FIN571 FIN/571 Final Exam (30/30) + other 3 variants

1) Which of the following statements is true?

2) Book value, or net book value, refers to

3) Assume that the par value of a bond is $1,000. Consider a bond where the coupon rate is 9% and the current yield is 10%. Which of the following statements is true?

4) If the yield to maturity for a bond is less than the bond’s coupon rate, the market value of the bond is 

5) For investors, the proper measure of a stock’s risk is its 

6) A company’s beta is -1.5. If the overall stock market decreases by 5%, what is the expected change in the firm’s stock price?

7) Which of these investments would you expect to have the highest rate of return for the next 20 years?

8) Dimensions of risk include 

9) One problem with using negative values for the proportion invested in the riskless asset to represent a borrowed amount is that the implied borrowing rate of interest is the same as the 

10) If you were willing to bet that the overall stock market was heading up on a sustained basis, it would be logical to invest in

11) Stony Products has an inventory conversion period (ICP) of about 70 days

12) The main source of short-term operating capital is 

13) An investor’s risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true?

14) An all-equity-financed firm would

15) If a firm wants to lower its weighted average cost of capital (WACC), one way to do so would be to

16) Boeing® is a world leader in commercial aircraft. In the face of competition, Boeing® often faces a critical 

17) Ideas for capital budgeting projects come from all levels within an organization.

18) Which of the following statements is true?

19) In practice, the __________ rule is the preferred criteria to accept or reject a capital investment project

20) The Jerome Inc. western regional branch has been looking to install a new distribution center. 

21) The __________ method breaks down when evaluating projects in which the sign of the cash flow changes

22) Studies show systematic differences in capital structures across industries. These are due primarily to differences in 

23) Capital structure decisions refer to the

24) Which of the following statements concerning preferred stock is true?

25) Mortgage bonds are 

26) __________ says to calculate the net advantage of leasing based on the incremental after-tax benefits that leasing will provide

27) From the lessee’s viewpoint, the relevant discount rate for evaluating a lease versus buy decision is the 

28) The wholesale price for Captain John’s is $0.612 per loaf

29) Which of the following statements is true?

30) In efficient markets, as in the United States, market prices are not expected to be