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BUSN 379 Final Exam (Devry)
http://www.fres-courses.com/product/busn-379-final-exam-devry |
BUSN 379 Final Exam (Devry) 1. (TCO 4) Which of the following is true regarding the evaluation of projects? (Points : 4) sunk costs should be included 2. (TCO 4) Which of the following investment ranking methods does not consider the time value of money? (Points : 4) net present value method 3. (TCO 3 and 4) A net present value of zero implies that an investment: (Points : 4) has no initial cost. 4. (TCO 3 and 4) What is the net present value of a project with the following cash flows, if the discount rate is 15 percent? Year 0 1 2 3 4 Cash flow -$45,000 $11,520 $13,630 $16,470 $18,990 (Points : 4) -$2,989.48 5. (TCO 4) Leward Manufacturing is spending $115,000 to update its equipment. This is necessary if the firm wishes to be competitive in the marketplace and provide a wide array of product models. The company estimates that these updates will improve its cash inflows by $27,500 a year, for eight years. What is the payback period? (Points : 4) 4.18 years 6. (TCO 4) The postponement of a project until conditions are more favorable: (Points : 4) is a valuable option. 7. (TCO 4) ___________, occurs when a firm cannot raise financing for a project under any circumstances. (Points : 4) contingency planning. 8. (TCO 4) ABC Cameras is considering an investment that will have a cost of $10,000 and the following cash flows: $6,000 in year 1, $4,000 in year 2 and $3,000 in year 3. Assume the cost of capital is 10%. Which of the following is true regarding this investment? (Points : 4) The net present value of the project is approximately $10,000 9. (TCO 4) Assume Company X plans to invest $60,000 in new computers. Using Tables 9.6 and 9.7 of your textbook (Page 277), which is the second year depreciation amount under MACRS? (Points : 4) $12,000 10. (TCO 1 and 4) Assume a corporation has earnings before depreciation, and taxes of $100,000, depreciation of $40,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company? (Points : 4) $82,000 11. (TCO 8) Which of the following statements is true regarding systematic risk? (Points : 4) is diversifiable 12. (TCO 8) Which statement is true regarding risk? (Points : 4) the expected return is usually the same as the actual return 13. (TCO 8) The stock of Hobby Town has an expected return of 8.8 percent. Given the information below, what is the expected return on this stock if the economy is normal? State of Economy Probability of State of Economy Rate of Return Recession .10 -.09 Normal .70 ? Boom .20 .26 (Points : 4) 3.86 percent 6.43 percent 14. (TCO 8) You own a portfolio that consists of $8,000 in stock A, $4,600 in stock B, $13,000 in stock C, and $5,500 in stock D. What is the portfolio weight of stock B? (Points : 4) 14.79 percent 15. (TCO 8) You would like to create a portfolio that is equally invested in a risk-free asset and two stocks. The one stock has a beta of .80. What does the beta of the second stock have to be if you want the portfolio risk to equal that of the overall market? (Points : 4) 1.4 1. (TCO 8) Weak form market efficiency states that the value of a security is based on: (Points : 4) all public and private information. 2. (TCO 5) Royal Petroleum Co. can buy a piece of equipment that can be financed with debt at a cost of 6 percent (after-tax) and common equity at a cost of 18 percent. Assume debt and common equity each represent 50 percent of the firm’s capital structure. What is the weighted average cost of capital? (Points : 4) between 3 and 9% 3. (TCO 5, 6 and 7) An issue of common stock is expected to pay a dividend of $4.80 at the end of the year. Its growth rate is equal to eight percent. If the required rate of return is 13 percent, what is its current price? (Points : 4) $103.68 4. (TCO 5, 6 and 7) Which of the following is true regarding the cost of debt? (Points : 4) It is the return that the firm’s creditors demand on new borrowing. 