Financial literacy

7. A sports nutrition company is examining whether a new high-performance sports

7. A sports nutrition company is examining whether a new high-performance sports drink should be added to its product line. A preliminary feasibility analysis indicated that the c…

7. Agency Costs Rountain Corporation\'s economists estimate that a good business

7. Agency Costs Rountain Corporation's economists estimate that a good business environment and a bad business environment are equally likely for the coming yeai. The managers of …

7. All of the following are forms of options except a. convertible bonds b. call

7.            All of the following are forms of options except a.     convertible bonds                   b.     callable bonds              c.     puttable bonds c.     mutual fu…

7. Although NPV is the best capital budgeting technique, most executives prefer

7. Although NPV is the best capital budgeting technique, most executives prefer to use a)payback because the calculations are easy b)profitability index because they are familiar …

7. An increase in days sales outstanding (DSO), all other things equal, would __

7. An increase in days sales outstanding (DSO), all other things equal, would ___________ the cash conversion period and reflect ________________ liquidity increase, increased inc…

7. An investment project has annual cash inflows of $4,600, $5,700, $6,500, and

7. An investment project has annual cash inflows of $4,600, $5,700, $6,500, and $7,800, and a discount rate of 13 percent.    Required: What is the discounted payback period for t…

7. An investment project has annual cash inflows of $4,600, $5,700, $6,500, and

7. An investment project has annual cash inflows of $4,600, $5,700, $6,500, and $7,800, and a discount rate of 13 percent.    Required: What is the discounted payback period for t…

7. Andrea C ujoli is a currency speculator who enjoys \"betting\" on changes in

7. Andrea C ujoli is a currency speculator who enjoys "betting" on changes in the foreign currency exchange market. Currently the spot price for theJapanese yen is ¥129.875 and th…

7. Anelectronics company makes communications devices for militarycontract. The

7. Anelectronics company makes communications devices for militarycontract. The company just completed two contracts. The navy wasfor 2,300 devices and took 25 workers two weeks (…

7. Arm & Hammer r launches a campaign to extend the life of its baking soda prod

7. Arm & Hammer r launches a campaign to extend the life of its baking soda products through improved packaging and new uses in products such as toothpaste and cat litter. The…

7. As of December 31, 2011, employees of Brookdale Senior Living were owed $150,

7. As of December 31, 2011, employees of Brookdale Senior Living were owed $150,000 for work performed in 2011. The $150,000 appeared in Brookdale's 2011 income statement as salar…

7. As the level of debt rises, the cost of equity _____________ and the WACC ___

7. As the level of debt rises, the cost of equity _____________ and the WACC _______________. a)      Increases at an increasing rate; falls and then rises b)      Decreases; fall…

7. As the result of stockholder pressure, RJR Nabisco is considering spinning of

7. As the result of stockholder pressure, RJR Nabisco is considering spinning off its food division. You have been asked to estimate the beta for the division, and decide to do so…

7. Asset versus Equity Betas Suppose Zenos Manufacturing is contemplating invest

7. Asset versus Equity Betas Suppose Zenos Manufacturing is contemplating investing in a new business and would like to estimate cost of capital in this new business. An existing …

7. Assume that capital is perfectly mobile and substitutable and that the intere

7. Assume that capital is perfectly mobile and substitutable and that the interest rate in the United States and the European Union is currently 5%. Investors expect the euro to r…

7. Assume that today is January 1, U.S. $1.00 = .90 euros, and the interest rate

7. Assume that today is January 1, U.S. $1.00 = .90 euros, and the interest rate on dollar deposits is 3%. If in one year: 1. the dollar appreciates relative to the euro by 10%, w…

7. At what annual rate would the following have to be invested? $2,626, to grow

7. At what annual rate would the following have to be invested? $2,626, to grow to $91,242, in 26 years. Round the answer to two decimal places in percentage form. 8. A firms divi…

7. At what annual rate would the following have to be invested? $2,626, to grow

7. At what annual rate would the following have to be invested? $2,626, to grow to $91,242, in 26 years. Round the answer to two decimal places in percentage form. 8. A firms divi…

7. Backwater Corp. has 9 percent coupon bonds making annual payments with a YTM

7. Backwater Corp. has 9 percent coupon bonds making annual payments with a YTM of 8.2 percent. The current yield on these bonds is 8.55 percent. How many years do these bonds hav…

7. Bank A offers loans with a 10 percent stated annual rate and a 10 percent com

7. Bank A offers loans with a 10 percent stated annual rate and a 10 percent compensating balance. You wish to obtain $250,000 in a six-month loan. a. How much must you borrow in …

7. Bradley Co. will pay $2.20 per share dividend next year. Their future dividen

7. Bradley Co. will pay $2.20 per share dividend next year. Their future dividends will be increasing at 2 percent annually forever. What is one share of this stock worth to you t…

7. Briefly explain the differences between preferred and common stock. If you ar

7. Briefly explain the differences between preferred and common stock. If you are the investor which one will you prefer and why? 8. What are the different kinds of risk in financ…

7. Brite Lighting Corporation wants to investigate the effect on its cost of cap

7. Brite Lighting Corporation wants to investigate the effect on its cost of capital based on the rate at which the company is taxed. The firm wishes to maintain a capital structu…

7. By definition, a firm\'s operating breakeven point represents the level of pr

7. By definition, a firm's operating breakeven point represents the level of production and sales at which a. additional funds needed equal zero b. variable costs equal operating …

7. CAPM, portfolio risk, and return Consider the following information for three

7. CAPM, portfolio risk, and return Consider the following information for three stocks, Stocks A, B, and C. The returns on the three stocks are positively correlated, but they ar…

