This document contains 30 multiple choice questions that appear to be from a finance exam covering various topics in corporate finance and investments. The questions cover concepts such as the goal of the firm, primary vs secondary markets, agency theory, financial ratios, time value of money, capital budgeting techniques like NPV, IRR and payback period, cost of capital, capital structure, and basics of international finance.
Problems and solutions in financial management step by step approachrajnikantrajhans
This is a slide from my book problems and solutions in Financial Management: step by step approach. The book is available for sale at Amazone and Kindle. The link is as below:
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Dividend policy
What is Dividend?
What is dividend policy?
Theories of Dividend Policy
Relevant Theory
Walter’s Model
Gordon’s Model
Irrelevant Theory
M-M’s Approach
Traditional Approach
Referred to:
Prasanna Chandra
Problems and solutions in financial management step by step approachrajnikantrajhans
This is a slide from my book problems and solutions in Financial Management: step by step approach. The book is available for sale at Amazone and Kindle. The link is as below:
http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Daps&field-keywords=RAJNI+KANT+RAJHANS
Dividend policy
What is Dividend?
What is dividend policy?
Theories of Dividend Policy
Relevant Theory
Walter’s Model
Gordon’s Model
Irrelevant Theory
M-M’s Approach
Traditional Approach
Referred to:
Prasanna Chandra
FIN 370 Final Exam A++1) The goal of the firm should beA. maxi.docxmydrynan
FIN 370 Final Exam A++
1) The goal of the firm should be
A. maximization of profits
B. maximization of shareholder wealth
C. maximization of consumer satisfaction
D. maximization of sales
2) An example of a primary market transaction is
A. a new issue of common stock by AT&T
B. a sale of some outstanding common stock of AT&T
C. AT&T repurchasing its own stock from a stockholder
D. one stockholder selling shares of common stock to another individual
3) According to the agency problem, _________ represent the principals of a corporation.
A. shareholders
B. managers
C. employees
D. suppliers
4) Which of the following is a principle of basic financial management?
A. Risk/return tradeoff
B. Derivatives
C. Stock warrants
D. Profit is king
5) Another name for the acid test ratio is the
A. current ratio
B. quick ratio
C. inventory turnover ratio
D. average collection period
6) The accounting rate of return on stockholders' investments is measured by
A. return on assets
B. return on equity
C. operating income return on investment
D. realized rate of inflation
7) If you are an investor, which of the following would you prefer?
A. Earnings on funds invested compound annually
B. Earnings on funds invested compound daily
C. Earnings on funds invested would compound monthly
D. Earnings on funds invested would compound quarterly
8) The primary purpose of a cash budget is to
A. determine the level of investment in current and fixed assets
B. determine accounts payable
C. provide a detailed plan of future cash flows
D. determine the estimated income tax for the year
9) Which of the following is a non-cash expense?
A. Depreciation expenses
B. Interest expense
C. Packaging costs
D. Administrative salaries
10) The break-even model enables the manager of a firm to
A. calculate the minimum price of common stock for certain situations
B. set appropriate equilibrium thresholds
C. determine the quantity of output that must be sold to cover all operating costs
D. determine the optimal amount of debt financing to use
11) A zero-coupon bond
A. pays no interest
B. pays interest at a rate less than the market rate
C. is a junk bond
D. is sold at a deep discount at less than the par value
12) If you have $20,000 in an account earning 8% annually, what constant amount could you withdraw each year and have nothing remaining at the end of 5 years?
A. $3,525.62
B. $5,008.76
C. $3,408.88
D. $2,465.78
13) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?
A. 6%
B. 5%
C. 7%
D. 8%
I = Interest
P = Principal
R = Rate
T= Time
I = P x R x T
So, R = I / (P x T)
R = $316.40 / ($400 x 10) = ($316.40 / $4,000) = 0.0791 ≈ 0.08 or 8%
14) The present value of a single future sum
A. increases as the number of discount periods increase
B. is generally larger than the future sum
C. depends upon the number of discount periods
D. increases as the discount rate increases
15) Which of the following is considered to be a spontaneous source of financing ...
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
We all have good and bad thoughts from time to time and situation to situation. We are bombarded daily with spiraling thoughts(both negative and positive) creating all-consuming feel , making us difficult to manage with associated suffering. Good thoughts are like our Mob Signal (Positive thought) amidst noise(negative thought) in the atmosphere. Negative thoughts like noise outweigh positive thoughts. These thoughts often create unwanted confusion, trouble, stress and frustration in our mind as well as chaos in our physical world. Negative thoughts are also known as “distorted thinking”.
How to Make a Field invisible in Odoo 17Celine George
It is possible to hide or invisible some fields in odoo. Commonly using “invisible” attribute in the field definition to invisible the fields. This slide will show how to make a field invisible in odoo 17.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
How to Create Map Views in the Odoo 17 ERPCeline George
The map views are useful for providing a geographical representation of data. They allow users to visualize and analyze the data in a more intuitive manner.
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
1. Page 1
Fin 370 Final Exam Answers
1) The goal of the firm should be
A. maximization of profits
B. maximization of shareholder wealth
C. maximization of consumer satisfaction
D. maximization of sales
2) An example of a primary market transaction is
A. a new issue of common stock by AT&T
B. a sale of some outstanding common stock of AT&T
C. AT&T repurchasing its own stock from a stockholder
D. One stockholder selling shares of common stock to another individual
3) According to the agency problem, _________ represent the principals of a
corporation.
A. shareholders
B. managers
C. employees
D. suppliers
4) Which of the following is a principle of basic financial management?
A. Risk/return tradeoff
B. Derivatives
C. Stock warrants
D. Profit is king
2. Page 2
5) Another name for the acid test ratio is the
A. Current ratio
B. Quick ratio
C. Inventory turnover ratio
D. Average collection period
6) The accounting rate of return on stockholders’ investments is measured by
A. return on assets
B. return on equity
C. operating income return on investment
D. realized rate of inflation
7) If you are an investor, which of the following would you prefer?
A. Earnings on funds invested compound annually
B. Earnings on funds invested compound daily
C. Earnings on funds invested would compound monthly
D. Earnings on funds invested would compound quarterly
8) The primary purpose of a cash budget is to
A. determine the level of investment in current and fixed assets
B. determine accounts payable
C. provide a detailed plan of future cash flows
D. determine the estimated income tax for the year
9) Which of the following is a non-cash expense?
A. Depreciation expenses
3. Page 3
B. Interest expense
C. Packaging costs
D. Administrative salaries
10) The break-even model enables the manager of a firm to
A. calculate the minimum price of common stock for certain situations
B. set appropriate equilibrium thresholds
C. determine the quantity of output that must be sold to cover all operating costs
D. determine the optimal amount of debt financing to use
11) A zero-coupon bond
A. pays no interest
B. pays interest at a rate less than the market rate
C. is a junk bond
D. is sold at a deep discount at less than the par value
12) If you have $20,000 in an account earning 8% annually, what constant amount
could you withdraw each year and have nothing remaining at the end of 5 years?
A. $3,525.62
B. $5,008.76
C. $3,408.88
D. $2,465.78
13) At what rate must $400 be compounded annually for it to grow to $716.40 in
10 years?
A. 6%
B. 5%
4. Page 4
C. 7%
D. 8%
14) The present value of a single future sum
A. increases as the number of discount periods increase
B. is generally larger than the future sum
C. depends upon the number of discount periods
D. increases as the discount rate increases
15) Which of the following is considered to be a spontaneous source of
financing?
A. Operating leases
B. Accounts receivable
C. Inventory
D. Accounts payable
16) Compute the payback period for a project with the following cash flows, if the
company’s discount rate is 12%.
