finance test 1 (52 question)

Question: If inflation is anticipated to be 5 percent during the next year, while the real rate of interest for a one-year loan is 5 percent, then what should the nominal rate of interest be for a risk-free one-year loan? 

Question: Which one of the following statements is not true? 

Question: Efficiency ratio: Jet, Inc., has net sales of $712,478 and accounts receivables of $167,435. What are the firm's accounts receivables turnover and days' sales outstanding? 

Question: If you have loaned capital to a firm, then you could be 

Question: Which one of the following is not an advantage of using ROE as a goal? 

Question: The future value of multiple cash flows is 

Question: The major players in the direct financial markets are 

Question: One of the main services offered by investment banks to companies is 

Question: Shane Matthews has invested in an investment that will pay him $6,200, $6,450, $7,225, and $7,500 over the next four years. If his opportunity cost is 10 percent, what is the future value of the cash flows he will receive? (Round to the nearest dollar.) 

Question: Which of the following is a cash flow from investing activities? 

Question: Largent Supplies Corp. has borrowed to invest in a project. The loan calls for a payment of $17,384 every month for three years. The lender quoted Largent a rate of 8.40 percent with monthly compounding. At what rate would you discount the payments to find the amount borrowed by Largent? (Round to two decimal places.) 

Question: Which of the following statements is not a limitation associated with market valuation of balance sheet accounts? 

Question: Which of the following reports directly to the owners of the firm (assume the firm is a public corporation)? 

Question: Tommie Harris is considering an investment that pays 6.5 percent annually. How much must he invest today such that he will have $25,000 in seven years? (Round to the nearest dollar.) 

Question: Which of the following stock exchange organizational forms has no physical location? 

Question: Working capital management decisions involve 

Question: Hassan Ali has made an investment that will pay him $11,455, $16,376, and $19,812 at the end of the next three years. His investment was to fetch him a return of 14 percent. What is the present value of these cash flows? (Round to the nearest dollar.) 

Question: Herm Mueller has invested in a fund that will provide him a cash flow of $11,700 for the next 20 years. If his opportunity cost is 8.5 percent, what is the present value of this cash flow stream? (Round to the nearest dollar.) 

Question: The assumption of arm's-length transaction states that 

Question: The time value of money refers to the issue of 

Question: Which of the following does maximizing shareholder wealth not usually account for? 

Question: Which one of the following is not true for a corporation? 

Question: The cash remaining after the firm has met its operating expenses, payments to creditors, and taxes is called 

Question: Executives that repeatedly put their own interests before that of the firm may find that they have difficulty finding another job after their current one. This is an example of 

Question: Petry Corp. is a growing company with sales of $1.25 million this year. The firm expects to grow at an annual rate of 25 percent for the next three years, followed by a growth of 20 percent per year for the next two years. What will be Petry's sales at the end of five years? (Round to the nearest dollar.) 

Question: Your brother has asked you to help him with choosing an investment. He has $5,000 to invest today for a period of two years. You identify a bank CD that pays an interest rate of 4.25 percent with the interest being paid quarterly. What will be the value of the investment in two years? 

Question: Centennial Brewery produced revenues of $1,145,227 in 2008. It has expenses (excluding depreciation) of $812,640, depreciation of $131,335, and interest expense of $81,112. It pays an average tax rate of 34 percent. What is the firm's net income after taxes? 

Question: Which of the following individuals is typically most responsible for managing a large corporation’s financial function? 

Question: Jeff Conway wants to receive $25,000 in perpetuity and will invest his money in an investment that will earn a return of 13.5 percent annually. What is the value of the investment that he needs to make today to receive his perpetual cash flow stream? (Round to the nearest dollar.) 

Question: The DuPont equation shows that a firm's ROE is determined by three factors 

Question: Leverage ratio: Your firm has an equity multiplier of 2.47. What is its debt-to-equity ratio? 

Question: A director who is not an employee of the firm is called 

Question: During 2008, Towson Recording Company increased its investment in marketable securities by $36,845, funded fixed assets acquisition by $109,455, and had marketable securities to the tune of $14,215 mature. What is the net cash provided (used) in investing activities? 

Question: During an economic expansion, we would expect 

Question: Chartworth Associates' financial statements indicated that the company had EBITDA of $3,145,903. It had depreciation of $633,000, and its interest rate on debt of $1.25 million was 7.5 percent. Calculate the amount of taxes the company is likely to owe. 

Question: Using higher discount rates will 

Question: Liquidity ratio: Zidane Enterprises has a current ratio of 1.92, current liabilities of $272,934, and inventory of $197,333. What is the firm's quick ratio? 

Question: According to the realization principle, revenue from a sale of the firm's products are recognized 

Question: Which organizational form best enables the owners of the firm to monitor the actions of other owners of the same firm? 

Question: Which organizational form best enables the owners of the firm to monitor the actions of other owners of the same firm? 

Question: Which one of the following does not change a firm's current ratio? 

Question: You want to have $25,000 for a down payment on a house 6 years from now. If you can earn 6.5 percent, compounded annually, on your savings, how much do need to deposit today to reach your goal? 

Question: The annuity transformation method is used to transform 

Question: To solve present value problems with multiple cash flows involves which of the following steps? 

Question: Direct financing occurs when 

Question: Which of the following can help align the behavior of managers with the goals of shareholders? 

Question: The present value of a lump sum future amount 

Question: Peer group analysis can be performed by 

Question: Derek's friend, Jackson, is asking to borrow today with a promise to repay $7,418.87 in four years. If Derek could earn 5.45 percent annually on the any investment he makes today, how much would he be willing to lend Jackson today? (Round to nearest dollar.) 

Question: Your mother is trying to choose one of the following bank CDs to deposit $10,000. Which one will have the highest future value if she plans to invest for three years? 

Question: The price of borrowing money is called 

Question: A mutual fund is an example of