For more course tutorials visit
1) Occurs when a "follower" receives the benefit of an expenditure made by a "leader" by imitating the leader's behavior.
2) Occurs when inaccurate information can falsely exist.
3) Refers to situations wherein the agent can take unseen actions for personal benefit even though such actions are costly to the principal.
4) The annual report refers to
5) Remaining maturity refers to:
6) Generally accepted accounting principles (GAAP) refers to
7) Original maturity refers to:
8) The firm's assets in the balance sheet refer to:
9) Book value (or Net book value) refers to:
10) The return expected by equity investors is called the __________.
11) Assume that the par value of a bond is $1,000. Consider a bond where the coupon rate is 9% and the current yield is 10%. Which of
the following statements is true?
12) Preferred stock payment obligations are typically __________.
13) Certain countries have restrictions. In practice, U.S. investors have NOT invested very much internationally. Possible factors include
__________.
14) Certain countries have restrictions. In practice, U.S. investors have NOT invested very much internationally. Possible factors include
__________.
15) For diversified investors, the proper measure of a stock's risk is __________.
16) One problem with using negative values for w1 (the proportion invested in the riskless asset) to represent a borrowed amount is that
the implied borrowing rate of interest is the same as __________.
17) Which of these investments would you expect to have the highest rate of return for the next 20 years?
18) According to the Principle of Risk-Return Trade-Off, investors require a higher return to compensate for __________.
19) Suppose the Ruskin Oil Corporation has $150,000 for both its book balance and its bank balance. It takes 4 days for a check to clear.
If Ruskin writes a $3,000 check, which of the following statements is false?
20) Stony Products has a payables turnover of six times. What is Stony's payables deferral period (PDP)?
The payables deferral period is the average length of time between the purchase of the materials and labor that go into inventory and the
payment of cash for these materials and labor. We have: PDP = where PTO is the payables turnover and is equal to:
where CS is cost of sales, SGA is selling, general, and administrative expenses, AP is account payables, and WBT is wages, benefits, and
payroll taxes payable. We have: PDP = = = 60.83333 days ≈ 60.83 days.
21) Stony Products has a receivables turnover of ten times. What is Stony’s receivables collection period (RCP)?
The receivables collection period (RCP), or days' sales outstanding (DSO), is the average number of days that it takes to collect on
accounts receivable. We have: RCP =
where RTO is the receivables turnover and is equal to where AR is account receivables. We have: RCP = = = 36.5 days.]
22) __________ says to calculate the incremental after-tax cash flows connected with working capital decisions.
23) __________ says to compare the benefits and costs of alternative uses and sources of money using after-tax APYs.
24) Bank term loans represent __________.
25) Which (if any) of the below statements is false?
26) Credit-policy decisions involve all aspects of receivables management. The decision does NOT include which of the following?
27) Most credit sales are made on an open account basis, which means __________.
28) An all-equity-financed firm would __________.
29) A profitable firm would __________.
30) Whenever a firm splits itself into separate units, with each unit having limited liability with respect to its financing, the capital structure
of each unit becomes __________.
A. an irrelevant consideration for a cost of capital.
B. the relevant consideration for a cost of capital.
C. important only if the firm faces financial distress.
D. none of these
31) There are two important tax considerations for a capital budgeting project. These include which (if any) of the following?
32) Projects can be classified into various categories. These include:
33) Ideas for capital budgeting projects come from all levels within an organization. The bottom up process results in ideas percolating
through the organization.
34) In practice, the __________ rule is preferred.
35) Whenever projects are both independent and conventional, then the IRR and NPV methods agree. Which of the following statements is
true?
36) The __________ method breaks down when evaluating projects in which the sign of the cash flow changes.
37) Studies show systematic differences in capital structures across industries. These are due mostly to differences in __________.
38) A firm cannot simply adopt the industry average debt ratio, because differences exist among firms in any particular industry with
respect to __________.
39) Studies show systematic differences in capital structures across industries. These are due mostly to differences in __________.
40) Which of the following favors a high dividend payout policy?
41) There can be a variety of motives for stock repurchases including __________.
A. a decrease in anticipated earnings.
B. a buyback of undervalued stock.
C. a decrease in leverage.
D. all of these
42) Some countries have __________ in which shareholders' returns are not fully taxed twice.
43) Conditional sales contracts __________.
44) The Time Value of Money Principle says __________.
45) Stated maturity is __________.
46) The Time Value of Money Principle says to __________.
47) __________ says to calculate the net advantage of leasing based on the incremental after-tax benefits that leasing will provide.
48) __________ says to look for opportunities to develop asset-based financing arrangements that offer new positive-NPV financing
mechanisms.
49) The wholesale price for Captain John’s is $1.00 per loaf, and the variable cost of production is $0.50 per loaf. Captain John’s is
expecting that expansion will allow them to sell an additional 5.0 million loaves in the next year. What additional revenues minus expenses
will be generated from expansion?
[Contribution margin = wholesale price − variable cost = $1.00 − $0.50 = $0.50 per loaf. The additional 5 million loaves would therefore
generate an increase of $0.50 per loaf times 5 million loaves = $2,500,000 in revenues minus expenses each year.]
50) The wholesale price for Captain John’s is $3.00 per loaf. One million loaves will be sold in the next year. What is the contribution
margin?
[We need the variable cost to determine the contribution margin which is equal to the wholesale price minus the variable cost; thus, we
cannot tell.]
51) The wholesale price for Captain John’s is $0.612 per loaf, and the variable cost of production is $0.387 per loaf. Captain John’s is
expecting that expansion will allow them to sell an additional 4.5 million loaves in the next five years. What additional revenues minus
expenses will be generated from expansion?
[Contribution margin = wholesale price − variable cost = $0.612 − $0.387 = $0.225 per loaf. The additional 4.5 million loaves would
therefore generate an increase of $0.225 per loaf times 4.5 million loaves = $1,012,500 in revenues minus expenses each year.]
52) In efficient markets, as in the United States, you should think long and hard before you conclude that a market price is __________.
53) Due to asymmetric information, the market fears that a firm issuing securities will do so when the stock is ___________.
54) Which of the following statements is true?
55) __________ says to forecast the firm’s cash flows, and analyze the incremental cash flows of alternative decisions.
56) __________ says to carefully evaluate and monitor the financial plan’s impact on the firm and its stakeholders.
57) __________ says to use common industry practices as a good starting place for the planning process.
No comments:
Post a Comment