Initial outlay = $450
Cash flows:
Year 1 = $325
Year 2 = $65
Year 3 = $100
A. 3.43 years
B. 3.17 years
C. 2.88 years
D. 2.6 years
17) For the NPV criteria, a project is acceptable if the NPV is __________, while for
the profitability index, a project is acceptable if the profitability index is
__________.
5. Page 5
A. less than zero, greater than the required return
B. greater than zero, greater than one
C. greater than one, greater than zero
D. greater than zero, less than one
18) Which of the following is considered to be a deficiency of the IRR?
A. It fails to properly rank capital projects.
B. It could produce more than one rate of return.
C. It fails to utilize the time value of money.
D. It is not useful in accounting for risk in capital budgeting.
19) The firm should accept independent projects if
A. the payback is less than the IRR
B. the profitability index is greater than 1.0
C. the IRR is positive
D. the NPV is greater than the discounted payback
20) the most expensive source of capital is
A. preferred stock
B. new common stock
C. debt
D. retained earnings
21) The cost associated with each additional dollar of financing for investment
projects is
A. the incremental return
B. the marginal cost of capital
C. risk-free rate
6. Page 6
D. beta
22) The XYZ Company is planning a $50 million expansion. The expansion is to be
financed by selling $20 million in new debt and $30 million in new common stock. The
before-tax required rate of return on debt is 9%, and the required rate of return on equity
is 14%. If the company is in the 40% tax bracket, what is the marginal cost of capital?
A. 14.0%
B. 9.0%
C. 10.6%
D. 11.5%
23) Shawhan Supply plans to maintain its optimal capital structure of 30% debt, 20%
preferred stock, and 50% common stock far into the future. The required return on each
component is: debt–10%; preferred stock–11%; and common stock–18%. Assuming a
40% marginal tax rate, what after-tax rate of return must Shawhan Supply earn on its
investments if the value of the firm is to remain unchanged?
A. 18.0%
B. 13.0%
C. 10.0%
D. 14.2%
24) Lever Brothers has a debt ratio (debt to assets) of 40%. Management is wondering
if its current capital structure is too conservative. Lever Brothers’ present EBIT is $3
million, and profits available to common shareholders are $1,560,000, with 342,857
shares of common stock outstanding. If the firm were to instead have a debt ratio of
60%, additional interest expense would cause profits available to stockholders to
decline to $1,440,000, but only 228,571 common shares would be outstanding. What is
the difference in EPS at a debt ratio of 60% versus 40%?
A. $1.75
B. $2.00
7. Page 7
C. $3.25
D. $4.50
25) Zybeck Corp. projects operating income of $4 million next year. The firm’s income
tax rate is 40%. Zybeck presently has 750,000 shares of common stock which have a
market value of $10 per share, no preferred stock, and no debt. The firm is considering
two alternatives to finance a new product: (a) the issuance of $6 million of 10% bonds,
or (b) the issuance of 60,000 new shares of common stock. If Zybeck issues common
stock this year, what will be the projected EPS next year?
A. $4.94
B. $2.96
C. $5.33
D. $3.20
26) _________ risk is generally considered only a paper gain or loss.
A. Transaction
B. Translation
C. Economic
D. Financial
27) Capital markets in foreign countries
A. offer lower returns than those obtainable in the domestic capital markets
B. provide international diversification
C. in general are becoming less integrated due to the widespread availability of
interest rate and currency swaps
D. have been getting smaller in the past decade
28) Buying and selling in more than one market to make a riskless profit is called
A. profit maximization
8. Page 8
B. arbitrage
C. international trading
D. an efficient market
29) What keeps foreign exchange quotes in two different countries in line with
each other?
A. Cross rates
B. Forward rates
C. Arbitrage
D. Spot rates
30) One reason for international investment is to reduce
A. portfolio risk
B. price-earnings (P/E) ratios
C. advantages in a foreign country
D. exchange rate risk