Financial literacy
81314 questions • Page 1408 / 1627
Which of the following statements is CORRECT? A. While the distinctions are blur
Which of the following statements is CORRECT? A. While the distinctions are blurring, investment banks generally specialize in lending money, whereas commercial banks generally he…
Which of the following statements is CORRECT? A.Suppose a firm is operating its
Which of the following statements is CORRECT? A.Suppose a firm is operating its fixed assets at below 100% of capacity, but it has no excess current assets. Based on the AFN equat…
Which of the following statements is CORRECT? A.The NPV method was once the favo
Which of the following statements is CORRECT? A.The NPV method was once the favorite of academics and business executives, but today most authorities regard the MIRR as being the …
Which of the following statements is CORRECT? Answer A change in a company\'s ta
Which of the following statements is CORRECT? Answer A change in a company's target capital structure cannot affect its WACC. WACC calculations should be based on the before-tax c…
Which of the following statements is CORRECT? Answer A time line is not meaningf
Which of the following statements is CORRECT? Answer A time line is not meaningful unless all cash flows occur annually. Time lines are not useful for visualizing complex problems…
Which of the following statements is CORRECT? Answer A time line is not meaningf
Which of the following statements is CORRECT? Answer A time line is not meaningful unless all cash flows occur annually. Time lines are not useful for visualizing complex problems…
Which of the following statements is CORRECT? Answer A time line is not meaningf
Which of the following statements is CORRECT? Answer A time line is not meaningful unless all cash flows occur annually. Time lines are not useful for visualizing complex problems…
Which of the following statements is CORRECT? Answer A) If the Federal Reserve u
Which of the following statements is CORRECT? Answer A) If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an imme…
Which of the following statements is CORRECT? Answer A)Since accounts payable an
Which of the following statements is CORRECT? Answer A)Since accounts payable and accrued liabilities must eventually be paid off, as these accounts increase, AFN as calculated by…
Which of the following statements is CORRECT? Answer Accruals are an expensive b
Which of the following statements is CORRECT? Answer Accruals are an expensive but commonly used way to finance working capital. A conservative financing policy is one where the f…
Which of the following statements is CORRECT? Answer All else equal, high-coupon
Which of the following statements is CORRECT? Answer All else equal, high-coupon bonds have less reinvestment rate risk than low-coupon bonds. All else equal, long-term bonds have…
Which of the following statements is CORRECT? Answer Although some methods used
Which of the following statements is CORRECT? Answer Although some methods used to estimate the cost of equity are subject to severe limitations, the CAPM is a simple, straightfor…
Which of the following statements is CORRECT? Answer Although some methods used
Which of the following statements is CORRECT? Answer Although some methods used to estimate the cost of equity are subject to severe limitations, the CAPM is a simple, straightfor…
Which of the following statements is CORRECT? Answer An example of a sunk cost i
Which of the following statements is CORRECT? Answer An example of a sunk cost is the cost associated with restoring the site of a strip mine once the ore has been depleted. Sunk …
Which of the following statements is CORRECT? Answer Any forecast of financial r
Which of the following statements is CORRECT? Answer Any forecast of financial requirements involves determining how much money the firm will need, and this need is determined by …
Which of the following statements is CORRECT? Answer Any forecast of financial r
Which of the following statements is CORRECT? Answer Any forecast of financial requirements involves determining how much money the firm will need, and this need is determined by …
Which of the following statements is CORRECT? Answer As a rule, the optimal capi
Which of the following statements is CORRECT? Answer As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS. The optimal …
Which of the following statements is CORRECT? Answer As a rule, the optimal capi
Which of the following statements is CORRECT? Answer As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS. The optimal …
Which of the following statements is CORRECT? Answer As a rule, the optimal capi
Which of the following statements is CORRECT? Answer As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS. The optimal …
Which of the following statements is CORRECT? Answer Because of tax effects, an
Which of the following statements is CORRECT? Answer Because of tax effects, an increase in the risk-free rate will have a greater effect on the after-tax cost of debt than on the…
Which of the following statements is CORRECT? Answer Collections Inc. is in the
Which of the following statements is CORRECT? Answer Collections Inc. is in the business of collecting past-due accounts for other companies, i.e., it is a collection agency. Coll…
Which of the following statements is CORRECT? Answer Depreciation is included in
Which of the following statements is CORRECT? Answer Depreciation is included in the estimate of cash flows (Cash flow = Net income + Depreciation), hence depreciation is set fort…
Which of the following statements is CORRECT? Answer For a project with normal c
Which of the following statements is CORRECT? Answer For a project with normal cash flows, any change in the WACC will change both the NPV and the IRR. To find the MIRR, we first …
Which of the following statements is CORRECT? Answer If Disney issues additional
Which of the following statements is CORRECT? Answer If Disney issues additional shares of common stock through an investment banker, this would be a secondary market transaction.…
Which of the following statements is CORRECT? Answer If a corporation elects to
Which of the following statements is CORRECT? Answer If a corporation elects to be taxed as an S corporation, then both it and its stockholders can avoid all Federal taxes. This p…
