Financial literacy

1. ART company has come out with a new and improved product. As a result, the ma

1. ART company has come out with a new and improved product. As a result, the market projects an ROE of 25% for the company, and we know the company will maintain a plowback ratio…

1. AS@, a widower, age 65, makes the following gifts: (a) $82,000 of listed secu

1.     AS@, a widower, age 65, makes the following gifts: (a) $82,000 of listed securities to his son, (b) $17,000 cash to his daughter, (c) $6,000 to his granddaughter, and (d) $…

1. AZ Inc. had credit sales of $6,500,000 last year and its days sales outstandi

1. AZ Inc. had credit sales of $6,500,000 last year and its days sales outstanding was DSO = 50 days. What was its average receivables balance, based on a 365-day year? 2. Firm Q …

1. Abacus, Inc. forms a corporation, Sirius, Inc., by transferring 18 percent of

1. Abacus, Inc. forms a corporation, Sirius, Inc., by transferring 18 percent of Abacus's stock to it for 100 percent of the stock in Sirius. Sirius, Inc. acquires 90 percent of t…

1. Abagail Corp. uses activity-based costing system with three activity cost poo

1. Abagail Corp. uses activity-based costing system with three activity cost pools. The following information is provided: Costs: Wages and salaries $ 202,000 Depreciation 102,000…

1. About 25 years ago, when Japanese companies were \"eating our lunch\", many a

1. About 25 years ago, when Japanese companies were "eating our lunch", many analysts noted that those companies had highly leveraged capital structures -- lot's of debt and littl…

1. According to M & M Proposition 1 with taxes, what is the optimal capital stru

1. According to M & M Proposition 1 with taxes, what is the optimal capital structure for every firm. 2. A) Fonda Enterprise expects to generate an annual cash flow of $195 ea…

1. According to Markowitz, rational investors will seek efficient portfolios bec

1. According to Markowitz, rational investors will seek efficient portfolios because these portfolios are optimal based on: a. expected return b. risk c. d· expected return and ri…

1. According to the following information, which of the stocks would be consider

1.     According to the following information, which of the stocks would be considered riskiest in a diversified portfolio of investments? Stock s b ABC 12.5% 1.0 FGH   8.0% 0.5 M…

1. According to the following information, which of the stocks would be consider

1.     According to the following information, which of the stocks would be considered riskiest in a diversified portfolio of investments? Stock s b ABC 12.5% 1.0 FGH   8.0% 0.5 M…

1. According to the text, which of the following attributes is NOT assigned to c

1. According to the text, which of the following attributes is NOT assigned to cohabiters? A. Less educated B. Less committed to relationship C. More likely to be childless D. Hav…

1. Ace Mining Company is planning to take a lease on atract of landing in minera

1. Ace Mining Company is planning to take a lease on atract of landing in mineral rich Congo. The lease is in an area where government control is weak and civil disturbances may n…

1. Acne Corp. has a beta of 0.82. The risk-free rate of return is 4.25 percent a

1. Acne Corp. has a beta of 0.82. The risk-free rate of return is 4.25 percent and the market rate of return is 14.60 percent. Find a. The stock's required rate of return b. The y…

1. Adams Corporation can raise up to $1700 million for investment from a mixture

1. Adams Corporation can raise up to $1700 million for investment from a mixture of debt, preferred stock and retained equity. Above $1700 million, the firm must issue new common …

1. Advantage First Corporation has sales of $4,744,860; income tax of $570,194;

1. Advantage First Corporation has sales of $4,744,860; income tax of $570,194; the selling, general and administrative expenses of $218,931: depreciation of $318,835; cost of goo…

1. Adventure Outfitter Corp. can sell common stock for $27 per share and its inv

1. Adventure Outfitter Corp. can sell common stock for $27 per share and its investors require a 17% return. However, the administrative or flotation costs associated with selling…

1. After a 4-for-1 stock split, Perry Enterprises paid a dividend of $1.40 per n

1. After a 4-for-1 stock split, Perry Enterprises paid a dividend of $1.40 per new share, which represents a 8% increase over last year's pre-split dividend. What was last year's …

1. After careful analysis of the economic data from the U. S. Government the XYZ

1. After careful analysis of the economic data from the U. S. Government the XYZ store set a sales plan increase for the next season (Feb.- July) of 8.2%. Based on this year's sal…

1. After hearing the advice that it is usually best to buy life insurance from a

1. After hearing the advice that it is usually best to buy life insurance from a person who has been in the business at least five years, a life insurance company general agent be…

1. After saving for the past few years, Sharon now has enough for the down payme

1. After saving for the past few years, Sharon now has enough for the down payment on her house. Her dream house costs $256,000 and her down payment will be equal to 25% of this a…

1. After three years, a deposit of $1,000 that compounds annually at an interest

1. After three years, a deposit of $1,000 that compounds annually at an interest rate of 20% returns A. $1,000. B. $1,200. C. $1,440. D. $1,728. 2. A one-year discount bond has a …

1. Agency conflicts and costs The nature and effects of agency conflicts Agency

1. Agency conflicts and costs The nature and effects of agency conflicts Agency conflicts are a special example of a conflict of interest; specifically, they are created by the re…

1. Agency problem is not a major concern in sole proprietorships because: a. b.

1. Agency problem is not a major concern in sole proprietorships because: a. b. c. d. Expense amounts are not excessive Owners bear the full cost of their actions Owners costs are…

1. Aiso deposits $170/month in a savings account paying 4%/year compounded conti

1. Aiso deposits $170/month in a savings account paying 4%/year compounded continuously. Estimate the amount that will be in his account after 15 years. (Round your answer to the …

