQuestion 9 of 25 4.0 PointsBondholders never have any control over the actions of a firm.A. TrueB. FalseQuestion 10 of 25 4.0 PointsThe increasing sophistication of individual investors has decreased the role of institutional investors in the stock market. A. TrueB. False Question 11 of 25 4.0 PointsStock purchased through a rights offering may carry lower margin requirements.A. TrueB. False Question 12 of 25 4.0 PointsThe term debenture refers to A.long-term, secured debt. B.long-term, unsecured debt. C.the after-acquired property clause. D.a 100-page document covering the specific terms of the offering. Question 13 of 25 4.0 PointsThe difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.A. TrueB. FalseQuestion 14 of 25 4.0 PointsWith regard to interest rates and bond prices it can be said that A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices. B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices. C.long-term rates are more volatile than short-term rates. D.a decrease in interest rates will cause bond prices to fall. Question 15 of 25 4.0 PointsAn increasing proportion of shares in the U.S. are owned by: A.individual investors. B.corporations (Treasury Stock). C.institutions. D.governments. Question 16 of 25 4.0 PointsUnder normal operating conditions, the board of directors is elected by A.the common stockholders. B.the preferred stockholders. C.the bondholders. D.two of the above. Question 17 of 25 4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders A.must sell their stock to the company. B.get first option to buy additional issues of common stock. C.may purchase existing treasury stock. D.cannot utilize cumulative voting procedures.Question 18 of 25 4.0 PointsThe higher the bond rating A.the higher the interest rate on a bond. B.the lower the interest rate on a bond. C.the higher the call premium. D.the lower the call premium Question 19 of 25 4.0 PointsThe purpose of cumulative voting is A.to maintain majority control of the board of directors. B.to allow minority stockholders the possibility of a voice on the board of directors. C.to obstruct unfriendly mergers and takeover efforts. D.to prevent the dilution of common stock through pre-emptive rights offerings. Question 20 of 25 4.0 PointsThe weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.Correct A. TrueB. FalseQuestion 21 of 25 4.0 PointsPreferred stock is the least used of all long-term securities because A.investors can get higher returns after taxes in other investments. B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible. C.flotation costs are extremely high compared to bonds. D.all of these. Question 22 of 25 4.0 PointsWhich of the following is not a form of yield on a bond? A.coupon rate (nominal yield) B.current yieldC.dividend yield D.yield to maturity Question 23 of 25 4.0 PointsThere are a number of possible advantages to a rights offering: A.current shareholders are protected against dilution. B.the firm has a built-in market of knowledgeable investors. C.distribution costs are lower than a public offering. D.all of these. Question 24 of 25 4.0 PointsThe yield to maturity is the internal rate of return on a bond.Correct A. TrueB. FalseQuestion 25 of 25 4.0 PointsWhen a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.Correct A. TrueB. False Week 8Question 1 of 25 4.0 PointsCash flow is equal to earnings before taxes minus depreciation. A. TrueB. False Question 2 of 25 4.0 PointsWhich of the following would not be included in the balance sheet investment account? A.stocks of other corporations B.long term government bonds C.marketable securities D.investments in other corporations Question 3 of 25 4.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its A.capital structure. B.earnings volatility. C.sales, profit margins, and earnings. D.all of these. Question 4 of 25 4.0 PointsThe 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: A.40% B.12% C.20% D.25% Question 5 of 25 4.0 Points(point) The break-even point can be calculated as A.variable costs divided by contribution margin. B.total costs divided by contribution margin. C.variable cost times contribution margin. D.fixed cost divided by contribution margin. Question 6 of 25 4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage. A. TrueB. False Question 7 of 25 4.0 PointsIf 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?A.$100,000 B.$30,000 C.$15,000 D.$145,000 Question 8 of 25 4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit.A. TrueB. False Part 3 of 6 – Week 1 Practice Quiz 16.0 Points Question 9 of 25 4.0 PointsFor most firms, the primary motive for holding cash is the transaction motive.A. TrueB. FalseQuestion 10 of 25 4.0 PointsA Just-In-Time (JIT) inventory management program has all but which of the following requirements? A.quality production B.large safety stocks C.close ties between suppliers, manufacturers, and customers D.minimizing inventory levels Question 11 of 25 4.0 PointsModos 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’s checks have cleared but only $600 of its own, calculate its float. A.$1,200 B.$1,100 C.$300 D.$700 Question 12 of 25 4.0 PointsEven 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.A. TrueB. FalsePart 4 of 6 – Final Exam 20.0 Points Question 13 of 25 4.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.A. TrueB. False Question 14 of 25 4.0 Points(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate A.decreases. B.remains the same. C.increases. D.Not enough information to tell. Question 15 of 25 4.0 Points(point) Within the capital asset pricing model A.the risk-free rate is usually higher than the return in the market. B.the higher the beta the lower the required rate of return. C.beta measures the volatility of an individual stock relative to a stock market index. D.two of the above are true. Question 16 of 25 4.0 PointsLewis, 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? A.4.41% B.9.0% C.1.89% D.6.43% Question 17 of 25 4.0 PointsIf the yield to maturity on a bond is greater than the coupon rate, you can assume: A.interest rates have decreased B.the price is below the par C.the price is above the par D.risk premiums have decreased Part 5 of 6 – Final Exam 16.0 Points Question 18 of 25 4.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method A.assumes that cash flows are reinvested at the project’s internal rate of return. B.concentrates on the liquidity aspects of investment projects. C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. D.none of these. Question 19 of 25 4.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows. A. TrueB. False Question 20 of 25 4.0 PointsThere are several disadvantages to the payback method, among them: A.payback ignores the time value of money. B.payback emphasizes receiving money back as fast as possible for reinvestment. C.payback is Basic to use and to understand. D.payback can be used in conjunction with time adjusted methods of evaluation. Question 21 of 25 4.0 PointsWhich of the following is a characteristic of beta? A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. B.A beta of 1.0 is of equal risk with the market. C.A beta of greater than 1.0 has less risk than the market. D.Two of the above are true. Part 6 of 6 – Final Exam 16.0 Points Question 22 of 25 4.0 PointsStock purchased through a rights offering may carry lower margin requirements. A. TrueB. False Question 23 of 25 4.0 PointsBondholders never have any control over the actions of a firm. A. TrueB. FalseQuestion 24 of 25 4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders A.must sell their stock to the company. B.get first option to buy additional issues of common stock. C.may purchase existing treasury stock. D.cannot utilize cumulative voting procedures. Question 25 of 25 4.0 PointsWhich of the following best represents the hierarchy of creditor and stockholder claims?

                A.Common stock, senior secured debt, subordinated debentures

                B.Senior debentures,

subordinated debentures, junior secured debt

                C.Senior secured debt, subordinated debentures, common stock

                D.Preferred stock, secured debt, debentures.

Finc400 quiz 1-8 art 1 of 1 – Week 1 Quiz Question 1 of 254.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its  [removed] A.capital structure. [removed] B.earnings volatility. [removed] C.sales, profit margins, and earnings. [removed] D.all of these.  Question 2 of 254.0 PointsThe primary disadvantage of accrual accounting is that  [removed] A.it does not match revenues and expenses in the period in which they are incurred. [removed] B.it does not appropriately measure accounting profit. [removed] C.it does not recognize accounts receivable. [removed] D.it does not adequately show the actual cash flow position of the firm Question 3 of 254.0 PointsTotal assets of a firm are financed with liabilities and stockholders’ equity.  [removed] True[removed] False.  Question 4 of 254.0 PointsGross profit is equal to  [removed] A.sales minus cost of goods sold. [removed] B.sales minus (selling and administrative expenses). [removed] C.sales minus (cost of goods sold and selling and administrative expenses). [removed] D.sales minus (cost of goods sold and depreciation expense).    Question 5 of 254.0 PointsThe higher the profit of a firm, the higher the value the firm is assured of receiving in the market.  [removed] A. True[removed] B. False  uestion 6 of 254.0 PointsRatios are used to compare different firms in the same industry.  [removed] A. True[removed] B. False Question 7 of 254.0 PointsThe Sarbanes-Oxley Act was passed in an effort to  [removed] A.protect small business from large corporations dominating the market. [removed] B.ensure that partnerships divide profits among partners in a fair manner. [removed] C.guarantee outside auditors can control corporate accounting practices. [removed] D.control corrupt corporate behavior.   uestion 8 of 254.0 PointsWhich of the following is not subtracted out in arriving at operating income?  [removed] A.interest expense [removed] B.cost of goods sold [removed] C.depreciation [removed] D.selling and administrative expense   Question 9 of 254.0 PointsWhich of the following is not a primary source of capital to the firm?  [removed] A.assets [removed] B.common stock [removed] C.preferred stock [removed] D.bonds   Question 10 of 254.0 PointsA 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?  [removed] A.$35 per share [removed] B.$25 per share [removed] C.$15 per share [removed] D.Not enough information to tell   Question 11 of 254.0 PointsDebt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power.  [removed] A. True[removed] B. False  uestion 12 of 254.0 PointsA firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of  [removed] A.$60.00 [removed] B.$15.00 [removed] C.$6.67 [removed] D.the market assigns a stock price independent of EPS and the P/E ratio.   Question 13 of 254.0 PointsThe P/E ratio is strongly related to the past performance of the firm.  [removed] A. True[removed] B. False  Question 14 of 254.0 PointsMoney markets would include which of the following securities?  [removed] A.common stock and corporate bonds. [removed] B.treasury bills and commercial paper. [removed] C.certificates of deposit and preferred stock. [removed] D.all of these.   uestion 15 of 254.0 PointsAgency theory assumes that corporate managers act to increase the wealth of corporate shareholders.  [removed] A. True[removed] B. False  Question 16 of 254.0 PointsPreferred stock is excluded from stockholders equity because it does not have full voting rights.  [removed] A. True[removed] B. False  Question 17 of 254.0 PointsSales minus cost of goods sold is equal to earnings before taxes.  [removed] A. True[removed] B. False   Question 18 of 254.0 PointsAsset utilization ratios  [removed] A.relate balance sheet assets to income statement sales. [removed] B.measure how much cash is available for reinvestment into current assets. [removed] C.are most important to stockholders. [removed] D.measures the firm’s ability to generate a profit on sales.    Question 19 of 254.0 PointsThe P/E ratio provides no indication of investors’ expectations about the future of a company.  [removed] A. True[removed] B. False Question 20 of 254.0 PointsAsset utilization ratios relate balance sheet assets to income statement sales.  [removed] A. True[removed] B. False Question 21 of 254.0 Points   Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.  [removed] A. True[removed] B. False Question 22 of 254.0 Points   Which of the following is an outflow of cash?  [removed] A.profitable operations [removed] B.the sale of equipment [removed] C.the sale of the company’s common stock [removed] D.the payment of cash dividends  uestion 23 of 254.0 PointsThe 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:  [removed] A.40% [removed] B.12% [removed] C.20% [removed] D.25%   Question 24 of 254.0 PointsThe income statement is the major device for measuring the profitability of a firm over a period of time.  [removed] A. True[removed] B. False  Question 25 of 254.0 PointsWhich of the following is an inflow of cash?  [removed] A.funds spent in normal business operations [removed] B.the purchase of a new factory [removed] C.the sale of the firm’s bonds [removed] D.the retirement of the firm’s bonds   Week 2Question 1 of 25               4.0 PointsA lower price for the firm’s product will reduce the firm’s breakeven point.                A. True  B. False Question 2 of 25               4.0 Points(point) Profit is generally adequate to finance significant growth.                 A. True  B. False  Question 3 of 25               4.0 PointsIf 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?                 A.$100,000                 B.$30,000                 C.$15,000                 D.$145,000 Question 4 of 25               4.0 Points(point) The break-even point can be calculated as                 A.variable costs divided by contribution margin.                 B.total costs divided by contribution margin.                 C.variable cost times contribution margin.                 D.fixed cost divided by contribution margin.  Question 5 of 25               4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.                 A. True  B. False  Question 6 of 25               4.0 PointsIf fixed costs rise while other variables stay constant                 A.the breakeven point rises.                 B.degree of operating leverage increases.                 C.total profit declines.                 D.all of theseQuestion 7 of 25               4.0 PointsOperating leverage emphasizes the impact of using fixed assets in the business.                A. True  B. False Question 8 of 25               4.0 Points(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced                 A.is higher.                 B.is lower.                 C.is the same.                 D.can be either higher or lower.Question 9 of 25               4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit.                A. True  B. False Question 10 of 25             4.0 Points(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?                 A.decrease in inventory.                 B.increase in retained earnings.                 C.decrease in accounts payable.                 D.decrease in accounts receivable. Question 11 of 25             4.0 PointsAn increase in sales and profits generates the necessary cash required for economic growth.                A. True  B. False Question 12 of 25             4.0 PointsThe percent-of-sales forecast is likely to be most accurate when used with cyclical companies.                 A. True  B. False Question 13 of 25             4.0 PointsPro forma financial statements are                 A.the most comprehensive means of financial forecasting.                 B.often required by prospective creditors.                 C.projections of financial statements for a future period.                 D.all of these.Question 14 of 25             4.0 Points(point) When the cost of raw materials is increasing, FIFO accounting                 A.yields higher ending inventory values than LIFO.                 B.produces higher unit sales than using LIFO.                 C.yields higher cost of goods sold than LIFO.                 D.All of these.Question 15 of 25             4.0 Points(point) If sales volume exceeds the break-even point, the firm will experience                 A.an operating loss.                 B.an operating profit.                 C.an increase in plant and equipment.                 D.an increase in stock price. Question 16 of 25             4.0 PointsThe value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.                 A. True  B. False Question 17 of 25             4.0 Points(point) Leverage works best when volume is increasing.                   A. True  B. False Question 18 of 25             4.0 Points(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.                 A. True  B. FalseQuestion 19 of 25             4.0 PointsIf the price per unit decreases because of competition but the cost structure remains the same                 A.the breakeven point rises.                 B.the degree of combined leverage declines.                 C.the degree of financial leverage declines.                 D.All of these Question 20 of 25             4.0 PointsSales (100,000 units)       $   1,000,000Variable costs             300,000Contribution margin                                700,000Fixed manufacturing costs                    200,000Operating income                     500,000Interest                           75,000Earnings before taxes             425,000Taxes (30%)                                                 127,500Net Income        $      297,500 Refer to the figure above. The Degree of Operating Leverage is                 A.1.40x                 B.1.56x                 C.3.33x                 D.2.22x Question 21 of 25             4.0 Points(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.                 A. True  B. False  Question 22 of 25             4.0 Points(point) As the contribution margin rises, the breakeven point goes down.                 A. True  B. False   Question 23 of 25             4.0 Points(point) In the percent-of-sales method, an increase in dividends                 A.will increase required new funds.                 B.will decrease required new funds.                 C.has no effect on required new funds.                              D.more information is needed.  Question 24 of 25             4.0 PointsWhich of the following is not true about leverage?                 A.operating leverage influences the top half of the income statement, determining EBIT.                           B.financial leverage deals with the bottom half of the income statement, determining EPS                         C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT.                   D.none of these    Question 25 of 25             4.0 PointsThe finance department should work independently without the input of other departments because there may be significant biases when creating proformas.                  A. True  B. False  Week 3FINC400 quiz 3FINC400 Week 4 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. Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond  [removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up. [removed] D.need more information  Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.  [removed] A. True[removed] B. FalseQuestion 3 of 254.0 PointsThe time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.  [removed] A. True[removed] B. False Question 4 of 254.0 Points   (point) The longer the time to maturity:  [removed] A.the greater the price increase from an increase in interest rates. [removed] B.the less the price increase from an increase in interest rates. [removed] C.the greater the price increase from a decrease in interest rates. [removed] D.the less the price decrease from a decrease in interest rates.  Question 5 of 254.0 Points(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.  [removed] A. True[removed] B. False Question 6 of 254.0 Points   Financial capital does not include  [removed] A.stock.  [removed] B.bonds.  [removed] C.preferred stock.  [removed] D.working capital.  Question 7 of 254.0 Points    The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?  [removed] A.$3.00  [removed] B.$37.50  [removed] C.$50.00  [removed] D.none of these  Question 8 of 254.0 Points    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.  [removed] A. True[removed] B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds.  [removed] A. True[removed] B. False Question 10 of 254.0 Points   (point) The calculation of the cost of capital depends upon historical costs of funds.  [removed] A. True[removed] B. False Question 11 of 254.0 Points   As the interest rate increases, the interest factor (IF) for the present value of $1 increases.  [removed] A. True[removed] B. False Question 12 of 254.0 Points(point) An annuity may be defined as  [removed] A.a payment at a fixed interest rate. [removed] B.a series of payments of unequal amount. [removed] C.a series of yearly payments. [removed] D.a series of consecutive payments of equal amounts. Reset Selection uestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate  [removed] A.decreases. [removed] B.remains the same. [removed] C.increases. [removed] D.Not enough information to tell.  Question 14 of 254.0 Points(point) Within the capital asset pricing model  [removed] A.the risk-free rate is usually higher than the return in the market.  [removed] B.the higher the beta the lower the required rate of return.  [removed] C.beta measures the volatility of an individual stock relative to a stock market index.  [removed] D.two of the above are true.  Question 15 of 254.0 Points          The risk premium is primarily concerned with business risk, financial risk, and inflation risk.  [removed] A. True[removed] B. False uestion 16 of 254.0 Points        When inflation rises, preferred stock prices fall.  [removed] A. True[removed] B. False uestion 17 of 254.0 Points    (point) If the inflation premium for a bond goes up, the price of the bond  [removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up. [removed] D.need more information.  uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return.  [removed] A. True[removed] B. False Question 19 of 254.0 Points   (point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.  [removed] A. True[removed] B. False uestion 20 of 254.0 Points   The time value of money concept becomes less critical as the prime rate increases.  [removed] A. True[removed] B. False Question 21 of 254.0 Points   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.  [removed] A. True[removed] B. False Question 22 of 254.0 Points   The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.  [removed] A. True[removed] B. False Question 23 of 254.0 Points   The required return by investors is important to financial managers for all of the following reasons except:  [removed] A.It influences the firm’s cost of financing  [removed] B.It influences their stock price  [removed] C.It is the primary driver of their financial ratios  [removed] D.It helps when pricing new issues of securities  uestion 24 of 254.0 Points    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?  [removed] A.4.41% [removed] B.9.0% [removed] C.1.89% [removed] D.6.43%   Question 25 of 254.0 PointsYou 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?  [removed] A.Present value of an annuity of $1 [removed] B.Future value of an annuity [removed] C.Present value of $1 [removed] D.Future value of $1    Week 4 FINC400Week 4The 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.Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond  [removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up. [removed]D.need more information  Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.  [removed]A. True[removed]B. FalseQuestion 3 of 254.0 PointsThe time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.  [removed]A. True[removed]B. FalseQuestion 4 of 254.0 Points   (point) The longer the time to maturity:  [removed]A.the greater the price increase from an increase in interest rates. [removed]B.the less the price increase from an increase in interest rates. [removed]C.the greater the price increase from a decrease in interest rates. [removed]D.the less the price decrease from a decrease in interest rates.  Question 5 of 254.0 Points(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.  [removed]A. True[removed]B. FalseQuestion 6 of 254.0 Points   Financial capital does not include  [removed]A.stock. [removed]B.bonds. [removed]C.preferred stock. [removed]D.working capital. Question 7 of 254.0 Points    The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?  [removed]A.$3.00 [removed]B.$37.50 [removed]C.$50.00 [removed]D.none of these Question 8 of 254.0 Points    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.  [removed]A. True[removed]B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds.  [removed]A. True[removed]B. FalseQuestion 10 of 254.0 Points   (point) The calculation of the cost of capital depends upon historical costs of funds.  [removed]A. True[removed]B. FalseQuestion 11 of 254.0 Points   As the interest rate increases, the interest factor (IF) for the present value of $1 increases.  [removed]A. True[removed]B. FalseQuestion 12 of 254.0 Points(point) An annuity may be defined as  [removed]A.a payment at a fixed interest rate. [removed]B.a series of payments of unequal amount. [removed]C.a series of yearly payments. [removed]D.a series of consecutive payments of equal amounts. Reset Selectionuestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate  [removed]A.decreases. [removed]B.remains the same. [removed]C.increases. [removed]D.Not enough information to tell.  Question 14 of 254.0 Points(point) Within the capital asset pricing model  [removed]A.the risk-free rate is usually higher than the return in the market. [removed]B.the higher the beta the lower the required rate of return. [removed]C.beta measures the volatility of an individual stock relative to a stock market index. [removed]D.two of the above are true. Question 15 of 254.0 Points     The risk premium is primarily concerned with business risk, financial risk, and inflation risk.  [removed]A. True[removed]B. Falseuestion 16 of 254.0 Points    When inflation rises, preferred stock prices fall.  [removed]A. True[removed]B. Falseuestion 17 of 254.0 Points    (point) If the inflation premium for a bond goes up, the price of the bond  [removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up. [removed]D.need more information.  uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return.  [removed]A. True[removed]B. FalseQuestion 19 of 254.0 Points   (point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.  [removed]A. True[removed]B. Falseuestion 20 of 254.0 Points   The time value of money concept becomes less critical as the prime rate increases.  [removed]A. True[removed]B. FalseQuestion 21 of 254.0 Points   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.  [removed]A. True[removed]B. FalseQuestion 22 of 254.0 Points   The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.  [removed]A. True[removed]B. FalseQuestion 23 of 254.0 Points   The required return by investors is important to financial managers for all of the following reasons except:  [removed]A.It influences the firm’s cost of financing [removed]B.It influences their stock price [removed]C.It is the primary driver of their financial ratios [removed]D.It helps when pricing new issues of securities uestion 24 of 254.0 Points    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?  [removed]A.4.41% [removed]B.9.0% [removed]C.1.89% [removed]D.6.43% Question 25 of 254.0 PointsYou 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?  [removed]A.Present value of an annuity of $1 [removed]B.Future value of an annuity [removed]C.Present value of $1 [removed]D.Future value of $1    Week 5 FINC400Week 5 Quiz” for FINC400 I004 Sum 13  Question 1 of 254.0 PointsIn determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the  [removed] A.expected value. [removed] B.internal rate of return. [removed] C.standard deviation. [removed] D.coefficient of variation.  Question 2 of 254.0 PointsWhich of the following is a characteristic of beta?  [removed] A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. [removed] B.A beta of 1.0 is of equal risk with the market. [removed] C.A beta of greater than 1.0 has less risk than the market. [removed] D.Two of the above are true.  uestion 3 of 254.0 PointsCapital rationing  [removed] A.is a way of preserving the assets of the firm over the long term. [removed] B.is a less than optimal way to arrive at capital budgeting decisions. [removed] C.assures stockholder wealth maximization. [removed] D.assures maximum potential profitability.   Question 4 of 254.0 PointsCapital budgeting is only a concern of finance and accounting personnel.  [removed] A. True[removed] B. False Question 5 of 254.0 PointsEven though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow.  [removed] A. True[removed] B. False Question 6 of 254.0 PointsSimulation models allow the planner to:  [removed] A.reduce the standard deviations of projects. [removed] B.test possible changes in each variable. [removed] C.deal with the uncertainty in forecasting outcome D.b and c.Question 7 of 254.0 PointsThe selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected.  [removed] A. True[removed] B. False Question 8 of 254.0 PointsThe cost of capital is assumed to contain no risk for the firm.  [removed] A. True[removed] B. False Question 9 of 254.0 PointsIf 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?  [removed] A.Coefficient of correlation [removed] B.Coefficient of variation [removed] C.Standard deviation of returns [removed] D.Net present value  Question 10 of 254.0 PointsTo 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.  [removed] A. True[removed] B. False Question 11 of 254.0 PointsProjects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle.  [removed] A. True[removed] B. False  Question 12 of 254.0 PointsWhich of the following is a false statement?  [removed] A.Risky investments may produce large losses. [removed] B.Risky investments may produce large gains. [removed] C.The coefficient of variation is a risk measure. [removed] D.Risk-averse investors cannot be induced to invest in risky assets.  uestion 13 of 254.0 PointsRegardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital.  [removed] A. True[removed] B. False Question 14 of 254.0 PointsCash flow can be said to equal  [removed] A.operating income less taxes plus depreciation. [removed] B.operating income less taxes. [removed] C.operating income before depreciation and taxes plus depreciation. [removed] D.operating income after taxes minus depreciation.  Question 15 of 254.0 PointsThere are several disadvantages to the payback method, among them:  [removed] A.payback ignores the time value of money. [removed] B.payback emphasizes receiving money back as fast as possible for reinvestment. [removed] C.payback is Basic to use and to understand. [removed] D.payback can be used in conjunction with time adjusted methods of evaluation.  uestion 16 of 254.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method  [removed] A.assumes that cash flows are reinvested at the project’s internal rate of return. [removed] B.concentrates on the liquidity aspects of investment projects. [removed] C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. [removed] D.none of these.  Question 17 of 254.0 PointsAs the cost of capital increases  [removed] A.fewer projects are accepted. [removed] B.more projects are accepted. [removed] C.project selection remains unchanged. [removed] D.None of these.  Question 18 of 254.0 PointsThe capital budgeting decisions of a firm will have no effect on the share price of the common stock.  [removed] A. True[removed] B. False- Question 19 of 254.0 PointsThe payback method considers all cash inflows.  [removed] A. True[removed] B. False  uestion 20 of 254.0 PointsCapital budgeting is primarily concerned with  [removed] A.capital formation in the economy. [removed] B.planning future financing needs. [removed] C.evaluating investment alternatives. [removed] D.minimizing the cost of capital.  Question 21 of 254.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.  [removed] A. True[removed] B. False uestion 22 of 254.0 PointsWhich of the following statements about the “payback method” is true?  [removed] A.The payback method considers cash flows after the payback has been reached. [removed] B.The payback method does not consider the time value of money. [removed] C.The payback method uses discounted cash-flow techniques. [removed] D.The payback method generally leads to the same decision as other investment selection methods  uestion 23 of 254.0 PointsThe internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows.  [removed] A. True[removed] B. False Question 24 of 254.0 PointsSimulation models allow the analyst to test possible changes in the variables used in the model.  [removed] A. True[removed] B. False uestion 25 of 254.0 PointsThe first step in the capital budgeting process is  [removed] A.collection of data. [removed] B.idea development. [removed] C.assign probabilities. [removed] D.determine cashflow.   Week 7Question 1 of 25                4.0 PointsA bond’s rating can depend on all of the following except                A.the corporation’s debt-equity ratio.                   B.the corporation’s size.                              C.the ability of the firm to make interest payments.                       D.the coupon rate on the bond.               Question 2 of 25                4.0 PointsThe effect of a rights offering on a stockholder is                A.to increase his/her wealth.                    B.to increase his/her wealth only if the new stock is purchased.                               C.to decrease his/her wealth unless the stock is purchased.                       D.to decrease his/her wealth if nothing is done.               