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1. FIN 534 Final Exam Help (30/30 Q&A)
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http://www.homeworkarena.com/fin-534-final-exam-solution-perfect-score
Fin 534 Exam NEW 2015
Latest Exam 2015
Question 1
Cazden Motors' stockis trading at $30 a share. Call options on the
company's stockare also available, some with a strike price of $25 and some with
a strike price of $35. Both options expire in three months. Which of the following
best describes the value of these options?
Answer
• Question 2
BLW Corporation is considering the terms to be set on the options it plans to
issue to its executives. Which of the following actions would decrease the value of
the options, other things held constant?
Answer

2. • Question 3
Which of the following statements is CORRECT?
Answer
• Question 4
An investor who writes standard call options against stockheld in his or her
portfolio is said to be selling what type of options?
Answer
• Question 5
Which of the following statements is CORRECT?
Answer
• Question 6

3. Which of the following statements is most correct, holding other things
constant, for XYZ Corporation's traded call options?
Answer
• Question 7
To help them estimate the company's costofcapital, Smithco has hired you
as a consultant. You have been provided with the following data: D1 = $1.45; P0 =
$22.50; and g = 6.50% (constant). Based on the DCF approach, what is the costof
common from reinvested earnings?
Answer
• Question 8
Which of the following is NOT a capital component when calculating the
weighted average costof capital (WACC) for use in capital budgeting?
Answer
• Question 9
Which of the following statements is CORRECT?

4. Answer
• Question 10
Adams Inc. has the following data: rRF = 5.00%; RPM = 6.00%; and b =
1.05. What is the firm's costof common from reinvested earnings based on the
CAPM?
Answer
• Question 11
Which of the following statements is CORRECT?
Answer
• Question 12
Perpetual preferred stockfrom Franklin Inc. sells for $97.50 per share, and it
pays an $8.50 annual dividend. If the company were to sell a new preferred issue,
it would incur a flotation costof 4.00% of the price paid by investors. What is the
company's costof preferred stockfor use in calculating the WACC?
Answer

5. • Question 13
Which of the following statements is NOT a disadvantage of the regular
payback method?
Answer
• Question 14
Which of the following statements is CORRECT?
Answer
• Question 15
Projects C and D both have normal cash flows and are mutually exclusive.
Project C has a higher NPV if the WACC is less than 12%, whereas Project D has
a higher NPV if the WACC exceeds 12%. Which of the following statements is
CORRECT?
Answer
• Question 16

6. Which of the following statements is CORRECT?
Answer
• Question 17
Supposea firm relies exclusively on the payback method when making
capital budgeting decisions, and it sets a 4-year payback regardless of economic
conditions. Other things held constant, which of the following statements is most
likely to be true?
Answer
• Question 18
Which of the following statements is CORRECT?
Answer
• Question 19
Which of the following statements is CORRECT?

7. Answer
• Question 20
Collins Inc. is investigating whether to develop a new product. In evaluating
whether to go ahead with the project, which of the following items should NOT be
explicitly considered when cash flows are estimated?
Answer
• Question 21
Which of the following statements is CORRECT?
Answer
• Question 22
Which of the following statements is CORRECT?
Answer
• Question 23

8. When evaluating a new project, firms should include in the projected cash
flows all of the following EXCEPT:
Answer
• Question 24
Which of the following statements is CORRECT?
Answer
• Question 25
The capital intensity ratio is generally defined as follows:
Answer
• Question 26
Which of the following statements is CORRECT?
Answer

9. • Question 27
Which of the following statements is CORRECT?
Answer
• Question 28
Which of the following assumptions is embodied in the AFN equation?
Answer
• Question 29
The term "additional funds needed (AFN)" is generally defined as follows:
Answer
• Question 30
Which of the following statements is CORRECT?

10. Answer