Financial literacy

1. The Food Store is planning a major expansion for four years from today. In pr

1. The Food Store is planning a major expansion for four years from today. In preparation for this, the company is setting aside $35,000 each quarter, starting today, for the next…

1. The Frisco Company just paid $2.20 as its annual dividend. The dividends have

1. The Frisco Company just paid $2.20 as its annual dividend. The dividends have been increasing at a rate of 4% annually and this trend is expected to continue. The stock is curr…

1. The Frisco Company just paid $2.20 as its annual dividend. The dividends have

1. The Frisco Company just paid $2.20 as its annual dividend. The dividends have been increasing at a rate of 4% annually and this trend is expected to continue. The stock is curr…

1. The Goode and Cooke Company produces several models of frying pans. There is

1. The Goode and Cooke Company produces several models of frying pans. There is little difference in the production time required for the various models; the plant is designed to …

1. The Housekeeping Department of Micanopy Hospital has direct costs of $500,000

1. The Housekeeping Department of Micanopy Hospital has direct costs of $500,000. The hospital's four patient service departments utilize the following amounts of space: Departmen…

1. The J. Harris Corporation is considering selling one of its old assembly mach

1. The J. Harris Corporation is considering selling one of its old assembly machines. The machine purchased for $60,000 6 years ago, had an expected lif of 15 years and and expect…

1. The Johnson Company bought a truck costing $24,000 two and a half years ago.

1. The Johnson Company bought a truck costing $24,000 two and a half years ago. The truck's estimated life was four years at the time of purchase. It was accounted for by using st…

1. The Money market mutual funds are generally less risky than a corporate bond

1. The Money market mutual funds are generally less risky than a corporate bond mutual fund. True False 2. A closed-end fund has total assets of $270 million and liabilities of $6…

1. The NPV for a project with estimated cash flows of $45,000 per year for 5 yea

1. The NPV for a project with estimated cash flows of $45,000 per year for 5 years, initial investment $150,000, cost of capital 9.5% is $75,000. True or false. 2. The IRR for thi…

1. The NPV rule states that you should accept an investment if the NPV: Select o

1. The NPV rule states that you should accept an investment if the NPV: Select one: a. is less than or equal to zero. b. is less than the investment's initial cost. c. is positive…

1. The PARC Company, a large profitable corporation, has decided to purchase a n

1. The PARC Company, a large profitable corporation, has decided to purchase a new widget machine. The following cost data concerning the widget machine have been provided. First …

1. The Podrasky Corporation is considering an $80 million expansion (capital exp

1. The Podrasky Corporation is considering an $80 million expansion (capital expenditure) program next year. The company wants to determine approximately how much additional finan…

1. The Residual Dividend Model is rarely used in practice. Instead companies use

1. The Residual Dividend Model is rarely used in practice. Instead companies use this model to set a maximum dividend. Why is this? Select all that apply: The residual dividend mo…

1. The Rivoli Company has no debt outstanding and its financial position is give

1. The Rivoli Company has no debt outstanding and its financial position is given by the following data:             Market value of Assets                        $3,000,000      …

1. The S&P/ASX 200 index is currently at 4000. You manage a $4 million indexed e

1. The S&P/ASX 200 index is currently at 4000. You manage a $4 million indexed equity portfolio. The S&P/ASX 200 futures contract has a multiplier of $25. a) If you are te…

1. The SGS Co. had $101,000 in taxable income. Use the rates from Table 2.3. (Do

1. The SGS Co. had $101,000 in taxable income. Use the rates from Table 2.3. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) …

1. The SML approach to valuing a stock has several advantages when compared to t

1. The SML approach to valuing a stock has several advantages when compared to the dividend cash flow model that include: A) adjusting for risk B) SML can be used even if a firm d…

1. The SP500 is a portfolio formed by 500 firms, hence, very diversified. Is it

1. The SP500 is a portfolio formed by 500 firms, hence, very diversified. Is it true that suclh adiversified portfolio is immune to systematic risk? 2. Should WACC be calculated b…

1. The Sand Surfer Corporation has annual sales of $61 million. The average coll

1. The Sand Surfer Corporation has annual sales of $61 million. The average collection period is 33 days. What is the average investment in accounts receivable as shown on the bal…

1. The Seattle Corporation has been presented with an investment opportunity whi

1.     The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of $35,000 per year in Years 1 through 4, $40,000 per year in Years 5 …

1. The Securities Act of 1933: A. Provides for transparency in financial stateme

1.      The Securities Act of 1933: A.    Provides for transparency in financial statements B.    Prohibits misrepresentation and fraudulent activities C.    Was followed by the S…

1. The Social Security Act, adopting in 1935, called for workers to make payroll

1. The Social Security Act, adopting in 1935, called for workers to make payroll tax payments, which were then pooled to pay retirement benefits to primary workers. Survivor benef…

1. The Sturgeon Corp. has developed a new line of spinning reel it plans to prod

1. The Sturgeon Corp. has developed a new line of spinning reel it plans to produce and sell in the United States. The cost of the necessary equipment will be $2.8 million plus $3…

1. The Swiss franc (SF) futures contract has the following specifications Contra

1. The Swiss franc (SF) futures contract has the following specifications Contract Size -SF125,000 Initial Margin - $3,600 Maintenance Margin $2,700 (a) (5 points) For each tradin…

1. The Terrapins Investment Fund has a total investment of $500 million in five

1. The Terrapins Investment Fund has a total investment of $500 million in five stocks. Stock               Investment (millions)   Beta     1                              $150   …

