Financial literacy

1) The current price of a stock is $32, and the annual risk-free rate is 6%. A c

1) The current price of a stock is $32, and the annual risk-free rate is 6%. A call option with a strike price of $29 and 1 year until expiration has a current value of $5.30. Wha…

1) The current rate of inflation is 3 percent, and long-term Treasurybonds are y

1) The current rate of inflation is 3 percent, and long-term Treasurybonds are yielding 7 percent. You estimate that the rate of inflationwill increase to 6 percent. What do you e…

1) The earnings, dividends, and the stock price of Shelby, Inc. are expected to

1) The earnings, dividends, and the stock price of Shelby, Inc. are expected to grow at 7% per year in the future. Shelby’s common stock sells for $29.00 a share, its last dividen…

1) The expected rate of return of an investment is 28.36, while its measurement

1) The expected rate of return of an investment is 28.36, while its measurement of risk is 4.216. The risk per unit of return on this investment would be a) 119.57 b) 6.7268 c) 0.…

1) The firm you work for has asked you to evaluate the payables policy. Your exi

1) The firm you work for has asked you to evaluate the payables policy. Your existing supplier offers terms of 3/10, net 30 with an annualized late payment fee of 18% but would on…

1) The following profit information was taken from Eastside Hospital\'s budget d

1) The following profit information was taken from Eastside Hospital's budget data: Simple budget$1,200,000 Flexible budget$1,000,000 Actual results$ 500,000 What is the simple pr…

1) The graduated plan . 15) A) provides an increase in the number of weeks of va

1)    The graduated plan                         .                                                                                                                                 …

1) The longer its customers normally hold inventory, the longer the credit perio

1) The longer its customers normally hold inventory, the longer the credit period supplier firms normally offer. Still, suppliers have some flexibility in the credit terms they of…

1) The markets in general are paying a 3% real rate of return. Inflation is expe

1) The markets in general are paying a 3% real rate of return. Inflation is expected to be 2%. ABC stock commands a 6% risk premium. What is the risk-free rate of return? 2) An in…

1) The model has 346 observations (n=346) and 3 independent variables (K=3), 4 i

1)  The model has 346 observations (n=346) and 3 independent variables (K=3), 4 if you include the intercept (alpha) term.  At a 5% significance level, the lower and upper boundar…

1) The preferred stock of Easy Loan Bank pays an annual dividend of $5.60. It ha

1) The preferred stock of Easy Loan Bank pays an annual dividend of $5.60. It has a require rate of return of 8%. Compute the price of the preferred stock. 2) Ozark Fine Hardwook …

1) The premiums of the 6-month call and put on a euro are $0.114 and $0.098, res

1) The premiums of the 6-month call and put on a euro are $0.114 and $0.098, respectively, with a $0.94 strike. Dollar and euro interest rates are 7.0% and 6.0%, respectively. Wha…

1) The recent financial crisis was exacerbated by: A) Extremely high interest ra

1) The recent financial crisis was exacerbated by: A) Extremely high interest rates in the US that stifled investments B) Managers who underestimated the real risks of their decis…

1) The risk-adjusted cost of capital is the cost of capital appropriate for a gi

1) The risk-adjusted cost of capital is the cost of capital appropriate for a given project, given the riskiness of that project. The greater the project's risk, the higher its co…

1) The sales forecast may be presented as: a. Non of these b. A growth rate in s

1) The sales forecast may be presented as: a. Non of these b. A growth rate in sales c. An explicit sales figure d. Either a growth rate in sales or an explicit sales figure 2) Al…

1) The slope of a treasury yield curve normally reflects increasing interest rat

1) The slope of a treasury yield curve normally reflects increasing interest rates over time, aand represent the cost of borrowing for the US government. A) False B) True 2) what …

1) The stage in the capital budgeting process that involves applying the appropr

1) The stage in the capital budgeting process that involves applying the appropriate capital budgeting techniques to help make a final accept or reject decision is called the ____…

1) The stock of Trudeau Corporation went from $27 to $45 last year. The firm als

1) The stock of Trudeau Corporation went from $27 to $45 last year. The firm also paid $2 in dividends during the year. Compute the rate of return. 2) Given the following financia…

1) The term ex aequo et bono in an arbitration agreement means: a) The arbitrato

1) The term ex aequo et bono in an arbitration agreement means: a) The arbitrator can decide what's equitable and good. b) The arbitrator is restricted to deciding limits and bene…

1) The time value of money is the opportunity cost of passing up the earning pot

1) The time value of money is the opportunity cost of passing up the earning potential of a dollar today. 2) A rational investor would prefer to receive $1,200 today rather than $…

1) The total amount of interest that a 10-year investment earns will exactly dou

1) The total amount of interest that a 10-year investment earns will exactly double when the stated annual interest rate is doubled. a. True b. False 2) Beginning with an investme…

1) The use of P/E ratios to select stocks suggests that a. low P/E ratio stocks

1) The use of P/E ratios to select stocks suggests that a. low P/E ratio stocks are overvalued b. a stock should be purchased if it is selling near its historic high P/E c. high P…

1) The variable costing income statement classifies costs based on cost behavior

1) The variable costing income statement classifies costs based on cost behavior rather than function. True or False? 2) The data needed for cost-volume-profit analysis is readily…

1) The yield to maturity on a bond with a price equal to its par value will Sele

1) The yield to maturity on a bond with a price equal to its par value will Select one: a. be more than the coupon rate. b. always be equal to the coupon rate. c. be less than the…

1) Time Warner shares have a market capitalization of $55 billion. The company j

1) Time Warner shares have a market capitalization of $55 billion. The company just paid a dividend of $0.35 per share and each share trades for $35. The growth rate in dividends …