Question 3 of 25                4.0 PointsPreferred stock dividends are a deductible expense for a corporation.A. TrueB. FalseQuestion 4 of 25                4.0 PointsThe costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue.               A. TrueB. False  Question 5 of 25                4.0 PointsA “subordinated debenture”                A.must be transferred with the bond to which it is attached.                      B.is used mainly by railroad companies and usually specifies equipment as collateral.                     C.entitles the bondholder to purchase shares of common stock at a specific price.                           D.is an unsecured bond with an inferior claim on assets in the event of liquidation.         Question 6 of 25                4.0 PointsStockholders always have preemptive rights when new issues of stock are offered.A. TrueB. FalseQuestion 7 of 25                4.0 PointsDebentures are commonly issued by small companies.A. TrueB. FalseQuestion 8 of 25                4.0 PointsThe subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price.                A.higher, higher                              B.higher, lower                                C.lower, higher                                D.lower, lowerQuestion 9 of 25                4.0 PointsBondholders never have any control over the actions of a firm.A. TrueB. FalseQuestion 10 of 25                4.0 PointsThe increasing sophistication of individual investors has decreased the role of institutional investors in the stock market.               A. TrueB. False Question 11 of 25                4.0 PointsStock purchased through a rights offering may carry lower margin requirements.A. TrueB. False Question 12 of 25                4.0 PointsThe term debenture refers to                A.long-term, secured debt.                        B.long-term, unsecured debt.                   C.the after-acquired property clause.                    D.a 100-page document covering the specific terms of the offering.       Question 13 of 25                4.0 PointsThe difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.A. TrueB. FalseQuestion 14 of 25                4.0 PointsWith regard to interest rates and bond prices it can be said that                A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices.                       B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices.                       C.long-term rates are more volatile than short-term rates.                          D.a decrease in interest rates will cause bond prices to fall.         Question 15 of 25                4.0 PointsAn increasing proportion of shares in the U.S. are owned by:                A.individual investors.                  B.corporations (Treasury Stock).                              C.institutions.                   D.governments.              Question 16 of 25                4.0 PointsUnder normal operating conditions, the board of directors is elected by                A.the common stockholders.                    B.the preferred stockholders.                   C.the bondholders.                        D.two of the above.      Question 17 of 25                4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders                A.must sell their stock to the company.                                B.get first option to buy additional issues of common stock.                       C.may purchase existing treasury stock.                               D.cannot utilize cumulative voting procedures.Question 18 of 25                4.0 PointsThe higher the bond rating                A.the higher the interest rate on a bond.                             B.the lower the interest rate on a bond.                              C.the higher the call premium.                  D.the lower the call premium    Question 19 of 25                4.0 PointsThe purpose of cumulative voting is                A.to maintain majority control of the board of directors.                              B.to allow minority stockholders the possibility of a voice on the board of directors.                        C.to obstruct unfriendly mergers and takeover efforts.                                D.to prevent the dilution of common stock through pre-emptive rights offerings.            Question 20 of 25                4.0 PointsThe weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.Correct               A. TrueB. FalseQuestion 21 of 25                4.0 PointsPreferred stock is the least used of all long-term securities because                A.investors can get higher returns after taxes in other investments.                       B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible.                      C.flotation costs are extremely high compared to bonds.                             D.all of these.   Question 22 of 25                4.0 PointsWhich of the following is not a form of yield on a bond?                A.coupon rate (nominal yield)                   B.current yieldC.dividend yield                               D.yield to maturity         Question 23 of 25                4.0 PointsThere are a number of possible advantages to a rights offering:                A.current shareholders are protected against dilution.                  B.the firm has a built-in market of knowledgeable investors.                      C.distribution costs are lower than a public offering.                       D.all of these.   Question 24 of 25                4.0 PointsThe yield to maturity is the internal rate of return on a bond.Correct               A. TrueB. FalseQuestion 25 of 25                4.0 PointsWhen a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.Correct               A. TrueB. False  Week 8Question 1 of 25                4.0 PointsCash flow is equal to earnings before taxes minus depreciation.                A. TrueB. False  Question 2 of 25                4.0 PointsWhich of the following would not be included in the balance sheet investment account?                A.stocks of other corporations                 B.long term government bonds                                C.marketable securities                               D.investments in other corporations      Question 3 of 25                4.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its                A.capital structure.                         B.earnings volatility.                      C.sales, profit margins, and earnings.    D.all of these. Question 4 of 25                4.0 PointsThe 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:                A.40% B.12%                    C.20%                    D.25%    Question 5 of 25                4.0 Points(point) The break-even point can be calculated as                A.variable costs divided by contribution margin.                              B.total costs divided by contribution margin.                     C.variable cost times contribution margin.                          D.fixed cost divided by contribution margin.      Question 6 of 25                4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.                A. TrueB. False  Question 7 of 25                4.0 PointsIf 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?A.$100,000                          B.$30,000                             C.$15,000                             D.$145,000          Question 8 of 25                4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit.A. TrueB. False  Part 3 of 6 – Week 1 Practice Quiz             16.0 Points Question 9 of 25                4.0 PointsFor most firms, the primary motive for holding cash is the transaction motive.A. TrueB. FalseQuestion 10 of 25                4.0 PointsA Just-In-Time (JIT) inventory management program has all but which of the following requirements?                A.quality production                      B.large safety stocks                      C.close ties between suppliers, manufacturers, and customers                                D.minimizing inventory levels   Question 11 of 25                4.0 PointsModos 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’s checks have cleared but only $600 of its own, calculate its float.                A.$1,200                               B.$1,100                               C.$300                 D.$700 Question 12 of 25                4.0 PointsEven 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.A. TrueB. FalsePart 4 of 6 – Final Exam 20.0 Points Question 13 of 25                4.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.A. TrueB. False Question 14 of 25                4.0 Points(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate                A.decreases.                      B.remains the same.                      C.increases.                       D.Not enough information to tell.             Question 15 of 25                4.0 Points(point) Within the capital asset pricing model                A.the risk-free rate is usually higher than the return in the market.                        B.the higher the beta the lower the required rate of return.                      C.beta measures the volatility of an individual stock relative to a stock market index.                 D.two of the above are true.      Question 16 of 25                4.0 PointsLewis, 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?                A.4.41%                                B.9.0%                 C.1.89%                D.6.43%                Question 17 of 25                4.0 PointsIf the yield to maturity on a bond is greater than the coupon rate, you can assume:                A.interest rates have decreased                               B.the price is below the par                        C.the price is above the par                        D.risk premiums have decreased             Part 5 of 6 – Final Exam 16.0 Points Question 18 of 25                4.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method                A.assumes that cash flows are reinvested at the project’s internal rate of return.                            B.concentrates on the liquidity aspects of investment projects.                               C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital.                             D.none of these.              Question 19 of 25                4.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.                A. TrueB. False  Question 20 of 25                4.0 PointsThere are several disadvantages to the payback method, among them:                A.payback ignores the time value of money.                      B.payback emphasizes receiving money back as fast as possible for reinvestment.                         C.payback is Basic to use and to understand.                      D.payback can be used in conjunction with time adjusted methods of evaluation.            Question 21 of 25                4.0 PointsWhich of the following is a characteristic of beta?                A.Beta measures only the volatility of returns on an individual bond relative to a bond market index.                 B.A beta of 1.0 is of equal risk with the market.                                C.A beta of greater than 1.0 has less risk than the market.                           D.Two of the above are true.       Part 6 of 6 – Final Exam 16.0 Points Question 22 of 25                4.0 PointsStock purchased through a rights offering may carry lower margin requirements.                A. TrueB. False Question 23 of 25                4.0 PointsBondholders never have any control over the actions of a firm.                A. TrueB. FalseQuestion 24 of 25                4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders                A.must sell their stock to the company.                                B.get first option to buy additional issues of common stock.                      C.may purchase existing treasury stock.                               D.cannot utilize cumulative voting procedures.                Question 25 of 25                4.0 PointsWhich of the following best repFinc400 quiz 1-8 art 1 of 1 – Week 1 Quiz Question 1 of 254.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its  [removed] A.capital structure. [removed] B.earnings volatility. [removed] C.sales, profit margins, and earnings. [removed] D.all of these.  Question 2 of 254.0 PointsThe primary disadvantage of accrual accounting is that  [removed] A.it does not match revenues and expenses in the period in which they are incurred. [removed] B.it does not appropriately measure accounting profit. [removed] C.it does not recognize accounts receivable. [removed] D.it does not adequately show the actual cash flow position of the firm Question 3 of 254.0 PointsTotal assets of a firm are financed with liabilities and stockholders’ equity.  [removed] True[removed] False.  Question 4 of 254.0 PointsGross profit is equal to  [removed] A.sales minus cost of goods sold. [removed] B.sales minus (selling and administrative expenses). [removed] C.sales minus (cost of goods sold and selling and administrative expenses). [removed] D.sales minus (cost of goods sold and depreciation expense).    