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American public university system finc 600 week 8 practice quiz
- 1. American Public University System FINC 600 Week 8 Practice Quiz Get help for AmericanPublicUniversitySystemFINC600 Week7 Practice Quiz. We provide assignment, homework, discussions and case studies help for all subject AmericanPublicUniversity Systemfor Session 2015-2016 FINC 600 Week 8 Practice Quiz Corporate Finance Question1of 25 4.0/ 4.0 Points Indirectcostsof bankruptcyare borne principallyby: A. Bondholders B. Stockholders C. Managers D. The federal government AnswerKey:B
- 2. Question2of 25 4.0/ 4.0 Points Whichof the followinglistseventsinthe chronological orderfromearliesttolatest? A.Recorddate,declarationdate,ex-dividenddate B.Declarationdate,recorddate,ex-dividenddate C.Declarationdate,ex-dividenddate,recorddate D.None of the above AnswerKey:C Question3 Dividendsare decidedby: I) The managersof a firm II) The government III) The board of directors A.I only B.II only C.IIIonly
- 3. D.I and II only Question4 Discusssome examplesof the conflictsof interestthatmayarise betweenbondholdersand stockholderswhenafirmisinfinancial distress. Question5 The main advantage of debtfinancingforafirmis: I) no SEC registrationisrequiredforbondissue II) interestexpense of afirmistax deductible III) unleveredfirmshave highervalue thanleveredfirms A.I only B.II only C.IIIonly D.I and IIIonly Question6
- 4. Capital structure of the firmcan be definedas: I) the firm'sdebt-equityratio II) the firm'smix of differentsecuritiesusedtofinance assets III) the marketimperfectionthatthe firm'smanagercan exploit A.I only B.II only C.IIIonly D.I, II,and III Question7 If the capital marketsare efficient,thenthe sale orpurchase of any securityatthe prevailingmarket price is: A.Alwaysapositive NPV transaction B.GenerallyazeroNPV transaction C.Is alwaysa negative NPV transaction D.None of the above
- 5. Question8of 25 0.0/ 4.0 Points Brieflydescribethe traditional positiononcapital structure. Question9 Profitabilityratiosindicate: I) How productivelyisthe firmutilizingitsassets. II) How liquidisthe firm. III) How profitable isthe firm. IV) Howhighlyisthe firmvaluedbythe investors. A.I only B.II only C.IIIonly D.IIIand IV only Question10 What are the primaryreasonsfora companyto use debtinits capital structure?
- 6. Question11 The difference betweenCurrentAssetsof afirmand itsCurrentLiabilitiesiscalled. A.Networth B.Networkingcapital C.Gross workingcapital D.None of the above Question12 What are the three basicfinancial statements? Question13 The cash budgetisthe primaryshort-termfinancialplanningtool.The keyreasonsacashbudgetis createdare: I) To estimate yourinvestmentinassets II) To estimate the size andtimingof yournew cash flows III) To prepare forpotential financingneeds A.I only
- 7. B.II andIII only C.II only D.IIIonly Question14 Firmscan repurchase sharesinthe followingways: I) Openmarketrepurchase II) Through a tenderoffer III) Througha Dutchauctionprocess IV) Throughdirectnegotiation withamajorshareholder A.I only B.II only C.IIIonly D.I, II,III,and IV Question15
- 8. Stock price cyclesor patternsself-destructassoonas investorsrecognizethemthrough: A.stock marketregulationbythe SecuritiesandExchange Commission(SEC) B.price fixingbythe specialistsonNew YorkStockExchange C.tradingby the investors D.none of the above Question16 Whichof the followingisastatementof semi-strongformefficiency? I) If the marketsare efficientinthe semi-strongformthenpriceswill adjustimmediatelytopublic information II) If the marketsare efficientinthe semi-strongformthenpricesreflectall information III) If the marketsare efficientinthe semi-strongformthenpriceswilladjusttonewlypublished informationafteralongtime delay A.I only B.II only C.II andIII only D.IIIonly
- 9. Question17 Networkingcapital isdefinedas: A.The currentassetsin a business B.The difference betweencurrentassetsandcurrentliabilities C.The presentvalue of all short-termcashflows D.The difference betweenall assetsandliabilities Question18 If a firmpermanentlyborrows$100 millionataninterestrate of 8%, whatis the presentvalue of the interesttax shield?(Assume thatthe tax rate is30%) A.$8.00 million B.$5.6 million C.$30 million D.$26.67 million E.None of the above
- 10. Question19 The difference betweenTotal Assetsof afirmandits Total Liabilitiesiscalled. A.Networkingcapital B.Netcurrentassets C.Networth D.None of the above Question20 Capital structure isirrelevantif: A.the capital marketsare perfect B.each investorholdsafullydiversifiedportfolio C.eachinvestorholdsthe same proportionof debtandequityof the firm D.all of the above
- 11. Question21 In orderto findthe presentvalue of the tax shieldsprovidedbydebt,the discountrate usedis the: A.costof capital B.cost of equity C.cost of debt D.none of the above Question22 What are the commonratiosusedto measure liquidityof afirm? Question23 What isthe model thatisusedto prepare a pro-formastatement? Question24 Brieflyexplainthe informationcontentof share repurchase.
- 12. Question25 Generally,afirmisable to findpositiveNPV opportunitieswith: I) Financingdecisions II) Capital investmentdecisions III) Short-termborrowingdecisions A.I only B.I and IIIonly C.IIIonly D.II only http://www.justquestionanswer.com/viewanswer_detail/FINC-600-Week-8-Practice-Quiz-Corporate- Finance-Ques-57194