Financial literacy

1. The current stock price of ABC is $87. You have the following quotes on ABC o

1. The current stock price of ABC is $87. You have the following quotes on ABC options: Expiration Exercise Price Calls Puts Feb 80 9.30 1.05 Feb 85 8.05 1.15 May 90 3.50 4.35 May…

1. The day you were born your parents started a $1,000 bank account. For the fir

1. The day you were born your parents started a $1,000 bank account. For the first 8 of the account, the interest rate earned on the account was 6.9%. Since then, rates have been …

1. The days sales outstanding (DSO) ratio of a firm identifies: a. how much inve

1. The days sales outstanding (DSO) ratio of a firm identifies: a. how much investors are willing to pay for the firm's stock for each dollar of reported profits. b. the profit (e…

1. The decision not to buy flood insurance for a property that resides outside a

1. The decision not to buy flood insurance for a property that resides outside an established flood zone is known as __________. loss control 2. Buying an alarm system as an optio…

1. The depreciation is best defined as the: a) amount of tax that is saved when

1. The depreciation is best defined as the: a) amount of tax that is saved when an asset is purchased. b) allocation of the cost of the asset over its useful life. c) amount of ta…

1. The didend rate on a C S. is 5 7/19%, PV : 2 00, You own 4 round lots of this

1. The didend rate on a C S. is 5 7/19%, PV : 2 00, You own 4 round lots of this stock How much dividend do 2. You own B bonds of Andrusco Corp. with coupon rate of 3 49%, and tha…

1. The didend rate on a C S. is 5 7/19%, PV : 2 00, You own 4 round lots of this

1. The didend rate on a C S. is 5 7/19%, PV : 2 00, You own 4 round lots of this stock How much dividend do 2. You own B bonds of Andrusco Corp. with coupon rate of 3 49%, and tha…

1. The didend rate on a C S. is 5 7/19%, PV : 2 00, You own 4 round lots of this

1. The didend rate on a C S. is 5 7/19%, PV : 2 00, You own 4 round lots of this stock How much dividend do 2. You own B bonds of Andrusco Corp. with coupon rate of 3 49%, and tha…

1. The didend rate on a C S. is 5 7/19%, PV : 2 00, You own 4 round lots of this

1. The didend rate on a C S. is 5 7/19%, PV : 2 00, You own 4 round lots of this stock How much dividend do 2. You own B bonds of Andrusco Corp. with coupon rate of 3 49%, and tha…

1. The difference between probability sampling and nonprobability sampling is th

1. The difference between probability sampling and nonprobability sampling is that in nonprobability sampling: A. each sampling unit in the defined target population has a known p…

1. The difference between the weighted-average cost of capital (WACC) and the pr

1. The difference between the weighted-average cost of capital (WACC) and the pre-tax (unlevered) WACC is A.the weighted-average cost of capital multiplies the cost of debt by (1-…

1. The duration of a bond is determined by a combination of the maturity date an

1. The duration of a bond is determined by a combination of the maturity date and value, and: a. None of the above b. the call premium. c. the pattern of coupon payments. d. the p…

1. The ease with which a financial claim can be resold is its quality. b. risk d

1. The ease with which a financial claim can be resold is its quality. b. risk d. perpetuity. If the budget deficit 2. The federal government demand for loanable funds is were to …

1. The effect of financial leverage on ROE Companies that use debt in their capi

1. The effect of financial leverage on ROE Companies that use debt in their capital structure are said to be using financial leverage. Using leverage can increase shareholder retu…

1. The efficient market hypothesis says that at any time the security price full

1. The efficient market hypothesis says that at any time the security price fully reflects all the information, so the price changes are not predictable. True False 2. When we hav…

1. The equation for CAPM is kj = Rf + [bj x (Rm - Rf)] where, kj = required retu

1. The equation for CAPM is kj = Rf + [bj x (Rm - Rf)] where, kj = required return on asset j, Rf = risk-free rate of return, (6%) bj = beta coefficient for asset j, (1.75) Rm = m…