Question 5 of 254.0 PointsThe higher the profit of a firm, the higher the value the firm is assured of receiving in the market.  [removed] A. True[removed] B. False  uestion 6 of 254.0 PointsRatios are used to compare different firms in the same industry.  [removed] A. True[removed] B. False Question 7 of 254.0 PointsThe Sarbanes-Oxley Act was passed in an effort to  [removed] A.protect small business from large corporations dominating the market. [removed] B.ensure that partnerships divide profits among partners in a fair manner. [removed] C.guarantee outside auditors can control corporate accounting practices. [removed] D.control corrupt corporate behavior.   uestion 8 of 254.0 PointsWhich of the following is not subtracted out in arriving at operating income?  [removed] A.interest expense [removed] B.cost of goods sold [removed] C.depreciation [removed] D.selling and administrative expense   Question 9 of 254.0 PointsWhich of the following is not a primary source of capital to the firm?  [removed] A.assets [removed] B.common stock [removed] C.preferred stock [removed] D.bonds   Question 10 of 254.0 PointsA 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?  [removed] A.$35 per share [removed] B.$25 per share [removed] C.$15 per share [removed] D.Not enough information to tell   Question 11 of 254.0 PointsDebt utilization ratios are used to evaluate the firm’s debt position with regard to its asset base and earning power.  [removed] A. True[removed] B. False  uestion 12 of 254.0 PointsA firm with earnings per share of $3 and a price-earnings ratio of 20 will have a stock price of  [removed] A.$60.00 [removed] B.$15.00 [removed] C.$6.67 [removed] D.the market assigns a stock price independent of EPS and the P/E ratio.   Question 13 of 254.0 PointsThe P/E ratio is strongly related to the past performance of the firm.  [removed] A. True[removed] B. False  Question 14 of 254.0 PointsMoney markets would include which of the following securities?  [removed] A.common stock and corporate bonds. [removed] B.treasury bills and commercial paper. [removed] C.certificates of deposit and preferred stock. [removed] D.all of these.   uestion 15 of 254.0 PointsAgency theory assumes that corporate managers act to increase the wealth of corporate shareholders.  [removed] A. True[removed] B. False  Question 16 of 254.0 PointsPreferred stock is excluded from stockholders equity because it does not have full voting rights.  [removed] A. True[removed] B. False  Question 17 of 254.0 PointsSales minus cost of goods sold is equal to earnings before taxes.  [removed] A. True[removed] B. False   Question 18 of 254.0 PointsAsset utilization ratios  [removed] A.relate balance sheet assets to income statement sales. [removed] B.measure how much cash is available for reinvestment into current assets. [removed] C.are most important to stockholders. [removed] D.measures the firm’s ability to generate a profit on sales.    Question 19 of 254.0 PointsThe P/E ratio provides no indication of investors’ expectations about the future of a company.  [removed] A. True[removed] B. False Question 20 of 254.0 PointsAsset utilization ratios relate balance sheet assets to income statement sales.  [removed] A. True[removed] B. False Question 21 of 254.0 Points   Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.  [removed] A. True[removed] B. False Question 22 of 254.0 Points   Which of the following is an outflow of cash?  [removed] A.profitable operations [removed] B.the sale of equipment [removed] C.the sale of the company’s common stock [removed] D.the payment of cash dividends  uestion 23 of 254.0 PointsThe 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:  [removed] A.40% [removed] B.12% [removed] C.20% [removed] D.25%   Question 24 of 254.0 PointsThe income statement is the major device for measuring the profitability of a firm over a period of time.  [removed] A. True[removed] B. False  Question 25 of 254.0 PointsWhich of the following is an inflow of cash?  [removed] A.funds spent in normal business operations [removed] B.the purchase of a new factory [removed] C.the sale of the firm’s bonds [removed] D.the retirement of the firm’s bonds   Week 2Question 1 of 25               4.0 PointsA lower price for the firm’s product will reduce the firm’s breakeven point.                A. True  B. False Question 2 of 25               4.0 Points(point) Profit is generally adequate to finance significant growth.                 A. True  B. False  Question 3 of 25               4.0 PointsIf 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?                 A.$100,000                 B.$30,000                 C.$15,000                 D.$145,000 Question 4 of 25               4.0 Points(point) The break-even point can be calculated as                 A.variable costs divided by contribution margin.                 B.total costs divided by contribution margin.                 C.variable cost times contribution margin.                 D.fixed cost divided by contribution margin.  Question 5 of 25               4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.                 A. True  B. False  Question 6 of 25               4.0 PointsIf fixed costs rise while other variables stay constant                 A.the breakeven point rises.                 B.degree of operating leverage increases.                 C.total profit declines.                 D.all of theseQuestion 7 of 25               4.0 PointsOperating leverage emphasizes the impact of using fixed assets in the business.                A. True  B. False Question 8 of 25               4.0 Points(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced                 A.is higher.                 B.is lower.                 C.is the same.                 D.can be either higher or lower.Question 9 of 25               4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit.                A. True  B. False Question 10 of 25             4.0 Points(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?                 A.decrease in inventory.                 B.increase in retained earnings.                 C.decrease in accounts payable.                 D.decrease in accounts receivable. Question 11 of 25             4.0 PointsAn increase in sales and profits generates the necessary cash required for economic growth.                A. True  B. False Question 12 of 25             4.0 PointsThe percent-of-sales forecast is likely to be most accurate when used with cyclical companies.                 A. True  B. False Question 13 of 25             4.0 PointsPro forma financial statements are                 A.the most comprehensive means of financial forecasting.                 B.often required by prospective creditors.                 C.projections of financial statements for a future period.                 D.all of these.Question 14 of 25             4.0 Points(point) When the cost of raw materials is increasing, FIFO accounting                 A.yields higher ending inventory values than LIFO.                 B.produces higher unit sales than using LIFO.                 C.yields higher cost of goods sold than LIFO.                 D.All of these.Question 15 of 25             4.0 Points(point) If sales volume exceeds the break-even point, the firm will experience                 A.an operating loss.                 B.an operating profit.                 C.an increase in plant and equipment.                 D.an increase in stock price. Question 16 of 25             4.0 PointsThe value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.                 A. True  B. False Question 17 of 25             4.0 Points(point) Leverage works best when volume is increasing.                   A. True  B. False Question 18 of 25             4.0 Points(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.                 A. True  B. FalseQuestion 19 of 25             4.0 PointsIf the price per unit decreases because of competition but the cost structure remains the same                 A.the breakeven point rises.                 B.the degree of combined leverage declines.                 C.the degree of financial leverage declines.                 D.All of these Question 20 of 25             4.0 PointsSales (100,000 units)       $   1,000,000Variable costs             300,000Contribution margin                                700,000Fixed manufacturing costs                    200,000Operating income                     500,000Interest                           75,000Earnings before taxes             425,000Taxes (30%)                                                 127,500Net Income        $      297,500 Refer to the figure above. The Degree of Operating Leverage is                 A.1.40x                 B.1.56x                 C.3.33x                 D.2.22x Question 21 of 25             4.0 Points(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.                 A. True  B. False  Question 22 of 25             4.0 Points(point) As the contribution margin rises, the breakeven point goes down.                 A. True  B. False   Question 23 of 25             4.0 Points(point) In the percent-of-sales method, an increase in dividends                 A.will increase required new funds.                 B.will decrease required new funds.                 C.has no effect on required new funds.                              D.more information is needed.  Question 24 of 25             4.0 PointsWhich of the following is not true about leverage?                 A.operating leverage influences the top half of the income statement, determining EBIT.                           B.financial leverage deals with the bottom half of the income statement, determining EPS                         C.combined leverage utilizes the entire income statement, showing the impact of change in volume on EBIT.                   D.none of these    Question 25 of 25             4.0 PointsThe finance department should work independently without the input of other departments because there may be significant biases when creating proformas.                  A. True  B. False  Week 3FINC400 quiz 3FINC400 Week 4 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. Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond  [removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up. [removed] D.need more information  Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.  [removed] A. True[removed] B. FalseQuestion 3 of 254.0 PointsThe time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.  [removed] A. True[removed] B. False Question 4 of 254.0 Points   (point) The longer the time to maturity:  [removed] A.the greater the price increase from an increase in interest rates. [removed] B.the less the price increase from an increase in interest rates. [removed] C.the greater the price increase from a decrease in interest rates. [removed] D.the less the price decrease from a decrease in interest rates.  Question 5 of 254.0 Points(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.  [removed] A. True[removed] B. False Question 6 of 254.0 Points   Financial capital does not include  [removed] A.stock.  [removed] B.bonds.  [removed] C.preferred stock.  [removed] D.working capital.  Question 7 of 254.0 Points    The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?  [removed] A.$3.00  [removed] B.$37.50  [removed] C.$50.00  [removed] D.none of these  Question 8 of 254.0 Points    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.  [removed] A. True[removed] B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds.  [removed] A. True[removed] B. False Question 10 of 254.0 Points   (point) The calculation of the cost of capital depends upon historical costs of funds.  [removed] A. True[removed] B. False Question 11 of 254.0 Points   As the interest rate increases, the interest factor (IF) for the present value of $1 increases.  [removed] A. True[removed] B. False Question 12 of 254.0 Points(point) An annuity may be defined as  [removed] A.a payment at a fixed interest rate. [removed] B.a series of payments of unequal amount. [removed] C.a series of yearly payments. [removed] D.a series of consecutive payments of equal amounts. Reset Selection uestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate  [removed] A.decreases. [removed] B.remains the same. [removed] C.increases. [removed] D.Not enough information to tell.  Question 14 of 254.0 Points(point) Within the capital asset pricing model  [removed] A.the risk-free rate is usually higher than the return in the market.  [removed] B.the higher the beta the lower the required rate of return.  [removed] C.beta measures the volatility of an individual stock relative to a stock market index.  [removed] D.two of the above are true.  Question 15 of 254.0 Points          The risk premium is primarily concerned with business risk, financial risk, and inflation risk.  [removed] A. True[removed] B. False uestion 16 of 254.0 Points        When inflation rises, preferred stock prices fall.  [removed] A. True[removed] B. False uestion 17 of 254.0 Points    (point) If the inflation premium for a bond goes up, the price of the bond  [removed] A.is unaffected. [removed] B.goes down. [removed] C.goes up. [removed] D.need more information.  uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return.  [removed] A. True[removed] B. False Question 19 of 254.0 Points   (point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.  [removed] A. True[removed] B. False uestion 20 of 254.0 Points   The time value of money concept becomes less critical as the prime rate increases.  [removed] A. True[removed] B. False Question 21 of 254.0 Points   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.  [removed] A. True[removed] B. False Question 22 of 254.0 Points   The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.  [removed] A. True[removed] B. False Question 23 of 254.0 Points   The required return by investors is important to financial managers for all of the following reasons except:  [removed] A.It influences the firm’s cost of financing  [removed] B.It influences their stock price  [removed] C.It is the primary driver of their financial ratios  [removed] D.It helps when pricing new issues of securities  uestion 24 of 254.0 Points    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?  [removed] A.4.41% [removed] B.9.0% [removed] C.1.89% [removed] D.6.43%   Question 25 of 254.0 PointsYou 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?  [removed] A.Present value of an annuity of $1 [removed] B.Future value of an annuity [removed] C.Present value of $1 [removed] D.Future value of $1    Week 4 FINC400Week 4The 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.Question 1 of 254.0 PointsIf the inflation premium for a bond goes up, the price of the bond  [removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up. [removed]D.need more information  Question 2 of 254.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.  [removed]A. True[removed]B. FalseQuestion 3 of 254.0 PointsThe time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.  [removed]A. True[removed]B. FalseQuestion 4 of 254.0 Points   (point) The longer the time to maturity:  [removed]A.the greater the price increase from an increase in interest rates. [removed]B.the less the price increase from an increase in interest rates. [removed]C.the greater the price increase from a decrease in interest rates. [removed]D.the less the price decrease from a decrease in interest rates.  Question 5 of 254.0 Points(point) As the interest rate increases, the interest factor (IF) for the present value of $1 increases.  [removed]A. True[removed]B. FalseQuestion 6 of 254.0 Points   Financial capital does not include  [removed]A.stock. [removed]B.bonds. [removed]C.preferred stock. [removed]D.working capital. Question 7 of 254.0 Points    The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?  [removed]A.$3.00 [removed]B.$37.50 [removed]C.$50.00 [removed]D.none of these Question 8 of 254.0 Points    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.  [removed]A. True[removed]B. False Question 9 of 254.0 PointsThe calculation of the cost of capital depends upon historical costs of funds.  [removed]A. True[removed]B. FalseQuestion 10 of 254.0 Points   (point) The calculation of the cost of capital depends upon historical costs of funds.  [removed]A. True[removed]B. FalseQuestion 11 of 254.0 Points   As the interest rate increases, the interest factor (IF) for the present value of $1 increases.  [removed]A. True[removed]B. FalseQuestion 12 of 254.0 Points(point) An annuity may be defined as  [removed]A.a payment at a fixed interest rate. [removed]B.a series of payments of unequal amount. [removed]C.a series of yearly payments. [removed]D.a series of consecutive payments of equal amounts. Reset Selectionuestion 13 of 254.0 PointsAs the time period until receipt increases, the present value of an amount at a fixed interest rate  [removed]A.decreases. [removed]B.remains the same. [removed]C.increases. [removed]D.Not enough information to tell.  Question 14 of 254.0 Points(point) Within the capital asset pricing model  [removed]A.the risk-free rate is usually higher than the return in the market. [removed]B.the higher the beta the lower the required rate of return. [removed]C.beta measures the volatility of an individual stock relative to a stock market index. [removed]D.two of the above are true. Question 15 of 254.0 Points     The risk premium is primarily concerned with business risk, financial risk, and inflation risk.  [removed]A. True[removed]B. Falseuestion 16 of 254.0 Points    When inflation rises, preferred stock prices fall.  [removed]A. True[removed]B. Falseuestion 17 of 254.0 Points    (point) If the inflation premium for a bond goes up, the price of the bond  [removed]A.is unaffected. [removed]B.goes down. [removed]C.goes up. [removed]D.need more information.  uestion 18 of 254.0 PointsThe cost of capital for each source of funds is dependent on current market conditions and expected rates of return.  [removed]A. True[removed]B. FalseQuestion 19 of 254.0 Points   (point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.  [removed]A. True[removed]B. Falseuestion 20 of 254.0 Points   The time value of money concept becomes less critical as the prime rate increases.  [removed]A. True[removed]B. FalseQuestion 21 of 254.0 Points   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.  [removed]A. True[removed]B. FalseQuestion 22 of 254.0 Points   The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.  [removed]A. True[removed]B. FalseQuestion 23 of 254.0 Points   The required return by investors is important to financial managers for all of the following reasons except:  [removed]A.It influences the firm’s cost of financing [removed]B.It influences their stock price [removed]C.It is the primary driver of their financial ratios [removed]D.It helps when pricing new issues of securities uestion 24 of 254.0 Points    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?  [removed]A.4.41% [removed]B.9.0% [removed]C.1.89% [removed]D.6.43% Question 25 of 254.0 PointsYou 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?  [removed]A.Present value of an annuity of $1 [removed]B.Future value of an annuity [removed]C.Present value of $1 [removed]D.Future value of $1    Week 5 FINC400Week 5 Quiz” for FINC400 I004 Sum 13  Question 1 of 254.0 PointsIn determining the appropriate discount rate for an individual project, the financial manager will be most influenced by the  [removed] A.expected value. [removed] B.internal rate of return. [removed] C.standard deviation. [removed] D.coefficient of variation.  Question 2 of 254.0 PointsWhich of the following is a characteristic of beta?  [removed] A.Beta measures only the volatility of returns on an individual bond relative to a bond market index. [removed] B.A beta of 1.0 is of equal risk with the market. [removed] C.A beta of greater than 1.0 has less risk than the market. [removed] D.Two of the above are true.  uestion 3 of 254.0 PointsCapital rationing  [removed] A.is a way of preserving the assets of the firm over the long term. [removed] B.is a less than optimal way to arrive at capital budgeting decisions. [removed] C.assures stockholder wealth maximization. [removed] D.assures maximum potential profitability.   Question 4 of 254.0 PointsCapital budgeting is only a concern of finance and accounting personnel.  [removed] A. True[removed] B. False Question 5 of 254.0 PointsEven though one project may have superior cash flows, top management may sometimes choose a project that inflates earnings instead of cash flow.  [removed] A. True[removed] B. False Question 6 of 254.0 PointsSimulation models allow the planner to:  [removed] A.reduce the standard deviations of projects. [removed] B.test possible changes in each variable. [removed] C.deal with the uncertainty in forecasting outcome D.b and c.Question 7 of 254.0 PointsThe selection of a mutually exclusive project means that all other projects with a positive net present value may also be selected.  [removed] A. True[removed] B. False Question 8 of 254.0 PointsThe cost of capital is assumed to contain no risk for the firm.  [removed] A. True[removed] B. False Question 9 of 254.0 PointsIf 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?  [removed] A.Coefficient of correlation [removed] B.Coefficient of variation [removed] C.Standard deviation of returns [removed] D.Net present value  Question 10 of 254.0 PointsTo 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.  [removed] A. True[removed] B. False Question 11 of 254.0 PointsProjects with high positive correlation are sometimes valuable because they allow us to smooth out the overall performance of the firm during a business cycle.  [removed] A. True[removed] B. False  Question 12 of 254.0 PointsWhich of the following is a false statement?  [removed] A.Risky investments may produce large losses. [removed] B.Risky investments may produce large gains. [removed] C.The coefficient of variation is a risk measure. [removed] D.Risk-averse investors cannot be induced to invest in risky assets.  uestion 13 of 254.0 PointsRegardless of risk, no projects should be accepted unless they earn more than the firm’s weighted average cost of capital.  [removed] A. True[removed] B. False Question 14 of 254.0 PointsCash flow can be said to equal  [removed] A.operating income less taxes plus depreciation. [removed] B.operating income less taxes. [removed] C.operating income before depreciation and taxes plus depreciation. [removed] D.operating income after taxes minus depreciation.  Question 15 of 254.0 PointsThere are several disadvantages to the payback method, among them:  [removed] A.payback ignores the time value of money. [removed] B.payback emphasizes receiving money back as fast as possible for reinvestment. [removed] C.payback is Basic to use and to understand. [removed] D.payback can be used in conjunction with time adjusted methods of evaluation.  uestion 16 of 254.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method  [removed] A.assumes that cash flows are reinvested at the project’s internal rate of return. [removed] B.concentrates on the liquidity aspects of investment projects. [removed] C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital. [removed] D.none of these.  Question 17 of 254.0 PointsAs the cost of capital increases  [removed] A.fewer projects are accepted. [removed] B.more projects are accepted. [removed] C.project selection remains unchanged. [removed] D.None of these.  Question 18 of 254.0 PointsThe capital budgeting decisions of a firm will have no effect on the share price of the common stock.  [removed] A. True[removed] B. False- Question 19 of 254.0 PointsThe payback method considers all cash inflows.  [removed] A. True[removed] B. False  uestion 20 of 254.0 PointsCapital budgeting is primarily concerned with  [removed] A.capital formation in the economy. [removed] B.planning future financing needs. [removed] C.evaluating investment alternatives. [removed] D.minimizing the cost of capital.  Question 21 of 254.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.  [removed] A. True[removed] B. False uestion 22 of 254.0 PointsWhich of the following statements about the “payback method” is true?  [removed] A.The payback method considers cash flows after the payback has been reached. [removed] B.The payback method does not consider the time value of money. [removed] C.The payback method uses discounted cash-flow techniques. [removed] D.The payback method generally leads to the same decision as other investment selection methods  uestion 23 of 254.0 PointsThe internal rate of return is the interest rate that equates the cash outflows of an investment with the subsequent inflows.  [removed] A. True[removed] B. False Question 24 of 254.0 PointsSimulation models allow the analyst to test possible changes in the variables used in the model.  [removed] A. True[removed] B. False uestion 25 of 254.0 PointsThe first step in the capital budgeting process is  [removed] A.collection of data. [removed] B.idea development. [removed] C.assign probabilities. [removed] D.determine cashflow.   Week 7Question 1 of 25                4.0 PointsA bond’s rating can depend on all of the following except                A.the corporation’s debt-equity ratio.                   B.the corporation’s size.                              C.the ability of the firm to make interest payments.                       D.the coupon rate on the bond.               Question 2 of 25                4.0 PointsThe effect of a rights offering on a stockholder is                A.to increase his/her wealth.                    B.to increase his/her wealth only if the new stock is purchased.                               C.to decrease his/her wealth unless the stock is purchased.                       D.to decrease his/her wealth if nothing is done.               