5. (TCO 5) Which of the following is not true regarding the cost of retained earnings? (Points : 4) it is relevant to the WACC 6. (TCO 4) A project has the following cash flows. What is the internal rate of return? Year 0 1 2 3 Cash flow -$195,600 $99,800 $87,600 $75,300 (Points : 4) less than 5% 7. (TCO 5, 6 and 7) All else constant, the weighted average cost of capital for a firm will decrease if: (Points : 4) a firm’s bonds start selling at a premium, rather than at a discount. 8. (TCO 5, 6 and 7) The six percent preferred stock of FKH Manufacturing is selling for $62 a share. What is the firm’s cost of preferred stock, if the tax rate is 34 percent and the par value per share is $100? (Points : 4) 5.98% 9. (TCO 2) Which one of the following occurs if a firm files for Chapter 7 bankruptcy, but does not generally occur if the firm files for Chapter 11 bankruptcy? (Points : 4) a petition is filed in federal court 10. (TCO 5) Which of the following statements is false regarding the cost of capital? (Points : 4) The cost of capital should consider the flotation costs. 11. (TCO 2) Which of the following increases the cash account? (Points : 4) Goods are sold on credit 12. (TCO 2) Which of the following statements is true? (Points : 4) The optimal credit policy minimizes the total cost of granting credit. 13. (TCO 2) All else constant, a decrease in the accounts receivable period will: (Points : 4) lengthen the accounts payable period. 14. (TCO 2) Delphinia’s has the following estimated quarterly sales for next year. The accounts receivable period is 30 days. What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days. Q1 Q2 Q3 Q4 Sales $1,800 $1,700 $2,100 $1,900 (Points : 4) $567 15. (TCO 1) Why is maximization of the current value per share a more appropriate financial management goal than profit maximization? (Points : 4) Because by maximizing the current stock value, you also maximize the company’s profit for the year. 1. (TCO 1) Which one of the following activities best exemplify working capital management? (Points : 4) Sale long-term bonds to raise funds for a new machine. 2. (TCO 1) Book values are different from market values because: (Points : 4) Book values reflect the value of the asset based on generally-accepted accounting principles. 3. (TCO 1) Use the following tax table to answer this question: Taxable Income Tax Rate $0- $50,000 15% $50,001- 75,000 25 $75,001- 100,000 34 $100,001- 335,000 39 $335,001- 10,000,000 34 Riddell, Inc. earned $144,320 in taxable income for the year. How much tax does the company owe on this income? (Points : 4) $39,535 4. (TCO 3) Regional Bank offers you an APR of 19 percent compounded semiannually, and Local Bank offers you an EAR of 19.50 percent for a new automobile loan. You should choose ______________ because its _______ is lower. (Points : 4) Regional Bank, APR 5. (TCO 3) You deposited $8,000 in your bank account today. Which of the following will increase the future value of your deposit, assuming that all interest is reinvested? Assume the interest rate is a positive value. Select all that apply: (Points : 4) a decrease in the interest rate 6. (TCO 3) You want to have $15,000 for a down payment on a house five years from now. If you can earn 13 percent, compounded annually, on your savings, how much do you need to deposit today to reach your goal? (Points : 4) $7,858.11 7. (TCO 3) The new home that you want to buy costs $249,500. You plan to make a cash down payment of 20 percent and finance the balance over 10 years at 6.75 percent. What will be the amount of your monthly mortgage payment? (Points : 4) $2,291.89 8. (TCO 3) Which type of loan is comparable to the present value of a future lump sum? (Points : 4) effective annual rate 9. (TCO 3) Fanta Cola has $1,000 par value bonds outstanding at 12 percent interest. The bonds mature in 25 years. What is the current price of the bond if the YTM is 16 percent? Assume annual payments. (Points : 4) $1315 10. (TCO 6) The market where new securities are offered is called the _____ market. (Points : 4) primary 11. (TCO 7) Which one of the following statements concerning financial leverage is correct? (Points : 4) Financial leverage increases profits and decreases losses. 