1. The equation for CAPM is kj = Rf + [bj x (Rm - Rf)] where, kj = required retu

1. The equation for CAPM is kj = Rf + [bj x (Rm - Rf)] where, kj = required return on asset j, Rf = risk-free rate of return, (6%) bj = beta coefficient for asset j, (1.75) Rm = m…

1. The equivalent annual annuity method involves calculating the annual payment

1. The equivalent annual annuity method involves calculating the annual payment amount that a particular project would provide if it were an annuity. When comparing projects of un…

1. The fact that no investor can expect to earn excess returns based on an inves

1.                The fact that no investor can expect to earn excess returns based on an investment strategy using only historical stock price or return information is an example…

1. The financial director of a company makes the following comments: “The compan

1. The financial director of a company makes the following comments: “The company performed remarkably well this year. You be the judge – our depreciation policy enabled us to gen…

1. The firms tax rate is 40% 2. The current price of Colemans 12% coupon, semian

1. The firms tax rate is 40% 2. The current price of Colemans 12% coupon, semiannual payment, noncallable bonds with 15 years remaining to maturity is $ 1153.72. Coleman does not …

1. The first mass produced automobile was the Ford Model T, initially manufactur

1. The first mass produced automobile was the Ford Model T, initially manufactured and sold in 1909 for $825. The rate of inflation in the United States over the period 1909 to 20…

1. The fiscal or financial year of the Galt corporation begins on October 1 and

1. The fiscal or financial year of the Galt corporation begins on October 1 and ends on September 30 of the next year. On October 1, 2010 this corporation has $2,500,000 in its in…

1. The following balance sheet is for the Ballyhoo Company for fiscal year-end 2

1. The following balance sheet is for the Ballyhoo Company for fiscal year-end 2014 (all numbers are in $thousands). Please fill in all missing data. (4 pts.) Assets Liabilities a…

1. The following balance sheet is for the Ballyhoo Company for fiscal year-end 2

1. The following balance sheet is for the Ballyhoo Company for fiscal year-end 2014 (all numbers are in $thousands). Please fill in all missing data. (4 pts.) Assets Liabilities a…

1. The following balance sheet is for the Ballyhoo Company for fiscal year-end 2

1. The following balance sheet is for the Ballyhoo Company for fiscal year-end 2014 (all numbers are in $thousands). Please fill in all missing data. (4 pts.) Assets Liabilities a…

1. The following data is associated with a proposed replacement project: A machi

1. The following data is associated with a proposed replacement project: A machine that originally cost $25,000 and was depreciated on a straight line basis has one year of its ex…

1. The formula for the capital asset pricing model is: K i = R F + B i (K M - R

1. The formula for the capital asset pricing model is: Ki = RF + Bi (KM - RF) Ki is the required rate of return that we are solving for; RF is the risk-free rate, and we shall ass…

1. The formula for the capital asset pricing model is: K i = R F + B i (K M - R

1. The formula for the capital asset pricing model is: Ki = RF + Bi (KM - RF) Ki is the required rate of return that we are solving for; RF is the risk-free rate, and we shall ass…

1. The function of financial markets and institutions is: to create economical b

1. The function of financial markets and institutions is: to create economical booms and recessions. to facilitate the flow of funds through the economy. to manage portfolios of i…

1. The future value, FVn, of the lump sum deposit is ______ 2. The future vlue o

1. The future value, FVn, of the lump sum deposit is ______ 2. The future vlue of the mixed stream of payments is ______ 3. ?Which alternative will Gina choose? a. lump sum deposi…

1. The geometric average of -12%, 5%, 20%, and 25% is closest to: a) 8.5% 2. Sec

1. The geometric average of -12%, 5%, 20%, and 25% is closest to: a) 8.5% 2. Security Return Stan. Dev. Beta ORACLE 15% 24% 1.5 YAHOO 11% 32% 1.1 Which asset in the table above ha…