1) Tobin Supplies Company expects sales next year to be $410,000. Inventory and

1) Tobin Supplies Company expects sales next year to be $410,000. Inventory and accounts receivable will increase $70,000 to accommodate this sales level. The company has a steady…

1) Today you are depositing $136 in a bank account that promises to pay 7% inter

1) Today you are depositing $136 in a bank account that promises to pay 7% interest annually.  How much interest will you have earned at the end of one year? Round your answer to …

1) Trade credit terms of 2/10, net 90 are availabe. Calculate the cost of trade

1) Trade credit terms of 2/10, net 90 are availabe. Calculate the cost of trade credit when payment is made on the net due date using EAR (also known as APY). Use a 360 day year. …

1) TwitterMe, Inc., is a new company and currently has negative earnings. The co

1) TwitterMe, Inc., is a new company and currently has negative earnings. The company’s sales are $1.2 million and there are 114,000 shares outstanding. If the benchmark price–sal…

1) Two corporations A and B have exactly the same risk and both have a current s

1) Two corporations A and B have exactly the same risk and both have a current stock price of $100. Corporation A pays no dividend and will have a price of $120 one year from now.…

1) Use the Dividend Discount Model to determine the expected annual growth rate

1) Use the Dividend Discount Model to determine the expected annual growth rate of the dividend for ELO stock. The firm is expected to pay an annual divided of $19.84 per share in…

1) Using net present value calculations, determine which has a higher ROI. Assum

1) Using net present value calculations, determine which has a higher ROI. Assume the average mileage under both options is 15,000 miles. The car will be sold for its Kelly Blue B…

1) Using the data set below, what would be the forecast for period 5 using the e

1) Using the data set below, what would be the forecast for period 5 using the exponential smoothing method? Assume the forecast for period 4 is 14000. Use a smoothing constant of…

1) Using the information contained in J. Washam\'s financial statement, calculat

1) Using the information contained in J. Washam's financial statement, calculate the CCE, Cash Ratio, Cash Burn Rate, and net liquid balance. Interpret the trend in the these mesa…

1) Valence Electronics has 217 million shares outstanding. It expects earnings a

1) Valence Electronics has 217 million shares outstanding. It expects earnings at the end of the year of $760 million. Valence pays out 40% of its earnings in total?15% paid out a…

1) We know that capital budgeting is a forward looking process based on sales/re

1) We know that capital budgeting is a forward looking process based on sales/revenue and expense projections which convert to operating cash flows which are then discounted to th…

1) We know that capital budgeting is a forward looking process based on sales/re

1) We know that capital budgeting is a forward looking process based on sales/revenue and expense projections which convert to operating cash flows which are then discounted to th…

1) We receive $3,000 per semester and $87,000 in 9 years from the present. What

1) We receive $3,000 per semester and $87,000 in 9 years from the present. What ROR did we attain, if we now invest $4,000? (so I think this means we reveive 3,000 twice a year fo…

1) Weight of Equity FarCry Industries, a maker of telecommunications equipment,

1) Weight of Equity FarCry Industries, a maker of telecommunications equipment, has 2 million shares of common stock outstanding, 1 million shares of preferred stock outstanding, …

1) What are two reasons why FPL should cut the dividend? Don\'t just give generi

1) What are two reasons why FPL should cut the dividend? Don't just give generic answers, tie your response to something specific related to FPL in the case - show that you read t…

1) What does a Stock represent? A. A loan you make to a company that they must p

1) What does a Stock represent? A. A loan you make to a company that they must pay back B. A percentage of ownership of a company including assets and profits C. A contract for a …

1) What does it mean to \"Diversify\" your portfolio? A. To hold more than 1 sto

1) What does it mean to "Diversify" your portfolio? A. To hold more than 1 stock B. For your stocks to not be all in the same area of the economy C. To have a mix between stocks, …

1) What is a credit union? a) A not-for-profit depository institution that serve

1) What is a credit union? a) A not-for-profit depository institution that serves members who have a common affiliation b) A financial institution that accepts deposits and uses t…

1) What is the approximate standard deviation of returns if over the past four y

1) What is the approximate standard deviation of returns if over the past four years an investment returned 8.0%, -12.0%, -12% and 15.0%? 2) Plasti-tech Inc. is financed 60% with …

1) What is the approximate standard deviation of returns if over the past four y

1) What is the approximate standard deviation of returns if over the past four years an investment returned 8.0%, -12.0%, -12% and 15.0%? 2) Plasti-tech Inc. is financed 60% with …

1) What is the difference between equity real estate investment trusts and mortg

1) What is the difference between equity real estate investment trusts and mortgage real estate investment trusts? Considering the current state of home values in the United State…

1) What is the future value of an annuity of 21 deposits of 8,700 at the end of

1) What is the future value of an annuity of 21 deposits of 8,700 at the end of each year with a nominal rate of interest of 6%, compounded continuoysly, in 24 years? A) 425383.76…

1) What is the main problem with having a central bank that is not independent o

1) What is the main problem with having a central bank that is not independent of the rest of the government? A. Research studies have shown that the most independent central bank…

1) What is the payoff to a short forward position if the forward price is $40 an

1) What is the payoff to a short forward position if the forward price is $40 and the underlying stock price at expiration is $60? What would be the payoff to a purchased put opti…

1) What is the present value of a preferred stock (which pays unchanging dividen

1) What is the present value of a preferred stock (which pays unchanging dividends into perpetuity) paying a $6.50 annual dividend if the discount rate is 11%? $55.79 $59.09 $45.5…