12. (TCO 3) SmithKline Company’s bonds are currently selling for $1,157.75 per $1000 par-value bond. The bonds have a 10 percent coupon rate and will mature in 10 years. What is the approximate yield to maturity? (Points : 4) 6.96% 13. (TCO 8) Which of the following is true regarding bonds? (Points : 4) Bonds do not carry default risk. 14. (TCO 8) Which one of the following bonds is the most sensitive to interest rate movements? (Points : 4) zero-coupon, five year 15. (TCO 6) A sinking fund is an account managed by a bond trustee for the sole purpose of: (Points : 4) paying interest payments on a semi-annual basis. 1. (TCO 6) Which of the following is true regarding put bonds? (Points : 4) Have coupons that depend on the company’s income 2. (TCO 6 and 7) Financial leverage deals with: (Points : 4) the relationship of fixed and variable costs. 3. (TCO 6) Company A has a bond outstanding with $90 annual interest payment, a market price of $820, and a maturity date in five years. Assume the par value to be $1,000. What is the bond’s current yield? (Points : 4) 9% 4. (TCO 2) Which of the following does not reduce collection float? (Points : 4) installing a lockbox system. 5. (TCO 2) ___________, is a system that minimizes inventory. (Points : 4) material requirements planning 6. (TCO 1) Provide three examples of situations in which business ethics play a role in the financial management process. Explain your rationale, and how these situations may affect the value of the firm. (Points : 10)
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BUSN 379 Final Exam (Devry)
http://www.fres-courses.com/product/busn-379-final-exam-devry |
BUSN 379 Final Exam (Devry) 1. (TCO 4) Which of the following is true regarding the evaluation of projects? (Points : 4) sunk costs should be included 2. (TCO 4) Which of the following investment ranking methods does not consider the time value of money? (Points : 4) net present value method 3. (TCO 3 and 4) A net present value of zero implies that an investment: (Points : 4) has no initial cost. 4. (TCO 3 and 4) What is the net present value of a project with the following cash flows, if the discount rate is 15 percent? Year 0 1 2 3 4 Cash flow -$45,000 $11,520 $13,630 $16,470 $18,990 (Points : 4) -$2,989.48 5. (TCO 4) Leward Manufacturing is spending $115,000 to update its equipment. This is necessary if the firm wishes to be competitive in the marketplace and provide a wide array of product models. The company estimates that these updates will improve its cash inflows by $27,500 a year, for eight years. What is the payback period? (Points : 4) 4.18 years 6. (TCO 4) The postponement of a project until conditions are more favorable: (Points : 4) is a valuable option. 7. (TCO 4) ___________, occurs when a firm cannot raise financing for a project under any circumstances. (Points : 4) contingency planning. 8. (TCO 4) ABC Cameras is considering an investment that will have a cost of $10,000 and the following cash flows: $6,000 in year 1, $4,000 in year 2 and $3,000 in year 3. Assume the cost of capital is 10%. Which of the following is true regarding this investment? (Points : 4) The net present value of the project is approximately $10,000 9. (TCO 4) Assume Company X plans to invest $60,000 in new computers. Using Tables 9.6 and 9.7 of your textbook (Page 277), which is the second year depreciation amount under MACRS? (Points : 4) $12,000 10. (TCO 1 and 4) Assume a corporation has earnings before depreciation, and taxes of $100,000, depreciation of $40,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company? (Points : 4) $82,000 11. (TCO 8) Which of the following statements is true regarding systematic risk? (Points : 4) is diversifiable 12. (TCO 8) Which statement is true regarding risk? (Points : 4) the expected return is usually the same as the actual return 13. (TCO 8) The stock of Hobby Town has an expected return of 8.8 percent. Given the information below, what is the expected return on this stock if the economy is normal? State of Economy Probability of State of Economy Rate of Return Recession .10 -.09 Normal .70 ? Boom .20 .26 (Points : 4) 3.86 percent 6.43 percent 14. (TCO 8) You own a portfolio that consists of $8,000 in stock A, $4,600 in stock B, $13,000 in stock C, and $5,500 in stock D. What is the portfolio weight of stock B? (Points : 4) 14.79 percent 15. (TCO 8) You would like to create a portfolio that is equally invested in a risk-free asset and two stocks. The one stock has a beta of .80. What does the beta of the second stock have to be if you want the portfolio risk to equal that of the overall market? (Points : 4) 1.4 1. (TCO 8) Weak form market efficiency states that the value of a security is based on: (Points : 4) all public and private information. 