1. The goal of the firm should maintain leverage consistent with the capital str

1. The goal of the firm should maintain leverage consistent with the capital structure that minimizes taxes. 2. Smaller volumes of new financing are associated with lower risk and…

1. The government has imposed a fine on the Not-So-Legal Company. The fine calls

1. The government has imposed a fine on the Not-So-Legal Company. The fine calls for annual payments of $100,000, $250,000, and $250,000, respectively over the next three years. T…

1. The highest value for the equally likely criterions is ________; this occurs

1. The highest value for the equally likely criterions is ________; this occurs with alternative ______. (1.5 pts)                                 States of Nature                …

1. The idea that investors in a common stock may expect a lower total return if

1. The idea that investors in a common stock may expect a lower total return if they purchase a stock with limited price volatility rather than one with high price volatility sugg…

1. The intrinsic value of an asset (how much an asset should be worth) is define

1. The intrinsic value of an asset (how much an asset should be worth) is defined as: a. the total discounted value of its expected future profits. b. the sum of its expected cash…

1. The last dividend CompU paid was $0.80. The historical growth rate in dividen

1. The last dividend CompU paid was $0.80. The historical growth rate in dividends has been 6%, and analysts expect it to remain constant for the foreseeable future. Investors req…

1. The last dividend on Spirex Corporation\'s common stock was $3.75, and the ex

1.     The last dividend on Spirex Corporation's common stock was $3.75, and the expected growth rate is 8 percent. If you require a rate of return of 15 percent, what is the high…

1. The length of time between the purchase of inventory and the receipt of cash

1. The length of time between the purchase of inventory and the receipt of cash from the sale of that inventory is called the: A. operating cycle. B. inventory period. C. accounts…

1. The length of time between the purchase of inventory and the receipt of cash

1. The length of time between the purchase of inventory and the receipt of cash from the sale of that inventory is called the: A. operating cycle. B. inventory period. C. accounts…

1. The major component in the current account in the balance of payments is to A

1. The major component in the current account in the balance of payments is to A measure a country’s balance of international reserves B measure a country’s balance of transfer pa…

1. The management at Smith and Teabury Co. wants to continue its internal discus

1. The management at Smith and Teabury Co. wants to continue its internal discussions related to its cash management. One of the finance team members presents the followinf case i…

1. The manager of Green Daisy Inc. is in the process of deciding whether to make

1. The manager of Green Daisy Inc. is in the process of deciding whether to make or buy carburetors for its power lawn mowers. If Green Daisy decides to manufacture the carburetor…

1. The manager of Green Daisy Inc. is in the process of deciding whether to make

1. The manager of Green Daisy Inc. is in the process of deciding whether to make or buy carburetors for its power lawn mowers. If Green Daisy decides to manufacture the carburetor…

1. The manager of PPO Inc. plans to manufacture engine blocks for classic cars f

1. The manager of PPO Inc. plans to manufacture engine blocks for classic cars from the 1960s. The revenue from the blocks will be $750,000 per year for each of the next 4 years. …

1. The managers of process operations focus on the series of repetitive processe

1. The managers of process operations focus on the series of repetitive processes, or steps, resulting in a noncustomized product or service. True False 2. Process costing systems…

1. The markup on a new diamond ring should be 25% based on selling price. If the

1. The markup on a new diamond ring should be 25% based on selling price. If the seller paid $4,525.00 for one, then how much should it be sold for to achieve the desired markup? …

1. The most significant portions of your projection are, no matter how carefully

1. The most significant portions of your projection are, no matter how carefully contrived, still little more than educated guesses.          TRUE FALSE 2. Where assets have been …

1. The net present value for a project with a relatively long life is more sensi

1. The net present value for a project with a relatively long life is more sensitive to changes in the required rate of return than the net present value for a project with a rela…