Financial literacy

1.Consider a sequential game between a shopkeeper and a haggling customer. The p

1.Consider a sequential game between a shopkeeper and a haggling customer. The party who moves first chooses either a high price ($50) or low price ($20) and the second mover eith…

1.Consider an asset that costs $616,000 and is depreciated straight-line to zero

1.Consider an asset that costs $616,000 and is depreciated straight-line to zero over its seven-year tax life. The asset is to be used in a five-year project; at the end of the pr…

1.Consider bidding for a project to supply 80 million postage stamps per year to

1.Consider bidding for a project to supply 80 million postage stamps per year to USPS for the next 5 years. You have an idle parcel of land available at that cost $1 million 5 yea…

1.Consider the following cash flow: Year Amount 0 -1000 1 to 5 300 Using a incom

1.Consider the following cash flow: Year                Amount    0                     -1000 1 to 5                    300             Using a income tax rate of 34% and a MARR o…

1.Consider the following four debt securities, which are identical in every char

1.Consider the following four debt securities, which are identical in every characteristic except as noted: ?W: A corporate bond rated AAA ?X: A corporate bond rate BBB ?Y: A corp…

1.Consider the following portfolio: You buy two July 2009 maturity call options

1.Consider the following portfolio: You buy two July 2009 maturity call options on Dell with exercise price of 30. You also sell two July 2009 maturity put options on Dell with an…

1.Consider the following two projects: Project C/F0 C/F1 C/F2 C/F3 C/F4 C/F5 C/F

1.Consider the following two projects: Project C/F0 C/F1 C/F2 C/F3 C/F4 C/F5 C/F6 C/F7 Discount Rate Alpha -79 20 25 30 35 40 N/A N/A 15% Beta -80 25 25 25 25 25 25 25 16% 1) The …

1.Contingency models suggest that a manager who is effective in one situation is

1.Contingency models suggest that a manager who is effective in one situation is likely to be effective in all leadership situation? True or false B. A good manager must be able t…

1.Debt holders: a .are the residual owners of a corporation. b. have little say

1.Debt holders: a .are the residual owners of a corporation. b. have little say in how the firm conducts its business. c. cannot force the firm into bankruptcy court if it fails t…

1.Department G had 3,171 units, one-third completed at the beginning of the peri

1.Department G had 3,171 units, one-third completed at the beginning of the period, 12,814 units were completed during the period, 1,668 units were one-fifth completed at the end …

1.Dunder Mifflin Paper Company is considering purchasing a new stamping machine

1.Dunder Mifflin Paper Company is considering purchasing a new stamping machine that costs $400,000. This new machine will produce cash inflows of $100,000 each year at the end of…

1.Explain why the present value of a cash flow stream, and the asset associated

1.Explain why the present value of a cash flow stream, and the asset associated therewith; fluctuate in value with the level of interest rates in the capital markets.      2.   Li…

1.Fasco Industries just paid a dividend of D0 = $1.45. Analysts expect the compa

1.Fasco Industries just paid a dividend of D0 = $1.45. Analysts expect the company's dividend to grow by 28% this year, by 11% in Year 2, and at a constant rate of 6% in Year 3 an…

1.Federal Deposit Insurance coverage on a single account in a single institution

1.Federal Deposit Insurance coverage on a single account in a single institution was set at this maximum insurable amount.   A) 1,500,000 B) 1,000,000 C) 500,000 D) 250,000   E) 1…

1.Find Apple Inc.’s 10-K filings that will give you their financial data for the

1.Find Apple Inc.’s 10-K filings that will give you their financial data for the past 5 years. Note: You could find it on Apple, Inc.’s investor relations’ website: http://investo…

1.Firm A is paying $300,000 in fixed interest payments a year while Firm B is pa

1.Firm A is paying $300,000 in fixed interest payments a year while Firm B is paying LIBOR plus 30 basis points on $5 million loans. The current LIBOR rate is 5.5 percent. Firm A …