2. (TCO 5) Royal Petroleum Co. can buy a piece of equipment that can be financed with debt at a cost of 6 percent (after-tax) and common equity at a cost of 18 percent. Assume debt and common equity each represent 50 percent of the firm’s capital structure. What is the weighted average cost of capital? (Points : 4) between 3 and 9% 3. (TCO 5, 6 and 7) An issue of common stock is expected to pay a dividend of $4.80 at the end of the year. Its growth rate is equal to eight percent. If the required rate of return is 13 percent, what is its current price? (Points : 4) $103.68 4. (TCO 5, 6 and 7) Which of the following is true regarding the cost of debt? (Points : 4) It is the return that the firm’s creditors demand on new borrowing. 5. (TCO 5) Which of the following is not true regarding the cost of retained earnings? (Points : 4) it is relevant to the WACC 6. (TCO 4) A project has the following cash flows. What is the internal rate of return? Year 0 1 2 3 Cash flow -$195,600 $99,800 $87,600 $75,300 (Points : 4) less than 5% 7. (TCO 5, 6 and 7) All else constant, the weighted average cost of capital for a firm will decrease if: (Points : 4) a firm’s bonds start selling at a premium, rather than at a discount. 8. (TCO 5, 6 and 7) The six percent preferred stock of FKH Manufacturing is selling for $62 a share. What is the firm’s cost of preferred stock, if the tax rate is 34 percent and the par value per share is $100? (Points : 4) 5.98% 9. (TCO 2) Which one of the following occurs if a firm files for Chapter 7 bankruptcy, but does not generally occur if the firm files for Chapter 11 bankruptcy? (Points : 4) a petition is filed in federal court 10. (TCO 5) Which of the following statements is false regarding the cost of capital? (Points : 4) The cost of capital should consider the flotation costs. 11. (TCO 2) Which of the following increases the cash account? (Points : 4) Goods are sold on credit 12. (TCO 2) Which of the following statements is true? (Points : 4) The optimal credit policy minimizes the total cost of granting credit. 13. (TCO 2) All else constant, a decrease in the accounts receivable period will: (Points : 4) lengthen the accounts payable period. 14. (TCO 2) Delphinia’s has the following estimated quarterly sales for next year. The accounts receivable period is 30 days. What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days. Q1 Q2 Q3 Q4 Sales $1,800 $1,700 $2,100 $1,900 (Points : 4) $567 15. (TCO 1) Why is maximization of the current value per share a more appropriate financial management goal than profit maximization? (Points : 4) Because by maximizing the current stock value, you also maximize the company’s profit for the year. 1. (TCO 1) Which one of the following activities best exemplify working capital management? (Points : 4) Sale long-term bonds to raise funds for a new machine. 2. (TCO 1) Book values are different from market values because: (Points : 4) Book values reflect the value of the asset based on generally-accepted accounting principles. 3. (TCO 1) Use the following tax table to answer this question: Taxable Income Tax Rate $0- $50,000 15% $50,001- 75,000 25 $75,001- 100,000 34 $100,001- 335,000 39 $335,001- 10,000,000 34 Riddell, Inc. earned $144,320 in taxable income for the year. How much tax does the company owe on this income? (Points : 4) $39,535 4. (TCO 3) Regional Bank offers you an APR of 19 percent compounded semiannually, and Local Bank offers you an EAR of 19.50 percent for a new automobile loan. You should choose ______________ because its _______ is lower. (Points : 4) Regional Bank, APR 5. (TCO 3) You deposited $8,000 in your bank account today. Which of the following will increase the future value of your deposit, assuming that all