Which of the following statements is CORRECT? Answer If a firm is found guilty o
Which of the following statements is CORRECT? Answer If a firm is found guilty of cannibalization in a court of law, then it is judged to have taken unfair advantage of its compet…
Which of the following statements is CORRECT? Answer If a firm repurchases some
Which of the following statements is CORRECT? Answer If a firm repurchases some of its stock in the open market, then shareholders who sell their stock for more than they paid for…
Which of the following statements is CORRECT? Answer If expected inflation incre
Which of the following statements is CORRECT? Answer If expected inflation increases, interest rates are likely to increase. If individuals in general increase the percentage of t…
Which of the following statements is CORRECT? Answer If the Federal Reserve unex
Which of the following statements is CORRECT? Answer If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immedia…
Which of the following statements is CORRECT? Answer If the Federal Reserve unex
Which of the following statements is CORRECT? Answer If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immedia…
Which of the following statements is CORRECT? Answer If the underlying stock doe
Which of the following statements is CORRECT? Answer If the underlying stock does not pay a dividend, it does not make good economic sense to exercise a call option prior to its e…
Which of the following statements is CORRECT? Answer If you formed a portfolio t
Which of the following statements is CORRECT? Answer If you formed a portfolio that included a large number of low-beta stocks (stocks with betas less than 1.0 but greater than -1…
Which of the following statements is CORRECT? Answer Net working capital is defi
Which of the following statements is CORRECT? Answer Net working capital is defined as current assets minus the sum of payables and accruals, and any increase in the current ratio…
Which of the following statements is CORRECT? Answer Once a firm has defined its
Which of the following statements is CORRECT? Answer Once a firm has defined its purpose, scope, and objectives, it must develop its strategy or strategies for achieving its goals…
Which of the following statements is CORRECT? Answer One defect of the IRR metho
Which of the following statements is CORRECT? Answer One defect of the IRR method versus the NPV is that the IRR does…
Which of the following statements is CORRECT? Answer One disadvantage of operati
Which of the following statements is CORRECT? Answer One disadvantage of operating as a corporation rather than as a partnership is that corporate shareholders are exposed to more…
Which of the following statements is CORRECT? Answer Other things held constant,
Which of the following statements is CORRECT? Answer Other things held constant, the higher a firm's days sales outstanding (DSO), the better its credit department. If a firm that…
Which of the following statements is CORRECT? Answer Other things held constant,
Which of the following statements is CORRECT? Answer Other things held constant, the higher a firm's days sales outstanding (DSO), the better its credit department. If a firm that…
Which of the following statements is CORRECT? Answer Projects with \"normal\" ca
Which of the following statements is CORRECT? Answer Projects with "normal" cash flows can have only one real IRR. Projects with "normal" cash flows can have two or more real IRRs…
Which of the following statements is CORRECT? Answer Question 5 answers a. A sto
Which of the following statements is CORRECT? Answer Question 5 answers a. A stock with a beta of -1.0 has zero market risk if held in a 1-stock portfolio. b. The SML relates its …
Which of the following statements is CORRECT? Answer The AFN equation for foreca
Which of the following statements is CORRECT? Answer The AFN equation for forecasting funds requirements requires only a forecast of the firm's balance sheet. Although a forecaste…
Which of the following statements is CORRECT? Answer The NPV, IRR, MIRR, and dis
Which of the following statements is CORRECT? Answer The NPV, IRR, MIRR, and discounted payback (using a payback requirement of 3 years or less) methods always lead to the same ac…
Which of the following statements is CORRECT? Answer The WACC is calculated usin
Which of the following statements is CORRECT? Answer The WACC is calculated using before-tax costs for all components. The after-tax cost of debt usually exceeds the after-tax cos…
Which of the following statements is CORRECT? Answer The WACC is calculated usin
Which of the following statements is CORRECT? Answer The WACC is calculated using before-tax costs for all components. The after-tax cost of debt usually exceeds the after-tax cos…
Which of the following statements is CORRECT? Answer The best way to judge the e
Which of the following statements is CORRECT? Answer The best way to judge the effectiveness of a firm's cash management procedures is to look at the ratio of its cash balances to…
Which of the following statements is CORRECT? Answer The bond-yield-plus-risk-pr
Which of the following statements is CORRECT? Answer The bond-yield-plus-risk-premium approach to estimating the cost of common equity involves adding a risk premium to the intere…
Which of the following statements is CORRECT? Answer The cash flows for an ordin
Which of the following statements is CORRECT? Answer The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods. If a series of unequal cash fl…
Which of the following statements is CORRECT? Answer The cash flows for an ordin
Which of the following statements is CORRECT? Answer The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods. If a series of unequal cash fl…
Which of the following statements is CORRECT? Answer The constant growth model i
Which of the following statements is CORRECT? Answer The constant growth model is often appropriate for evaluating start-up companies that do not have a stable history of growth b…
Which of the following statements is CORRECT? Answer The income of certain small
Which of the following statements is CORRECT? Answer The income of certain small corporations that qualify under the Tax Code is completely exempt from corporate income taxes. Thu…
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