1. Algeria Corporation may raise new capital in one of the following three ways.

1. Algeria Corporation may raise new capital in one of the following three ways. It has tax rate of 33%. Find the after-tax cost of new capital. (A) It can sell common stock at $2…

1. All creditors at the same level of the capital structure being treated the sa

1. All creditors at the same level of the capital structure being treated the same is known as? 2. A credit analyst is looking at three different companies – an auto company, a dr…

1. All creditors at the same level of the capital structure being treated the sa

1. All creditors at the same level of the capital structure being treated the same is known as? 2. A credit analyst is looking at three different companies – an auto company, a dr…

1. All else the same, a higher plow back ratio means a(n) _________P/E ratio (a)

1. All else the same, a higher plow back ratio means a(n) _________P/E ratio (a) higher (b) lower (c) unchanged (d) unable to determine 2. You wish to earn a return of 10% on each…

1. All of the following are advantages of a sole proprietorship EXCEPT: (a) Simp

1. All of the following are advantages of a sole proprietorship EXCEPT: (a) Simple to establish (b) Ease of ownership (c) Inexpensive to establish (d) Least regulation (e) Complet…

1. All of the following are characteristics of preferred stock that make it simi

1. All of the following are characteristics of preferred stock that make it similar to bonds except: a. constant periodic payments b. ahead of common stock with respect to dividen…

1. All of the following are core atttributes of an effective corporate governanc

1. All of the following are core atttributes of an effective corporate governance system except: a. fairness and accuracy in identifying inherent conflicts of interest b. clearly …

1. All other things equal, a decrease in the equity risk premium leads to a(n):

1. All other things equal, a decrease in the equity risk premium leads to a(n): a. Increase in the required return on stock. b. Decrease in the present value of stock. c. Increase…

1. All the following statements concerning the major steps in the estate plannin

1.       All the following statements concerning the major steps in the estate planning process are correct EXCEPT: A.      It is necessary to gather data, establish objectives, a…

1. All the following statements concerning the use of an insured corporate cross

          1. All the following statements concerning the use of an insured corporate cross-purchase buy-sell agreement are correct EXCEPT: A. The value of any life insurance polic…

1. All the following variables are used in computing the cost of debt EXCEPT a.

1. All the following variables are used in computing the cost of debt EXCEPT a. number of years to maturity. b. risk-free rate. 2. A significant advantage of the internal rate of …

1. Allen Auto Group owns corner property that can serve as a parking lot for cus

1. Allen Auto Group owns corner property that can serve as a parking lot for customers. The parking lot can be made of concrete or asphalt. Concrete will cost $375K initially, hav…

1. Allen ran a red light and crashed into Carol’s car. Carol sues Allen for negl

1. Allen ran a red light and crashed into Carol’s car. Carol sues Allen for negligence, claiming the following losses: • $2,000 for car repairs • $13,000 for medical expenses • $5…

1. Allison Engines Corporation has established a target capital structure of 40%

1. Allison Engines Corporation has established a target capital structure of 40% debt and 60% common equity. The current market price of the firm's stock is P0 = $36; its last div…

1. Alonzo plans to retire at age 67. His current expenses are $40,000, and he ex

1. Alonzo plans to retire at age 67. His current expenses are $40,000, and he expects 3 percent inflation from now until retirement. a). Use the replacement ratio method to estima…

1. Alpha and Beta Companies can borrow for a five-year term at the following rat

1. Alpha and Beta Companies can borrow for a five-year term at the following rates:                                                                                          Alpha …

1. Amanda Deleon, a college student is contemplating the following options for h

1. Amanda Deleon, a college student is contemplating the following options for her 3-month summer break: (1) Take a summer course which will cost $800 and work half-time making $1…

1. Amortization tables are useful for each of the following reasons expect: A)de

1. Amortization tables are useful for each of the following reasons expect: A)determining how much of a total payment is interest and how much is principal for tax purposes B)dete…

1. An agreement that grants the owner the right, but not the obligation, to buy

1. An agreement that grants the owner the right, but not the obligation, to buy or sell a specific asset at a specified price during a specified time period is called a(n) _____ c…

1. An example of a high risk/high reward investment would be Select one: a. Gove

1. An example of a high risk/high reward investment would be Select one: a. Government Bonds b. Corporate Bonds c. Certificates of Deposit d. Mutual Funds e. Junk Bonds 2. NAV sta…

1. An increase in a firm\'s financial leverage will: A. increase the variability

1. An increase in a firm's financial leverage will: A. increase the variability in earnings per share. B. always reduce the operating risk of the firm. C. increase the value of th…

1. An increase in current liabilites will have which one of the following effect

1. An increase in current liabilites will have which one of the following effects, all else held constant? Assume all ratios have postitive values. a. increase in the cash ratio b…

1. An increase in excess reserves will cause a. the Fed Funds rate to rise. b. p

1. An increase in excess reserves will cause a. the Fed Funds rate to rise. b. planned inventory investment to fall. c. depository institutions to lend more freely. d. foreign inv…

1. An index consists of the following securities. What is the price-weighted ind

1. An index consists of the following securities. What is the price-weighted index $ return?        What is the price-weighted index % return?                                     …

1. An insured who is an auto dealer advertises a new car for $3,399 instead of i

1. An insured who is an auto dealer advertises a new car for $3,399 instead of its actual price of $33,999. When the insured refuses to sell the car for the advertised amount, sev…

1. An interest rate ____ is a combination of a cap and a floor a. Swap b. FRA c.

1. An interest rate ____ is a combination of a cap and a floor a. Swap b. FRA c. LIBOR d. Collar e. None of the above 2. Which of the following statements is true? a. If Duration …