interest is reinvested? Assume the interest rate is a positive value. Select all that apply: (Points : 4) a decrease in the interest rate 6. (TCO 3) You want to have $15,000 for a down payment on a house five years from now. If you can earn 13 percent, compounded annually, on your savings, how much do you need to deposit today to reach your goal? (Points : 4) $7,858.11 7. (TCO 3) The new home that you want to buy costs $249,500. You plan to make a cash down payment of 20 percent and finance the balance over 10 years at 6.75 percent. What will be the amount of your monthly mortgage payment? (Points : 4) $2,291.89 8. (TCO 3) Which type of loan is comparable to the present value of a future lump sum? (Points : 4) effective annual rate 9. (TCO 3) Fanta Cola has $1,000 par value bonds outstanding at 12 percent interest. The bonds mature in 25 years. What is the current price of the bond if the YTM is 16 percent? Assume annual payments. (Points : 4) $1315 10. (TCO 6) The market where new securities are offered is called the _____ market. (Points : 4) primary 11. (TCO 7) Which one of the following statements concerning financial leverage is correct? (Points : 4) Financial leverage increases profits and decreases losses. 12. (TCO 3) SmithKline Company’s bonds are currently selling for $1,157.75 per $1000 par-value bond. The bonds have a 10 percent coupon rate and will mature in 10 years. What is the approximate yield to maturity? (Points : 4) 6.96% 13. (TCO 8) Which of the following is true regarding bonds? (Points : 4) Bonds do not carry default risk. 14. (TCO 8) Which one of the following bonds is the most sensitive to interest rate movements? (Points : 4) zero-coupon, five year 15. (TCO 6) A sinking fund is an account managed by a bond trustee for the sole purpose of: (Points : 4) paying interest payments on a semi-annual basis. 1. (TCO 6) Which of the following is true regarding put bonds? (Points : 4) Have coupons that depend on the company’s income 2. (TCO 6 and 7) Financial leverage deals with: (Points : 4) the relationship of fixed and variable costs. 3. (TCO 6) Company A has a bond outstanding with $90 annual interest payment, a market price of $820, and a maturity date in five years. Assume the par value to be $1,000. What is the bond’s current yield? (Points : 4) 9% 4. (TCO 2) Which of the following does not reduce collection float? (Points : 4) installing a lockbox system. 5. (TCO 2) ___________, is a system that minimizes inventory. (Points : 4) material requirements planning 6. (TCO 1) Provide three examples of situations in which business ethics play a role in the financial management process. Explain your rationale, and how these situations may affect the value of the firm. (Points : 10)
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BUSN 379 Final Exam (Devry)
http://www.fres-courses.com/product/busn-379-final-exam-devry |
BUSN 379 Final Exam (Devry) 1. (TCO 4) Which of the following is true regarding the evaluation of projects? (Points : 4) sunk costs should be included 2. (TCO 4) Which of the following investment ranking methods does not consider the time value of money? (Points : 4) net present value method 3. (TCO 3 and 4) A net present value of zero implies that an investment: (Points : 4) has no initial cost. 4. (TCO 3 and 4) What is the net present value of a project with the following cash flows, if the discount rate is 15 percent? Year 0 1 2 3 4 Cash flow -$45,000 $11,520 $13,630 $16,470 $18,990 (Points : 4) -$2,989.48 5. (TCO 4) Leward Manufacturing is spending $115,000 to update its equipment. This is necessary if the firm wishes to be competitive in the marketplace and provide a wide array of product models. The company estimates that these updates will improve its cash inflows by $27,500 a year, for eight years. What is the payback period? (Points : 4) 4.18 years 6. (TCO 4) The postponement of a project until conditions are more favorable: (Points : 4) is a valuable option. 7. (TCO 4) ___________, occurs when a firm cannot raise financing for a project under any circumstances. (Points : 4) contingency planning. 