FIN 571 LATEST VERSION FINALS.
1. The costs of avoiding a bankruptcy filing by a financially distressed firm are classified as _____ costs
2. Which one of the following is an example of a nondiversifiable risk
3. A project has an initial cost of $2,250. The cash inflows are $0, $500, $900, and $700 for Years 1 to 4, respectively. What is the payback period
4. Futures contracts contrast with forward contracts by
5. An efficient capital market is one in which
6. Ratios that measure a firm’s ability to pay its bills over the short run without undue stress are known as
7. A firm has a total debt ratio of .47. This means the firm has 47 cents in debt for every
8. The primary goal of financial management is to
9. Book value
10. The underlying assumption of the dividend growth model is that a stock is worth
11. 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
12. What is the present value of $6,811 to be received in one year if the discount rate is 6.5 percent
13. The process of planning and managing a firm’s long-term assets is called
14. The discount rate that makes the net present value of an investment exactly equal to zero is called the
15. 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 given a discount rate of 7 percent
16. Which one of these is a correct definition
17. One disadvantage of the corporate form of business ownership is the
18. An interest rate that is compounded monthly, but is expressed as if the rate were compounded annually, is called the _____ rate
19. All else equal, the contribution margin must increase as
20. All else held constant, interest rate risk will increase when the time to maturity
21. 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
22. The excess return you earn by moving from a relatively risk-free investment to a risky investment is called the
23. Which one of these statements is correct concerning the cash cycle
24. 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
25. Which term defines the tax rate that applies to the next dollar of taxable income earned
26. The higher the inventory turnover, the
27. The cash flow resulting from a firm’s ongoing, normal business activities is referred to as the
28. Which one of the following statements is false
29. Which one of the following statements about preferred stock is true
30. The market price of a bond increases when the
2. Which one of the following is an example of a nondiversifiable risk
3. A project has an initial cost of $2,250. The cash inflows are $0, $500, $900, and $700 for Years 1 to 4, respectively. What is the payback period
4. Futures contracts contrast with forward contracts by
5. An efficient capital market is one in which
6. Ratios that measure a firm’s ability to pay its bills over the short run without undue stress are known as
7. A firm has a total debt ratio of .47. This means the firm has 47 cents in debt for every
8. The primary goal of financial management is to
9. Book value
10. The underlying assumption of the dividend growth model is that a stock is worth
11. 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
12. What is the present value of $6,811 to be received in one year if the discount rate is 6.5 percent
13. The process of planning and managing a firm’s long-term assets is called
14. The discount rate that makes the net present value of an investment exactly equal to zero is called the
15. 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 given a discount rate of 7 percent
16. Which one of these is a correct definition
17. One disadvantage of the corporate form of business ownership is the
18. An interest rate that is compounded monthly, but is expressed as if the rate were compounded annually, is called the _____ rate
19. All else equal, the contribution margin must increase as
20. All else held constant, interest rate risk will increase when the time to maturity
21. 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
22. The excess return you earn by moving from a relatively risk-free investment to a risky investment is called the
23. Which one of these statements is correct concerning the cash cycle
24. 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
25. Which term defines the tax rate that applies to the next dollar of taxable income earned
26. The higher the inventory turnover, the
27. The cash flow resulting from a firm’s ongoing, normal business activities is referred to as the
28. Which one of the following statements is false
29. Which one of the following statements about preferred stock is true
30. The market price of a bond increases when the