1.Five different lenders quote you an annual percentage rate of 5 percent on a c

1.Five different lenders quote you an annual percentage rate of 5 percent on a car loan, but each lender compounds interest on a different period/frequency. Which one of the follo…

1.Fixed cost sources of financing include both debt and common stock. True False

1.Fixed cost sources of financing include both debt and common stock.    True    False 2.The desire to maintain high bond ratings will tend to increase the use of debt financing i…

1.For a portfolio of 40 randomly selected stocks, which of the following is most

1.For a portfolio of 40 randomly selected stocks, which of the following is most likely to be true? The riskiness of the portfolio is greater than the riskiness of each of the sto…

1.For a portfolio of 40 randomly selected stocks, which of the following is most

1.For a portfolio of 40 randomly selected stocks, which of the following is most likely to be true? The riskiness of the portfolio is greater than the riskiness of each of the sto…

1.For qualified individuals, a contribution to a registered retirement savings p

1.For qualified individuals, a contribution to a registered retirement savings plan (RRSP) will be Select one: a. an employment expense. b. a tax credit. c. a deduction from total…

1.For questions 1-4, consider a project with $150,000 initial cost (year 0), cas

1.For questions 1-4, consider a project with $150,000 initial cost (year 0), cash inflows of $45,200 per year for 5 years (end of each year), and a discount rate of 10%. What is t…

1.Free cash flows are what is left over for distribution to creditors and stockh

1.Free cash flows are what is left over for distribution to creditors and stockholders after the firm has made the necessary investments in working capital and long-term assets. T…

1.Fritz has an open fire insurance policy on his home for a maximum liability of

1.Fritz has an open fire insurance policy on his home for a maximum liability of $60,000. The policy has a number of standard clauses, including the right of the insurer to restor…

1.GHI, Inc. has NET WORKING CAPITAL of $ 4,050, CURRENT LIABILITIES of $8,580 an

1.GHI, Inc. has NET WORKING CAPITAL of $ 4,050, CURRENT LIABILITIES of $8,580 and INVENTORY of $ 3640. What is the firm's CURRENT RATIO? 2. Assume Old.com, Inc. has 10,000 shares …

1.Gawker hired a firm in japan that was versed in online publishing in that coun

1.Gawker hired a firm in japan that was versed in online publishing in that country in order to minimize which barrier to effective communication?                 a. filtering    …

1.Given the following Euro to $ Exchange rate of 1.46, what is the information c

1.Given the following Euro to $ Exchange rate of 1.46, what is the information contained in this quote? If the Purchasing Power Parity Theory is correct, what is true about the re…

1.Great Pumpkin Farms just paid a dividend of $3.70 on its stock. The growth rat

1.Great Pumpkin Farms just paid a dividend of $3.70 on its stock. The growth rate in dividends is expected to be a constant 7 percent per year indefinitely. Investors require a re…

1.Historically, the concepts of bonds is relatively new. t/f 2.Simply defined, b

1.Historically, the concepts of bonds is relatively new. t/f 2.Simply defined, bonds represent OPM. t/f 3.What is the stated interest rate on a bond called? 4.What does a bondhold…

1.Hog futures are trading at 26 per contract. July 25 calls are trading at a pre

1.Hog futures are trading at 26 per contract. July 25 calls are trading at a premium of $2. The call option on the Hog futures is said to be in the money or out of the money 2. If…

1.How much must an organization invest in a mutual fund today in order to sell i

1.How much must an organization invest in a mutual fund today in order to sell its shares for $50,000 in three years, assuming the average annual market return will be 9%, compoun…

1.Identify at least four factors that affect a bond’s yield and explain the effe

1.Identify at least four factors that affect a bond’s yield and explain the effect each factor has on the yield. 2.value of a stock (i.e. stock price) is the present value of ALL …

