FIN 571 Final Exam August 2017 1 Which one of the following is an example of a nondiversifiable risk?? · ?A well-respected chairman of the Federal Reserve Bank suddenly resigns · ?A poorly managed firm suddenly goes out of business due to lack of sales · ?A well-respected president of a firm suddenly resigns · ?A key employee suddenly resigns and accepts employment with a key competitor · ?A well-managed firm reduces its work force and automates several jobs question 2 A firm has a debt-equity ratio of .64, a pretax cost of debt of 8.5 percent, and a required return on assets of 12.6 percent. What is the cost of equity if you ignore taxes?? · ?15.22% · ?16.38% · ?8.06% · ?11.12% · ?8.55% question 3 Which term defines the tax rate that applies to the next dollar of taxable income earned?? · ?Deductible · ?Marginal · ?Average · ?Total · ?Residual question 4 All else held constant, interest rate risk will increase when the time to maturity:? · ?Increases or the coupon rate decreases. · ?Decreases or the coupon rate increases. · ?Increases or the coupon rate increases. · ?Decreases or the coupon rate decreases. · ?Decreases and the coupon rate equals zero. question 5 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.? · ?Negotiated offer; competitive offer · ?Firm commitment; best efforts · ?Competitive offer; negotiated offer · ?Best efforts; firm commitment · ?Seasoned; unseasoned question 6 The underlying assumption of the dividend growth model is that a stock is worth:? · ?An amount computed as the next annual dividend divided by the market rate of return. · ?The present value of the future income that the stock is expected to generate. · ?The same amount to every investor regardless of their desired rate of return. · ?The same amount as any other stock that pays the same current dividend and has the same required rate of return. · ?An amount computed as the next annual dividend divided by the required rate of return. question 7 The excess return you earn by moving from a relatively risk-free investment to a risky investment is called the:? · ?Inflation premium. · ?Risk premium. · ?Arithmetic average return. · ?Time premium. · ?Geometric average return. question 8 Which one of these statements is correct concerning the cash cycle?? · ?A positive cash cycle is preferable to a negative cash cycle. · ?Increasing the accounts payable period increases the cash cycle. · ?The longer the cash cycle, the more likely a firm will need external financing. · ?The cash cycle can exceed the operating cycle if the payables period is equal to zero. · ?Adopting a more liberal accounts receivable policy will tend to decrease the cash cycle. question 9 ?Which one of the following statements about preferred stock is true? · ?If preferred dividends are non-cumulative, then preferred dividends not paid in a particular year will be carried forward to the next year. · ?Preferred stock usually has a stated liquidating value of $100 per share. · ?Unlike dividends paid on common stock, dividends paid on preferred stock are a tax-deductible expense. · ?There is no significant difference in the voting rights granted to preferred and common shareholders. · ?Dividends on preferred stock payable during the next twelve months are considered to be a corporate liability. question 10 ?What is the present value of $6,811 to be received in one year if the discount rate is 6.5 percent? · ?$6,023.58 · ?$6,671.13 · ?$6,395.31 · ?$6,643.29 · ?$7,253.72 question 11 The market price of a bond increases when the:? · ?Coupon rate decreases. · ?Par value decreases. · ?Face value decreases. · ?Discount rate decreases. · ?Coupon is paid annually rather than semiannually. question 12 ?The process of planning and managing a firm’s long-term assets is called: · ?Capital st…

Looking for solution of this Assignment?


We deliver quality original papers

Our experts write quality original papers using academic databases.  

Free revisions

We offer our clients multiple free revisions just to ensure you get what you want.

Discounted prices

All our prices are discounted which makes it affordable to you. Use code FIRST15 to get your discount

100% originality

We deliver papers that are written from scratch to deliver 100% originality. Our papers are free from plagiarism and NO similarity

On-time delivery

We will deliver your paper on time even on short notice or  short deadline, overnight essay or even an urgent essay