1. The Treasury bill rate is 4 percent, and the expected return on the market po

1. The Treasury bill rate is 4 percent, and the expected return on the market portfolio is 12 percent. Using the capital asset pricing model: b. What is the risk premium on the ma…

1. The Turkish lira (TRY) was officially devalued by the Turkish government in F

1.    The Turkish lira (TRY) was officially devalued by the Turkish government in February 2001 during a severe political and       economic crisis. The Turkish government announc…

1. The Value of a bond may be expressed as the sum of a) the interest payments a

1. The Value of a bond may be expressed as the sum of a) the interest payments and the maturity value b)the pv of the par value and the pv of the sum of interest payments c) the P…

1. The \"repricing gap\" model focuses on changes in the ____________ of a bank

1. The "repricing gap" model focuses on changes in the ____________ of a bank Select one: a. market value of assets b. market value of liabilities c. interest income and interest …

1. The ____ is the annual coupon payment divided by the current price of the bon

1. The ____ is the annual coupon payment divided by the current price of the bond, is not always an accurate indicator. A)current yield B)coupon rate C)yield to maturity D) bond d…

1. The _______ decision should take precedence over the _____ decision. a asset

1. The _______ decision should take precedence over the _____ decision. a asset allocation; stock selection b bond selection; mutual fund selection c stock selection; asset alloca…

1. The amount of interest that is deducted from the amount you wish to borrow in

1. The amount of interest that is deducted from the amount you wish to borrow in order to get proceeds is 2. The approximate time that it takes a deposit to double at a certain in…

1. The annual interest rate divided by the number of days in a year is the perio

1. The annual interest rate divided by the number of days in a year is the periodic rate. True/False 2. The usury rate is a benchmark rate used to guide changes on varaible-rate p…

1. The appropriate cash flows for evaluating a corporate investment decision are

1. The appropriate cash flows for evaluating a corporate investment decision are: (Points : 1)        incremental additional cash flows.        marginal after-tax cash flows.     …

1. The average annual return on an Index from 1986 to 1995 was 16.70 percent. Th

1. The average annual return on an Index from 1986 to 1995 was 16.70 percent. The average annual T-bill yield during the same period was 5.90 percent.    What was the market risk …

1. The average tax rate is The average tax rate is the tax rate that is paid on

1. The average tax rate is    The average tax rate is the tax rate that is paid on the last dollar of income earned always higher than the marginal tax rate calculated by dividing…

1. The balance sheets of savings institutions consist mostly of: A. Consumer loa

1.   The balance sheets of savings institutions consist mostly of: A.   Consumer loans and High quality corporate bonds B.   Residential mortgages and time deposits C.   Commercia…

1. The basics of capital budgeting Aa Aa One of the most important financial man

1. The basics of capital budgeting Aa Aa One of the most important financial management activities that a firm undertakes is its evaluation and allocation of investment funds to s…

1. The basics of capital budgeting One of the most important financial managemen

1. The basics of capital budgeting One of the most important financial management activities that a firm undertakes is its evaluation and allocation of investment funds to support…

1. The best stock to own when the stock market is at a peak and is expected to d

1. The best stock to own when the stock market is at a peak and is expected to decline in value is one with a beta of A. +1.5 B. +1.0 C. -1.0 D. -0.5 2. When the Capital Asset Pri…

1. The beta of Stock B is –0.5 (indicating that its returns rise when returns on

1. The beta of Stock B is –0.5 (indicating that its returns rise when returns on most other stocks fall). If the risk-free rate is 5.2 percent and the expected rate of return on a…

1. The bid price for a 45 strike price call to be $4.70 and the ask price to be

1. The bid price for a 45 strike price call to be $4.70 and the ask price to be $4.90. You choose to purchase, go long, the call. What will be the profit on the call at expiration…

1. The book value of equity of a firm is $82 million and the market value of equ

1. The book value of equity of a firm is $82 million and the market value of equity is $96 million. The face value of debt of the firm is $40 million and the market value of debt …

1. The building of the ________ cash flow of a project is the cornerstone of the

1. The building of the ________ cash flow of a project is the cornerstone of the financial decision models. 2. Fully depreciated assets ________ , and so any proceeds from sale at…

1. The cash conversion cycle is the length of time from the __________ raw mater

1.      The cash conversion cycle is the length of time from the __________ raw materials to manufacture a product until the __________ of accounts receivable associated with the …

1. The collection of assets is called a(n) Select one: a. diversity b. investmen

1. The collection of assets is called a(n) Select one: a. diversity b. investment c. portfolio d. grouping 2. The ___________________ of an event occurring is the percentage chanc…

1. The common stock of Peachtree Paper, Inc., is currently selling for $40 a sha

1. The common stock of Peachtree Paper, Inc., is currently selling for $40 a share. A dividend of $2.00 per share was just paid. You are estimating that this dividend will grow at…

1. The common stock of Textile Mills pays an annual dividend of $1.65 a share. T

1. The common stock of Textile Mills pays an annual dividend of $1.65 a share. The company has promised to maintain a constant dividend even though economic times are tough. How m…

1. The current risk-free rate of return is 4.20% and the current market risk pre

1. The current risk-free rate of return is 4.20% and the current market risk premium is 6.60%. Fuzzy Button Clothing Company has a beta of 1.56. Using the Capital Asset Pricing Mo…

1. The current risk-free rate of return is 4.67%, while the market risk premium

1. The current risk-free rate of return is 4.67%, while the market risk premium is 5.75%. the wilson company has a beta of 1.56. using the capital asset pricing model approact, wi…