8. (TCO 4) ABC Cameras is considering an investment that will have a cost of $10,000 and the following cash flows: $6,000 in year 1, $4,000 in year 2 and $3,000 in year 3. Assume the cost of capital is 10%. Which of the following is true regarding this investment? (Points : 4) The net present value of the project is approximately $10,000 9. (TCO 4) Assume Company X plans to invest $60,000 in new computers. Using Tables 9.6 and 9.7 of your textbook (Page 277), which is the second year depreciation amount under MACRS? (Points : 4) $12,000 10. (TCO 1 and 4) Assume a corporation has earnings before depreciation, and taxes of $100,000, depreciation of $40,000, and that it has a 30 percent tax bracket. What are the after-tax cash flows for the company? (Points : 4) $82,000 11. (TCO 8) Which of the following statements is true regarding systematic risk? (Points : 4) is diversifiable 12. (TCO 8) Which statement is true regarding risk? (Points : 4) the expected return is usually the same as the actual return 13. (TCO 8) The stock of Hobby Town has an expected return of 8.8 percent. Given the information below, what is the expected return on this stock if the economy is normal? State of Economy Probability of State of Economy Rate of Return Recession .10 -.09 Normal .70 ? Boom .20 .26 (Points : 4) 3.86 percent 6.43 percent 14. (TCO 8) You own a portfolio that consists of $8,000 in stock A, $4,600 in stock B, $13,000 in stock C, and $5,500 in stock D. What is the portfolio weight of stock B? (Points : 4) 14.79 percent 15. (TCO 8) You would like to create a portfolio that is equally invested in a risk-free asset and two stocks. The one stock has a beta of .80. What does the beta of the second stock have to be if you want the portfolio risk to equal that of the overall market? (Points : 4) 1.4 1. (TCO 8) Weak form market efficiency states that the value of a security is based on: (Points : 4) all public and private information. 2. (TCO 5) Royal Petroleum Co. can buy a piece of equipment that can be financed with debt at a cost of 6 percent (after-tax) and common equity at a cost of 18 percent. Assume debt and common equity each represent 50 percent of the firm’s capital structure. What is the weighted average cost of capital? (Points : 4) between 3 and 9% 3. (TCO 5, 6 and 7) An issue of common stock is expected to pay a dividend of $4.80 at the end of the year. Its growth rate is equal to eight percent. If the required rate of return is 13 percent, what is its current price? (Points : 4) $103.68 4. (TCO 5, 6 and 7) Which of the following is true regarding the cost of debt? (Points : 4) It is the return that the firm’s creditors demand on new borrowing. 5. (TCO 5) Which of the following is not true regarding the cost of retained earnings? (Points : 4) it is relevant to the WACC 6. (TCO 4) A project has the following cash flows. What is the internal rate of return? Year 0 1 2 3 Cash flow -$195,600 $99,800 $87,600 $75,300 (Points : 4) less than 5% 7. (TCO 5, 6 and 7) All else constant, the weighted average cost of capital for a firm will decrease if: (Points : 4) a firm’s bonds start selling at a premium, rather than at a discount. 8. (TCO 5, 6 and 7) The six percent preferred stock of FKH Manufacturing is selling for $62 a share. What is the firm’s cost of preferred stock, if the tax rate is 34 percent and the par value per share is $100? (Points : 4) 5.98% 9. (TCO 2) Which one of the following occurs if a firm files for Chapter 7 bankruptcy, but does not generally occur if the firm files for Chapter 11 bankruptcy? (Points : 4) a petition is filed in federal court 10. (TCO 5) Which of the following statements is false regarding the cost of capital? (Points : 4) The cost of capital should consider the flotation costs. 11. (TCO 2) Which of the following increases the cash account? (Points : 4) Goods are sold on credit 12. (TCO 2) Which of the following statements is true? (Points : 4) The optimal credit policy minimizes the total cost of granting credit. 13. (TCO 2) All else constant, a decrease in the accounts receivable period will: (Points : 4) lengthen the accounts payable period. 