Question 3 of 25                4.0 PointsPreferred stock dividends are a deductible expense for a corporation.A. TrueB. FalseQuestion 4 of 25                4.0 PointsThe costs of bond refunding are the call premium, and the underwriting costs on the old and new bond issue.               A. TrueB. False  Question 5 of 25                4.0 PointsA “subordinated debenture”                A.must be transferred with the bond to which it is attached.                      B.is used mainly by railroad companies and usually specifies equipment as collateral.                     C.entitles the bondholder to purchase shares of common stock at a specific price.                           D.is an unsecured bond with an inferior claim on assets in the event of liquidation.         Question 6 of 25                4.0 PointsStockholders always have preemptive rights when new issues of stock are offered.A. TrueB. FalseQuestion 7 of 25                4.0 PointsDebentures are commonly issued by small companies.A. TrueB. FalseQuestion 8 of 25                4.0 PointsThe subscription rate is generally _______ than the rights-on price and _______ than the ex-rights price.                A.higher, higher                              B.higher, lower                                C.lower, higher                                D.lower, lowerQuestion 9 of 25                4.0 PointsBondholders never have any control over the actions of a firm.A. TrueB. FalseQuestion 10 of 25                4.0 PointsThe increasing sophistication of individual investors has decreased the role of institutional investors in the stock market.               A. TrueB. False Question 11 of 25                4.0 PointsStock purchased through a rights offering may carry lower margin requirements.A. TrueB. False Question 12 of 25                4.0 PointsThe term debenture refers to                A.long-term, secured debt.                        B.long-term, unsecured debt.                   C.the after-acquired property clause.                    D.a 100-page document covering the specific terms of the offering.       Question 13 of 25                4.0 PointsThe difference between the initial bond price and the maturity value is amortized for tax purposes over the life of a zero-coupon bond.A. TrueB. FalseQuestion 14 of 25                4.0 PointsWith regard to interest rates and bond prices it can be said that                A.a 1% change in interest rates will cause a greater change in long-term bond prices than short-term prices.                       B.a 1% change in interest rates will cause a greater change in short-term bond prices than long-term prices.                       C.long-term rates are more volatile than short-term rates.                          D.a decrease in interest rates will cause bond prices to fall.         Question 15 of 25                4.0 PointsAn increasing proportion of shares in the U.S. are owned by:                A.individual investors.                  B.corporations (Treasury Stock).                              C.institutions.                   D.governments.              Question 16 of 25                4.0 PointsUnder normal operating conditions, the board of directors is elected by                A.the common stockholders.                    B.the preferred stockholders.                   C.the bondholders.                        D.two of the above.      Question 17 of 25                4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders                A.must sell their stock to the company.                                B.get first option to buy additional issues of common stock.                       C.may purchase existing treasury stock.                               D.cannot utilize cumulative voting procedures.Question 18 of 25                4.0 PointsThe higher the bond rating                A.the higher the interest rate on a bond.                             B.the lower the interest rate on a bond.                              C.the higher the call premium.                  D.the lower the call premium    Question 19 of 25                4.0 PointsThe purpose of cumulative voting is                A.to maintain majority control of the board of directors.                              B.to allow minority stockholders the possibility of a voice on the board of directors.                        C.to obstruct unfriendly mergers and takeover efforts.                                D.to prevent the dilution of common stock through pre-emptive rights offerings.            Question 20 of 25                4.0 PointsThe weighted average cost of capital is generally used as the discount rate in a bond-refunding decision.Correct               A. TrueB. FalseQuestion 21 of 25                4.0 PointsPreferred stock is the least used of all long-term securities because                A.investors can get higher returns after taxes in other investments.                       B.preferred dividends are considered regular (fixed) obligations but are not tax-deductible.                      C.flotation costs are extremely high compared to bonds.                             D.all of these.   Question 22 of 25                4.0 PointsWhich of the following is not a form of yield on a bond?                A.coupon rate (nominal yield)                   B.current yieldC.dividend yield                               D.yield to maturity         Question 23 of 25                4.0 PointsThere are a number of possible advantages to a rights offering:                A.current shareholders are protected against dilution.                  B.the firm has a built-in market of knowledgeable investors.                      C.distribution costs are lower than a public offering.                       D.all of these.   Question 24 of 25                4.0 PointsThe yield to maturity is the internal rate of return on a bond.Correct               A. TrueB. FalseQuestion 25 of 25                4.0 PointsWhen a company defaults on a secured debt, it is rare for the secured asset to be sold and the proceeds distributed to the debtor.Correct               A. TrueB. False  Week 8Question 1 of 25                4.0 PointsCash flow is equal to earnings before taxes minus depreciation.                A. TrueB. False  Question 2 of 25                4.0 PointsWhich of the following would not be included in the balance sheet investment account?                A.stocks of other corporations                 B.long term government bonds                                C.marketable securities                               D.investments in other corporations      Question 3 of 25                4.0 PointsThe firm’s price-earnings (P/E) ratio is influenced by its                A.capital structure.                         B.earnings volatility.                      C.sales, profit margins, and earnings.    D.all of these. Question 4 of 25                4.0 PointsThe 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:                A.40% B.12%                    C.20%                    D.25%    Question 5 of 25                4.0 Points(point) The break-even point can be calculated as                A.variable costs divided by contribution margin.                              B.total costs divided by contribution margin.                     C.variable cost times contribution margin.                          D.fixed cost divided by contribution margin.      Question 6 of 25                4.0 PointsThe degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.                A. TrueB. False  Question 7 of 25                4.0 PointsIf 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?A.$100,000                          B.$30,000                             C.$15,000                             D.$145,000          Question 8 of 25                4.0 PointsThe contribution margin is equal to price per unit minus total costs per unit.A. TrueB. False  Part 3 of 6 – Week 1 Practice Quiz             16.0 Points Question 9 of 25                4.0 PointsFor most firms, the primary motive for holding cash is the transaction motive.A. TrueB. FalseQuestion 10 of 25                4.0 PointsA Just-In-Time (JIT) inventory management program has all but which of the following requirements?                A.quality production                      B.large safety stocks                      C.close ties between suppliers, manufacturers, and customers                                D.minimizing inventory levels   Question 11 of 25                4.0 PointsModos 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’s checks have cleared but only $600 of its own, calculate its float.                A.$1,200                               B.$1,100                               C.$300                 D.$700 Question 12 of 25                4.0 PointsEven 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.A. TrueB. FalsePart 4 of 6 – Final Exam 20.0 Points Question 13 of 25                4.0 PointsThe interest factor for the present value of a single amount is the inverse of the future value interest factor.A. TrueB. False Question 14 of 25                4.0 Points(point) As the time period until receipt increases, the present value of an amount at a fixed interest rate                A.decreases.                      B.remains the same.                      C.increases.                       D.Not enough information to tell.             Question 15 of 25                4.0 Points(point) Within the capital asset pricing model                A.the risk-free rate is usually higher than the return in the market.                        B.the higher the beta the lower the required rate of return.                      C.beta measures the volatility of an individual stock relative to a stock market index.                 D.two of the above are true.      Question 16 of 25                4.0 PointsLewis, 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?                A.4.41%                                B.9.0%                 C.1.89%                D.6.43%                Question 17 of 25                4.0 PointsIf the yield to maturity on a bond is greater than the coupon rate, you can assume:                A.interest rates have decreased                               B.the price is below the par                        C.the price is above the par                        D.risk premiums have decreased             Part 5 of 6 – Final Exam 16.0 Points Question 18 of 25                4.0 PointsThe Net Present Value Method is a more conservative technique for selecting investment projects than the Internal Rate of Return method because the NPV method                A.assumes that cash flows are reinvested at the project’s internal rate of return.                            B.concentrates on the liquidity aspects of investment projects.                               C.assumes that cash flows are reinvested at the firm’s weighted average cost of capital.                             D.none of these.              Question 19 of 25                4.0 PointsIn most capital budgeting decisions the emphasis should be on reported earnings rather than cash flows.                A. TrueB. False  Question 20 of 25                4.0 PointsThere are several disadvantages to the payback method, among them:                A.payback ignores the time value of money.                      B.payback emphasizes receiving money back as fast as possible for reinvestment.                         C.payback is Basic to use and to understand.                      D.payback can be used in conjunction with time adjusted methods of evaluation.            Question 21 of 25                4.0 PointsWhich of the following is a characteristic of beta?                A.Beta measures only the volatility of returns on an individual bond relative to a bond market index.                 B.A beta of 1.0 is of equal risk with the market.                                C.A beta of greater than 1.0 has less risk than the market.                           D.Two of the above are true.       Part 6 of 6 – Final Exam 16.0 Points Question 22 of 25                4.0 PointsStock purchased through a rights offering may carry lower margin requirements.                A. TrueB. False Question 23 of 25                4.0 PointsBondholders never have any control over the actions of a firm.                A. TrueB. FalseQuestion 24 of 25                4.0 PointsIf a corporate charter includes a provision for preemptive rights, the stockholders                A.must sell their stock to the company.                                B.get first option to buy additional issues of common stock.                      C.may purchase existing treasury stock.                               D.cannot utilize cumulative voting procedures.                Question 25 of 25                4.0 PointsWhich of the following best represents the hierarchy of creditor and stockholder claims?                A.Common stock, senior secured debt, subordinated debentures                           B.Senior debentures,

