34 terms

BUS 320 final exam

According to Finance theory, the primary goal for a firm's financial managers should be to:
none of the above
Which of the following statements is correct?
none of the above
Which of the following is a Working Capital Management Decision?
The firms policy regarding the amount of inventory to keep on hand
Which of the following is a "Secondary Market" transaction:
Microsoft buys up all the shares of XYZ Corp in the open market
Which of the following statements about leverage is correct?
Higher levels of debt typically are associated with increased tax benefits
Whenever possible, when making decisions, a financial manager should use _____ values and ______ tax rates
Market; Marginal
All else held constant, a firm's Return on Equity will be greater if it has a _____.
higher return on assets
MCorp recently issued new common stockand used the proceeds to pay off some of its short term Notes Payable and Accounts Payable. Tha action had no effect on either Operating Profit or Total Assets. Which of the following scenarios is most likely?
The company's Current Ratio increased
A Net Profit margin of 10% means that
for each $1 of sales generated by the firm it earns 10 cents in net income
Assuming all else held constant, if the interest (or discount rate) increases, the present value of a lump sum will _____ and the future value of a lump sum will _____.
decrease; increase
The future value interest factor is calculated as:
If a bank uses a compounding frequency that is more frequent than annual (and the interest rate is greater than zero), the APR rate on its savings accounts _____.
will always be less than the effective annual rate on these accounts
Which of the following will increase if the number of periods increases?
the future value of a lump sum
If the number of years and the APR is held constant, an increase in the number of compunding periods per year (from s/a to monthly compounding) will cause the present value of a sum of money to be received in the future to:
Which of the following statements are correct assuming that the payment amount and number of payments are the same?
[PV / FV] of annuity due = [PV / FV] of ordinary annuity x (1+r)
Which of the following statements about amortized loans is correct?
Assuming no additional payments have been made, the outstanding balance on the loan at any point in time is the PV of the remaining payments at that point in time
What is the principle amount of a bond that is repaid at the end of the loan term called?
Face value
A bond for which no specific property has been pledged as security is classified as a:
The treasury yield curve plots the yields on Treasury notes and bonds relative to the _____ of those securities.
If a bond has a yield to maturity that is greater than its coupon rate
it will sell at a discount
Which of the following bonds will have the greatest exposure to "price" or "interest rate" risk?
a thirty-year, zero coupon bond
What is the market called that allows shareholders to resell their shares to other investors?
Which of the following is NOT a major bond rating agency?
The required rate of return on a stock is equal to the sum of its _____ and _____.
capital gains yield; dividend yield
If an analyst uses the constant dividend growth model, which of the following is certain to cause her to decrease her estimate of the current value of the stock?
increasing the required rate of return for the stock
A stock's dividend is expected to grow at a constant rate of 5% annually into the forseeable future. Which of the following statements is most correct?
The stock price one year from today will be 5% higher than today's price
Kate could not attend the last shareholders meeting. Consequently, she granted the authority to vote on her behalf to the managers of the firm. Which one of the following terms is used to describe the method by which Kate's shares were voted?
Which capital budgeting decision rule is considered the "best" in principle?
Which one of the following methods is most appropriate when future cash flows are highly uncertain?
All else held constant, if the cost of capital used as the discount rate increases, the IRR of a project _____.
will remain unchanged
Assume you have a project with "conventional" cash flows. The project's required rate of return is lower than the project's IRR. Which of the following statements is most correct?
The project's NPV will be positive
A cost that has already been paid, is known as a
sunk cost
The amount by which a firm's tax bill is reduced as a result of the depreciation expense is referred to as the depreciation _____.
tax shield
The net working capital ivested in a project is generally:
recouped at the end of the project