7. Cal Lury owes $38,000 now. A lender will carry the debt for seven more years

7. Cal Lury owes $38,000 now. A lender will carry the debt for seven more years at 8 percent interest. That is, in this particular case, the amount owed will go up by 8 percent pe…

7. Calculate annuity cash flows Your goal is to have $20,000 in your bank accoun

7. Calculate annuity cash flows Your goal is to have $20,000 in your bank account by the end of nine years. If the interest rate remains constant at 10% and you want to make annua…

7. Calculate the effective (after tax) cost of debt for a for-profit healthcare

7. Calculate the effective (after tax) cost of debt for a for-profit healthcare provider, assuming that the interest rate set on its debt is 11% and its tax rate is 0%. 8. Which o…

7. Calculating interest rates The real risk-free rate (r*) is 2.80% and is expec

7. Calculating interest rates The real risk-free rate (r*) is 2.80% and is expected to remain constant into the future. Inflation is expected to be 5.10% per year for each of the …

7. Capital structure theory A Aa allowed to deduct interest payments as an expen

7. Capital structure theory A Aa allowed to deduct interest payments as an expense. Corporations allowed to deduct dividend payments to Corporabions stockholders as an expense. Th…

7. Capital structure theory Aa Aa As a firm takes on more debt, its probability

7. Capital structure theory Aa Aa As a firm takes on more debt, its probability of bankruptcy faces a Other factors hekd constant, a firm whose earmings are relatively volatlie sh…

7. Capital structure theory Aa Aa Which of the following are ways that a firm ca

7. Capital structure theory Aa Aa Which of the following are ways that a firm can reduce cash flows in order to prevent managers from wastefully spending excess cash flows? Check …

7. Cash budget Aa Aa The cash budget is considered the primary forecasting tool

7. Cash budget Aa Aa The cash budget is considered the primary forecasting tool when firms try to estimate their cash flows and figure out if they are likely to need additional ca…

7. Compensating balance versus discount loan Weathers Catering Supply, Inc., nee

7. Compensating balance versus discount loan Weathers Catering Supply, Inc., needs to borrow $147,000 for 6 months. State Bank has offered to lend the funds at an annual rate of 8…

7. Computing Annuity Payment: The Corner Bar & Grill is in the process of taking

7. Computing Annuity Payment: The Corner Bar & Grill is in the process of taking a five-year loan of $50,000 with First Community Bank. The bank offers the restaurant owner hi…

7. Consider the following financial statement for BestCare HMO, a non-profit man

7. Consider the following financial statement for BestCare HMO, a non-profit managed care plan:___________ BestCare HMO Income Statement Year Ended June 30, 2012 (in thousands)___…

7. Consider the following information while answering the following questions. U

7. Consider the following information while answering the following questions. Use discrete returns and round off implied percentage repo rates to 2 decimal places. Only arbitrage…

7. Constant-growth rates Aa Aa One of the most important components of stock val

7. Constant-growth rates Aa Aa One of the most important components of stock valuation is a firm's estimated growth rate. Financial statements provide the information needed to es…

7. Constant-growth rates Aa Aa One of the most important components of stock val

7. Constant-growth rates Aa Aa One of the most important components of stock valuation is a firm's estimated growth rate. Financial statements provide the information needed to es…

7. Constant-growth rates Aa Aa One of the most important components of stock val

7. Constant-growth rates Aa Aa One of the most important components of stock valuation is a firm's estimated growth rate. Financial statements provide the information needed to es…

7. Correcting for negative externalities -Regulation versus tradable permits Sup

7. Correcting for negative externalities -Regulation versus tradable permits Suppose the government wants to reduce the total pollution emitted by three local firms. Currently, ea…

7. Current yield, capital gains yield, and yield to maturity Hooper Printing Inc

7. Current yield, capital gains yield, and yield to maturity Hooper Printing Inc. has bonds outstanding with 19 years left to maturity. The bonds have an 7% annual coupon rate and…

7. Dividend payments cannot exceed the balance sheet item \"Retained camings.\"

7. Dividend payments cannot exceed the balance sheet item "Retained camings." This is known as the a. stock split rule b. free cash flow rule c. constant payout rule d. impairment…

7. DuPont equation Aa Aa Corporate decision makers and analysts often use a part

7. DuPont equation Aa Aa Corporate decision makers and analysts often use a particular technique, called a DuPont analysis, to better understand the factors that drive a company's…

7. Edward signs a 30 year mortgage at 3.5% compounded monthly. The price of his

7. Edward signs a 30 year mortgage at 3.5% compounded monthly. The price of his house is $200,000. He makes a down payment of 40,000. Answer the following: (15 PTS) a. What will b…

7. Ethical corporate behavior and the Sarbanes-Oxley Act Aa Aa Most executives b

7. Ethical corporate behavior and the Sarbanes-Oxley Act Aa Aa Most executives believe that they and their firms behave in an ethical manner and that it is in their best interests…

7. Evidence in support of the efficient markets A) the inability B) the small- f

7. Evidence in support of the efficient markets A) the inability B) the small- firs effect C) the January effect D) excessive 8. Which of the following statements is correct? on p…

7. Factors that affect the AFN equation Aa Aa Several factors affect a firm\'s n

7. Factors that affect the AFN equation Aa Aa Several factors affect a firm's need for external funds. Evaluate the effect of each following factor and place a check next to each …

7. Factors that affect the WACC equation Aa Aa Each of the following factors aff

7. Factors that affect the WACC equation Aa Aa Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outsi…

7. Factors that influence dividend policy Aa Aa Distribution decisions are compl

7. Factors that influence dividend policy Aa Aa Distribution decisions are complicated and involve the understanding of critical strategic factors that affect the policy and value…