14. (TCO 2) Delphinia’s has the following estimated quarterly sales for next year. The accounts receivable period is 30 days. What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days. Q1 Q2 Q3 Q4 Sales $1,800 $1,700 $2,100 $1,900 (Points : 4) $567 15. (TCO 1) Why is maximization of the current value per share a more appropriate financial management goal than profit maximization? (Points : 4) Because by maximizing the current stock value, you also maximize the company’s profit for the year. 1. (TCO 1) Which one of the following activities best exemplify working capital management? (Points : 4) Sale long-term bonds to raise funds for a new machine. 2. (TCO 1) Book values are different from market values because: (Points : 4) Book values reflect the value of the asset based on generally-accepted accounting principles. 3. (TCO 1) Use the following tax table to answer this question: Taxable Income Tax Rate $0- $50,000 15% $50,001- 75,000 25 $75,001- 100,000 34 $100,001- 335,000 39 $335,001- 10,000,000 34 Riddell, Inc. earned $144,320 in taxable income for the year. How much tax does the company owe on this income? (Points : 4) $39,535 4. (TCO 3) Regional Bank offers you an APR of 19 percent compounded semiannually, and Local Bank offers you an EAR of 19.50 percent for a new automobile loan. You should choose ______________ because its _______ is lower. (Points : 4) Regional Bank, APR 5. (TCO 3) You deposited $8,000 in your bank account today. Which of the following will increase the future value of your deposit, assuming that all interest is reinvested? Assume the interest rate is a positive value. Select all that apply: (Points : 4) a decrease in the interest rate 6. (TCO 3) You want to have $15,000 for a down payment on a house five years from now. If you can earn 13 percent, compounded annually, on your savings, how much do you need to deposit today to reach your goal? (Points : 4) $7,858.11 7. (TCO 3) The new home that you want to buy costs $249,500. You plan to make a cash down payment of 20 percent and finance the balance over 10 years at 6.75 percent. What will be the amount of your monthly mortgage payment? (Points : 4) $2,291.89 8. (TCO 3) Which type of loan is comparable to the present value of a future lump sum? (Points : 4) effective annual rate 9. (TCO 3) Fanta Cola has $1,000 par value bonds outstanding at 12 percent interest. The bonds mature in 25 years. What is the current price of the bond if the YTM is 16 percent? Assume annual payments. (Points : 4) $1315 10. (TCO 6) The market where new securities are offered is called the _____ market. (Points : 4) primary 11. (TCO 7) Which one of the following statements concerning financial leverage is correct? (Points : 4) Financial leverage increases profits and decreases losses. 12. (TCO 3) SmithKline Company’s bonds are currently selling for $1,157.75 per $1000 par-value bond. The bonds have a 10 percent coupon rate and will mature in 10 years. What is the approximate yield to maturity? (Points : 4) 6.96% 13. (TCO 8) Which of the following is true regarding bonds? (Points : 4) Bonds do not carry default risk. 14. (TCO 8) Which one of the following bonds is the most sensitive to interest rate movements? (Points : 4) zero-coupon, five year 15. (TCO 6) A sinking fund is an account managed by a bond trustee for the sole purpose of: (Points : 4) paying interest payments on a semi-annual basis. 1. (TCO 6) Which of the following is true regarding put bonds? (Points : 4) Have coupons that depend on the company’s income 2. (TCO 6 and 7) Financial leverage deals with: (Points : 4) the relationship of fixed and variable costs. 3. (TCO 6) Company A has a bond outstanding with $90 annual interest payment, a market price of $820, and a maturity date in five years. Assume the par value to be $1,000. What is the bond’s current yield? (Points : 4) 9% 4. (TCO 2) Which of the following does not reduce collection float? (Points : 4) installing a lockbox system. 5. (TCO 2) ___________, is a system that minimizes inventory. (Points : 4) material requirements planning 6. (TCO 1) Provide three examples of situations in which business ethics play a role in the financial management process. Explain your rationale, and how these situations may affect the value of the firm. (Points : 10)
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