Financial literacy

Which of the following statements is most correct? (a) The primary test of feasi

Which of the following statements is most correct? (a) The primary test of feasibility in a reorganization is whether every claimant agrees with the reorganization plan. (b) The b…

Which of the following statements is most correct? A - firm can use retained ear

Which of the following statements is most correct? A - firm can use retained earnings without paying a flotation cost. Therefore, while the cost of retained earnings is not zero, …

Which of the following statements is most correct? A borrower\'s long-term debt

Which of the following statements is most correct? A borrower's long-term debt typically has a higher interest rate than its shortterm debt. Debt that is infrequently traded (less…

Which of the following statements is most correct? A) More firms fail or suffer

Which of the following statements is most correct? A) More firms fail or suffer financial distress during periods of economic expansion than during periods of economic recession. …

Which of the following statements is most correct? A)Retained earnings, as repor

Which of the following statements is most correct? A)Retained earnings, as reported on the balance sheet, represents the amount of cash a company has available to pay out as divid…

Which of the following statements is most correct? A. The NPV method of capital

Which of the following statements is most correct? A. The NPV method of capital budgeting assumes that cash flows will be reinvested at the cost of capital while the IRR method as…

Which of the following statements is most correct? A. The cost of capital used t

Which of the following statements is most correct? A. The cost of capital used to evaluate a project should be the cost of the specific type of financing used to fund that project…

Which of the following statements is most correct? Answer The cash balances of m

Which of the following statements is most correct? Answer The cash balances of most firms consist of transaction balances, compensating balances, and precautionary balances. The t…

Which of the following statements is most correct? Choose one answer. a. If a co

Which of the following statements is most correct? Choose one answer. a. If a company tax rate increases but the yield to maturity of its noncallable bonds remains the same, the c…

Which of the following statements is most correct? Expain. •Normally, the Securi

Which of the following statements is most correct? Expain. •Normally, the Security Market Line has an upward slope. However, at one of those unusual times when the yield curve on …

Which of the following statements is most correct? Select one: A. If a firm that

Which of the following statements is most correct? Select one: A. If a firm that sells on terms of net 30 changes its policy to 2/10 net 30, and if no change in sales volume occur…

Which of the following statements is most correct? The interest rate on a new is

Which of the following statements is most correct? The interest rate on a new issue of callable bonds is likely to exceed that on a similar new issue of noocallable bonds. The int…

Which of the following statements is most correct? a) Sunk costs must be include

Which of the following statements is most correct? a) Sunk costs must be included in the project's cash flow. b) R&D expenditures cannot be a part of the initial cost of a pro…

Which of the following statements is most correct? a. If beta doubles, the requi

Which of the following statements is most correct? a. If beta doubles, the required return doubles. b. If a stock has a negative beta, its required return is negative. c. Higher b…

Which of the following statements is most correct? a. If new debt is used to ref

Which of the following statements is most correct? a. If new debt is used to refund old debt, the correct discount rate to use in discounting cash flows is the before-tax cost of …

Which of the following statements is most correct? a. If the dividend irrelevanc

Which of the following statements is most correct? a. If the dividend irrelevance theory (which is associated with the names Modigliani and Miller) were exactly correct, and if th…

Which of the following statements is most true in regards to evaluating a capita

Which of the following statements is most true in regards to evaluating a capital investment project? A - We should always develop a project cost and revenue estimates that are ou…

Which of the following statements is not consistent with options characteristics

Which of the following statements is not consistent with options characteristics? A. Option values cannot be negative. B. A call option price cannot exceed the stock price. C. The…

Which of the following statements is not true with regard to beta? A) all of the

Which of the following statements is not true with regard to beta? A) all of the responses are correct with regard to beta. B) A beta of .75 is interpreted to mean that the stock …

Which of the following statements is not true with regard to the returns you wou

Which of the following statements is not true with regard to the returns you would expect from your investments: A) Earning interest on interest refers to the need to look at the …

Which of the following statements is not true? A qualified opinion or an adverse

Which of the following statements is not true? A qualified opinion or an adverse opinion may bring into question the reliability of the financial statements. A disclaimer of opini…

Which of the following statements is not true? A) The lower the PE ratio, the lo

Which of the following statements is not true? A) The lower the PE ratio, the lower the expectation investors are said to have in the corporation's future financial performance as…

Which of the following statements is the most correct? Increasing inventory turn

Which of the following statements is the most correct? Increasing inventory turnover is always a sign of a good business strategy. Decreasing inventory turnover with higher profit…

Which of the following statements is true about business plans? A business plan

Which of the following statements is true about business plans? A business plan is useful only in case of exigency in the business environment otherwise a business plan is not imp…

Which of the following statements is true about capital budgeting analysis? The

Which of the following statements is true about capital budgeting analysis? The payback period method should be used for capital budgeting decisions if there is a conflict in the …

