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?
WHY CHOOSE US?
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 |