American Public University FINCAmerican Public University FINCAmerican Public University FINCAmerican Public University FINCAmerican Public University FINCvv

subordinated debentures, junior secured debt

                C.Senior secured debt, subordinated debentures, common stock                            D.Preferred stock, secured debt, debentures.

vvvvvvvvvvvvvvvvvresents the hierarchy of creditor and stockholder claims?

                A.Common stock, senior secured debt, subordinated debentures

                B.Senior debentures, subordinated debentures, junior secured debt

                C.Senior secured debt, subordinated debentures, common stock                            D.Preferred stock, secured debt, debentures.

s the hierarchy of creditor and stockholder claims?

                A.Common stock, senior secured debt, subordinated debentures                           B.Senior debentures, subordinated debentures, junior secured debt                    C.Senior secured debt, subordinated debentures, common stock                            D.Preferred stock, secured debt, debentures.

  debt, subordinated debentures

                B.Senior debentures, subordinated debentures, junior secured debt                    C.Senior secured debt, subordinated debentures, common stock                            D.Preferred stock, secured debt, debentures.

ubordinated debentures

                B.Senior debentures, subordinated debentures, junior secured debt                    C.Senior secured debt, subordinated debentures, common stock                            D.Preferred stock, secured debt, debentures.

tock.

                D.cannot utilize cumulative voting procedures.                Question 25 of 25                4.0 PointsWhich of the following best represents the hierarchy of creditor and stockholder claims?                A.Common stock, senior secured debt, subordinated debentures                           B.Senior debentures, subordinated debentures, junior secured debt                    C.Senior secured debt, subordinated debentures, common stock                            D.Preferred stock, secured debt, debentures.

Turn in your highest-quality paper
Get a qualified writer to help you with

“ american public university FINC400 quiz 1-8 ”
Get high-quality paper
NEW! AI matching with writer

Calculate the price

Academic level

Type of assignment

Deadline

Pages

Total:

$0.00

Still stressed with your coursework?

Get quality coursework help from an expert!

Order now