Which of the following statements is true about common stock? Common stock is co

Which of the following statements is true about common stock? Common stock is considered to have a fixed maturity. Owners of common stock are guaranteed dividend payment by the fi…

Which of the following statements is true about the practice of press agentry du

Which of the following statements is true about the practice of press agentry during the “public be damned” phase of PR? They relied on one-way communication They were not expecte…

Which of the following statements is true concerning the use of mergers to reduc

Which of the following statements is true concerning the use of mergers to reduce cyclicality and volatility? I. The merger of large, public firms is a cost-effective way for shar…

Which of the following statements is true for applied research? A.It is a system

Which of the following statements is true for applied research? A.It is a systematic study to gain knowledge or understanding necessary to determine the means by which a recognize…

Which of the following statements is true of a project whose cash flows accrue r

Which of the following statements is true of a project whose cash flows accrue relatively rapidly?? a. ?The project will have multiple internal rates of return due to rapidly accr…

Which of the following statements is true of a project with a positive net prese

Which of the following statements is true of a project with a positive net present value (NPV)? The project's internal rate of return is less than the expected rate of return. The…

Which of the following statements is true of amortization? The computation of lo

Which of the following statements is true of amortization? The computation of loan amortization is wholly based on the computation of simple interest. The amortization schedule pr…

Which of the following statements is true of flotation costs? Flotation costs de

Which of the following statements is true of flotation costs? Flotation costs decrease the cost of preferred stock to the issuing firm. Flotation costs are added to the issue pric…

Which of the following statements is true of the impact of tax on the cost of ca

Which of the following statements is true of the impact of tax on the cost of capital of a firm? A. All else being equal, an increase in the equity capital that a firm raises by r…

Which of the following statements is true of the purchase and sale of assets? Sh

Which of the following statements is true of the purchase and sale of assets? Shareholders of the acquired corporation who disagree with the transfer of assets cannot demand appra…

Which of the following statements is true regarding a replacement decision? The

Which of the following statements is true regarding a replacement decision? The depreciation expenses on the new equipment is treated as an outflow. Any loss on the sale of the ol…

Which of the following statements is true regarding capital structure? In a worl

Which of the following statements is true regarding capital structure? In a world with no taxes and no bankruptcy costs, the optimal capital structure would be the one with 100% d…

Which of the following statements is true regarding consumers in emerging countr

Which of the following statements is true regarding consumers in emerging countries? A.The middle class is shrinking due to income disparity. B.Those markets are usually just copi…

Which of the following statements is true: Companies should attempt to retain ev

  Which of the following statements is true: Companies should attempt to retain every dollar of risk The insurance premium should be reasonable and feasible Retained losses must b…

Which of the following statements is true? (Points : 1) The U.S. Europe, Canada,

          Which of the following statements is true? (Points : 1)                                        The U.S. Europe, Canada, China, and Japan together account for less than h…

Which of the following statements is true? (Points : 4) The optimal credit polic

Which of the following statements is true? (Points : 4) The optimal credit policy minimizes the total cost of granting credit. Firms should avoid offering credit at all cost. An i…

Which of the following statements is true? 1. The investment portfolio of younge

Which of the following statements is true? 1. The investment portfolio of younger investors should be heavily weighted toward conservative assets such as government bonds and blue…

Which of the following statements is true? A) Assets with lower levels of market

Which of the following statements is true? A) Assets with lower levels of market risk will sell for higher prices. B) Assets with lower levels of market risk will have higher expe…

Which of the following statements is true? A) Both call and put options are in t

Which of the following statements is true?          A) Both call and put options are in the money if the stock price is above the exercise price.          B) Both call and put opt…

Which of the following statements is true? A. Financial theorists have resolved

Which of the following statements is true? A. Financial theorists have resolved the issue of how to maximize firm value by altering the capital structure. B.  highly leveraged fir…

Which of the following statements is true? A. The Principle of Capital Market Ef

Which of the following statements is true? A. The Principle of Capital Market Efficiency says to consider thepossible ways to minimize the value lost to capital marketimperfection…

Which of the following statements is true? Explain why. 1. Ignoring interest acc

Which of the following statements is true? Explain why. 1. Ignoring interest accrued between payment dates, if the required rate of return on a bond is less than its coupon intere…

Which of the following statements is true? If the NPV is less than $0, the disco

Which of the following statements is true? If the NPV is less than $0, the discount rate was equal to the internal rate of return If the NPV is equal to 0, the discount rate was l…

Which of the following statements is true? O We can use NPV to evaluate two mutu

Which of the following statements is true? O We can use NPV to evaluate two mutually exclusive repeated projects. To make an investment decision based on IRR, we do not need to kn…

Which of the following statements is true? Please explain. •If Congress raised t

Which of the following statements is true? Please explain. •If Congress raised the corporate tax rate, this would lower the effective cost of debt. •If Congress raised the persona…