1.If a bond\'s coupon rate is less than its yield to maturity, the the bond will

1.If a bond's coupon rate is less than its yield to maturity, the the bond will sell __________. A.at a price equal to its face value B.at a price less than its face value C.at a …

1.If a firm has already paid an expense or is obligated to pay one in the future

1.If a firm has already paid an expense or is obligated to pay one in the future, regardless of whether a particular project is undertaken, that expense is a 2.You are trying to p…

1.If a project has more than one negative net cash-flow a problem with using the

1.If a project has more than one negative net cash-flow a problem with using the IRR method to evaluate the project is that: Select one: a. The cash-flows cannot be determined b. …

1.If interest rates rise, the price of existing bonds increases. 2. Corporations

1.If interest rates rise, the price of existing bonds increases. 2. Corporations are obligated to pay cash dividends if they generate earnings. 3. An increase in risk should cause…

1.If you expect the British pound to depreciate, you could speculate by ____ pou

1.If you expect the British pound to depreciate, you could speculate by ____ pound call options or ____ pound put options. A. selling; purchasing B. selling; selling C. purchasing…

1.In 2005,soccer player David Beckman signed a contract reported to be worth $51

1.In 2005,soccer player David Beckman signed a contract reported to be worth $51million. ThB. contract called for $2 million immediately and $10 million in 2006. The remaining $39…

1.In 2005,soccer player David Beckman signed a contract reported to be worth $51

1.In 2005,soccer player David Beckman signed a contract reported to be worth $51million. ThB. contract called for $2 million immediately and $10 million in 2006. The remaining $39…

1.In February 2014 the risk-free rate was 4.37 percent, the market risk premium

1.In February 2014 the risk-free rate was 4.37 percent, the market risk premium was 7 percent, and the beta for Twitter stock was 1.56. What is the expected return that was consis…

1.In calculating the risk associated with two potential projects (A & B), which

1.In calculating the risk associated with two potential projects (A & B), which of the following statistical calculations indicates that the projects are equally risky? The st…

1.In preparing its Year 9 adjusting entries, the Singapore Company neglected to

1.In preparing its Year 9 adjusting entries, the Singapore Company neglected to adjust rental fees received in advance for the amount of rental fees earned during Year 9. What is …

1.In the real world, we find that dividends: a) b) c) d) 2. The company with the

1.In the real world, we find that dividends: a) b) c) d) 2. The company with the common equity accounts shown here has declared a 10 percent stock dividend when the market value o…

1.International Machinery Company (IMC) is a Swedish multinational manufacturing

1.International Machinery Company (IMC) is a Swedish multinational manufacturing company. Currently, IMC's financial planners are considering undertaking a 1-year project in the U…

1.Interpret the figures by evaluating the firms CFO and key financial ratios. 2.

1.Interpret the figures by evaluating the firms CFO and key financial ratios. 2. Identify potential problems the firm faces. Balance Sheet 2012 2013 Income Statement 2014 Assets C…

1.Investment X offers to pay you $5,700 per year for seven years, whereas Invest

1.Investment X offers to pay you $5,700 per year for seven years, whereas Investment Y offers to pay you $7,800 per year for four years.    Calculate the present value for Investm…

1.Investors demand higher expected returns from stockswith returns that are high

1.Investors demand higher expected returns from stockswith returns that are highly exposed to macroeconomicchanges 2.Investors demand higher expected rates of return fromstocks wi…

1.Investors demand higher rates of expected return onstocks with more variation

1.Investors demand higher rates of expected return onstocks with more variation in expected returns 2.An investor’s portfolio that has $10,000in T-Bills and $20,000 in the market …

1.Jack hold a portfolio with the following securities: Security Investment Retur

1.Jack hold a portfolio with the following securities: Security Investment Return Stock A 387,472 4.6% Stock B 611,129 5.5% Stock C 616,146 4.8% Calculate the expected return of p…

1.Lambdoid Corporation is comparing two different capital structures, an all-equ

1.Lambdoid Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Lambdoid would have 200,000 shares of…