FIN 571 Final Exam

Question no 1

All else equal, the contribution margin must increase as:​

Question no 2

Ratios that measure a firm’s ability to pay its bills over the short run without undue stress are known as:​

Question no 3

An interest rate that is compounded monthly, but is expressed as if the rate were compounded annually, is called the _____ rate.​

Question no 4

The market price of a bond increases when the:​

Question no 5

The underlying assumption of the dividend growth model is that a stock is worth:​

Question no 6

Which one of the following statements about preferred stock is true?

Question no 7

The cash flow resulting from a firm’s ongoing, normal business activities is referred to as the:​

Question no 8

You plan to invest $6,500 for three years at 4 percent simple interest. What will your investment be worth at the end of the three years?

Question no 9

The primary goal of financial management is to:

Question no 10

Under the ____________ method, the underwriter buys the securities for less than the offering price and accepts the risk of not selling the issue, while under the ________ method, the underwriter does not purchase the shares but merely acts as an agent.

Question no 11

Book Value:

Question no 12

One disadvantage of the corporate form of business ownership is the:

Question no 13

Which of the following is an example of a nondiversifiable risk?

Question no 14

The costs of avoiding a bankruptcy filing by a financially distressed firm are classified as

Question no 15

What is the present value of $6,811 to be in one year if the discount rate is 6.5 percent?

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Question no 16

Which one of these statements is correct concerning the cash cycle?

Question no 17

Lois is purchasing an annuity that will pay $5,000 annually for 20 years, with the first annuity payment made on the date of purchase. What is the value of the annuity on the purchase date a discount rate of 7 percent?​

Question no 18

All else held constant, interest rate risk will increase when the time to maturity:

Question no 19

The process of planning and managing a firm’s long-term assets is …

Question no 20

Which one of these is the correct definition?

Question no 21

An efficient capital market is one in which:

Question no 22

Which term defines the tax rate that applies to the next dollar of taxable income earned?

Question no 23

Which one of the following statements is false?

Question no 24

The discount rate that makes the net present value of investment exactly equal to zero is ….

Question no 25

Futures contracts contrast with forwarding contracts by

Question no 26

The higher the inventory turnover, the:

Question no 27

A firm has a debt-equity ratio of .64, a pretax cost of 8.5%, and a required return on assets of 12.6%. What is the cost of equity if you ignore taxes?

Question no 28

The excess return you earn by moving from a relatively risk-free investment to a risky investment is …..:

Question no 29

A project has an initial cost of $2,250. The cash inflows are $0, $500, $900, and $700 for years 1-4, respectively. What is the payback period?

Question no 30

A firm has a total debt ratio for .47. This means that the firm has 47 cents in debt for every: