1.Joe is a general partner in a limited partnership firm, while Jane is a limited partner in that same firm. Which of the following statements regarding their respective relationships to the firm are not correct?
A:Withdrawal of Jane from the partnership will dissolve that partnership.
B:Joe has no management authority within the partnership.
C:Jane is legally involved in the managerial decision making of the firm.
答案:Joe has no management authority within the partnership###Jane is legally involved in the managerial decision making of the firm###Withdrawal of Jane from the partnership will dissolve that partnership
2.An investor estimates the value of a firm which manufactures cookware by examining the cash flows of similar firms. Which of the following is assumed to be the same for these firms?
A:P/E
B:annual growth rates
C:payout rates
答案:P/E###annual growth rates###payout rates
3.Which of the following are diversifiable risks?
A:the risk of a key employee being hired away by a competitor
B:the risk that oil prices rise, increasing production costs
C:the risk that the CEO is killed in a plane crash
D:the risk of a product liability lawsuit
答案:the risk that the CEO is killed in a plane crash;
the risk of a key employee being hired away by a competitor;
the risk of a product liability lawsuit
4.Which of the following are limitations of the payback period rule?
A:It does not account for the time value of money.
B:It ignores cash flows after payback.
C:It does not account for changes in the discount rate.
D:It is difficult to calculate.
答案:It does not account for the time value of money###It ignores cash flows after payback###It does not account for changes in the discount rate
5.As a firm increases its level of debt relative to its level of equity, the firm is NOT ________.
A:increasing its leverage
B:decreasing the fraction of its debt
C:increasing the fraction of its equity
D:decreasing its leverage
答案:increasing the fraction of its equity###decreasing the fraction of its debt###decreasing its leverage
6.Which of the following statements regarding the cost-benefit analysis are correct?
A:Competitive market prices allow us to calculate the value of a decision without worrying about the tastes or opinions of the decision maker.
B:Because competitive markets exist for most commodities and financial assets, we can use them to determine cash values and evaluate decisions in most situations.
C:In the absence of competitive markets, we can use one-sided prices to determine exact cash values.
D:The first step in evaluating a project is to identify its costs and benefits.
答案:The first step in evaluating a project is to identify its costs and benefits.;
Competitive market prices allow us to calculate the value of a decision without worrying about the tastes or opinions of the decision maker.;
Because competitive markets exist for most commodities and financial assets, we can use them to determine cash values and evaluate decisions in most situations.
7.Which of the following is the likely explanation for a firm's high ROE?
A:The firm is able to find investment opportunities that are very profitable.
B:The firm is growing.
C:The firm enjoys high sales margins.
D:The firm has very efficient use of its assets.
答案:The firm is able to find investment opportunities that are very profitable###The firm has very efficient use of its assets###The firm enjoys high sales margins
8.Which ones are not the right process of double taxation for the stockholders in a C corporation?
A:The corporation must pay taxes on any profits it makes, and the capital raised by the sale of shares is also subject to taxation.
B:Their shares are taxed when they are both bought and sold.
C:The owners of a corporation are taxed when they receive dividend payments and when they make a profit from the sale of shares.
D:The corporation is taxed on the profits it makes, and the owners are taxed when this profit is distributed to them.
答案:Their shares are taxed when they are both bought and sold###The owners of a corporation are taxed when they receive dividend payments and when they make a profit from the sale of shares###The corporation must pay taxes on any profits it makes, and the capital raised by the sale of shares is also subject to taxation
9.Which of the following is/are part of the four characteristics of IPOs that puzzle financial economists?
A:The long-run performance of a newly public company (three to five years from the date of issue) is superior to the overall market return.
B:On average, IPOs appear to be underpriced.
C:The costs of the IPO are very high, and it is unclear why firms willingly incur such high costs.
D:The number of issues is highly cyclical.
答案:On average, IPOs appear to be underpriced###The number of issues is highly cyclical###The costs of the IPO are very high, and it is unclear why firms willingly incur such high costs
10.Which of the following could be a way that a firm can increase its dividend?
A:by increasing its dividend payout rate
B:by increasing its earnings (net income)
C:by increasing its retention rate
D:by decreasing its shares outstanding
答案:by decreasing its shares outstanding###by increasing its earnings (net income)###by increasing its dividend payout rate
11.On a particular day, a mining company reveals that, due to new extraction technology, the extractable yield from several of its nickel/lead mines has risen by 15%. Which of the following are the likely consequences of such an announcement?
A:Investors would revise their estimates of the net present value (NPV) of the firm.
B:Investors would increase their forecast of future cash flows in that firm.
A:In general, money today is worth more than money in one year. B:For most financial decisions, costs and benefits occur at different points in time. C:We define the risk-free interest rate (rf) for a given period as the interest rate at which money can be borrowed or lent without risk over that period. D:We refer to (1 - rf) as the interest rate factor for risk-free cash flows. 13.An investor is considering the two investments shown above. Which of the following statements about these investments is not true?
A:Neither investment should be taken since they both have a negative net present value (NPV). B:The investor should take investment A since it has a greater internal rate of return (IRR). C:The investor should take investment B since it has a greater net present value (NPV). D:The investor should take investment A since it has a greater net present value (NPV). 14.Which of the following is/are not true about the face value of a bond?
A:It is the notional amount we use to compute coupon payments. B:All of the above are true. C:It is the amount that is repaid at maturity. D:It is usually denominated in standard increments, such as $1,000. 15.Which of the following is/are not disadvantage of the Net Present Value rule?
A:ignores cash flows after the cutoff point B:not necessarily consistent with maximizing shareholder wealth C:relies on accurate estimate of the discount rate D:can be misleading if inflows come before outflows 16.Which of the following are considered to be an operating expense on the income statement?
A:depreciation and amortization B:administrative expenses and overhead C:salaries D:corporate taxes 17.Assume your current mortgage payment is $900 per month. If you begin to pay $1,000 per month (with the extra $100 per month going to principal), which of the following will not be TRUE?
A:The total interest expense will increase with $1,000 monthly payment compared to $900 monthly payments. B:The total principal paid will decrease with $1,000 monthly payment compared to $900 monthly payments. C:The total amount paid (principal and interest) will increase with $1,000 monthly payment compared to $900 monthly payments. D:The mortgage balance will decrease faster with $1,000 monthly payment compared to $900 monthly payments. 18.Which of the following are advantages of a sole proprietorship?
A:limited liability B:ease of setup C:single taxation D:no separation of ownership and control 19.Which of the following statements regarding real options are correct?
A:Real options give owners the right, but not the obligation, to exercise these opportunities at a later date. B:Real options build greater flexibility into a project and thus increase its net present value (NPV). 20.Which of the following statements is/are not true of bond prices?
A:Bond prices and interest rates are not connected. B:A fall in bond prices causes interest rates to fall. C:A rise in interest rates causes bond prices to fall. D:A fall in interest rates causes a fall in bond prices. 21.A portfolio has three stocks — 240 shares of Yahoo (YHOO), 150 Shares of General Motors (GM), and 40 shares of Standard and Poor's Index Fund (SPY). If the price of YHOO is $30, the price of GM is $30, and the price of SPY is $130, calculate the portfolio weight of YHOO and GM.
A:40.5%, 28.0% B:42.6%, 26.6% C:12.8%, 16.0% D:23.4%, 49.3% 22.What are dividend payments?
A:payments made to a company by investors for a share of the ownership of that company B:a share of the profits paid to each shareholder on the basis of the number of shares they hold C:the difference between the original cost price of a share and the price an investor receives when that share is sold D:incremental increases in the value of the stock held by an investor due to rises in share price 23.What is the main problem in using a balance sheet to provide an accurate assessment of the value of a company's equity?
A:Knowing at a single point in time what assets a firm possesses and the liabilities a firm owes does not give any indication of what those assets can produce in the future. B:The equity shown on the balance sheet does not reflect the market capitalization of the company. C:The balance sheet does not accurately represent the book value of assets held by the company. 24.Which of the following statements regarding the private debt market is FALSE?
A:Private debt has the advantage that it avoids the cost of registration. B:Bank loans are an example of private debt—debt that is not publicly traded. C:The public debt market is larger than the private debt market. D:Private debt has the disadvantage of being illiquid. 25.Cameron Industries is purchasing a new chemical vapor depositor in order to make silicon chips. It will cost $4 million to buy the machine and $12,000 to have it delivered and installed. Building a clean room in the plant for the machine will cost an additional $3 million. The machine is expected to have a working life of six years. If straight-line depreciation is used, what are the yearly depreciation expenses in this case?
A:1166667 B:666667 C:1168667 D:668667 26.Your retirement portfolio comprises 300 shares of the S&P 500 fund (SPY) and 100 shares of iShares Barclays Aggregate Bond Fund (AGG). The price of SPY is $136 and that of AGG is $97. If you expect the return on SPY to be 11% in the next year and the return on AGG to be 10%, what is the expected return for your retirement portfolio?
A:8.65% B:10.27% C:9.73% D:10.81% 27.Suppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child's college education. Currently, college tuition, books, fees, and other costs average $12,000 per year. On average, tuition and other costs have historically increased at a rate of 5% per year. Assuming that college costs continue to increase an average of 5% per year and that all her college savings are invested in an account paying 8% interest, then the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education is closest to ________.
A:77555 B:55397 C:132952 D:110793 28.A company releases a five-year bond with a face value of $1000 and coupons paid semiannually. If market interest rates imply a YTM of 6%, what should be the coupon rate offered if the bond is to trade at par?
A:7% B:5% C:6% D:3% 29.Which of the following would be LEAST likely to lower the interest rate that a bank offers a borrower?
A:The borrower is judged to have a low degree of risk. B:The number of borrowers seeking funds is low. C:The expected inflation rate is expected to be low. D:The loan will be for a long period of time. 30.Which of the following is NOT a factor that a manager should bear in mind when estimating a project's revenues and costs?
A:Sales of a product will typically accelerate, stabilize, and then decline as the product becomes outdated or faces increased competition. B:The prices of technology products tend to fall over time as newer, superior technologies emerge and production costs decline. C:A new product typically has its highest sales immediately after release as customers are attracted by the novelty of the product. D:Prices and costs tend to rise with the general level of inflation in the economy. 31.What is the present value (PV) of an investment that pays $100,000 every year for four years if the interest rate is 5% APR, compounded quarterly?
A:424581 B:353818 C:389200 D:459963 32.Credenza Industries is expected to pay a dividend of $1.70 at the end of the coming year. It is expected to sell for $62 at the end of the year. If its equity cost of capital is 9%, what is the expected capital gain from the sale of this stock at the end of the coming year?
A:5.12 B:56.88 C:3.56 D:58.44 33.A small business repairs its store. The builders charge them $130,000 which will be paid back in monthly installments over three years at 6.80% APR. The builders will reduce this rate to 6.30% APR if they pay $2600 up front. By approximately how much will this reduce the monthly loan repayments?
A:109 B:218 C:55 D:164 34.Athelstone Realty issues debt with a maturity of 20 years. In the case of bankruptcy, holders of this debt may claim the property held by Athelstone Realty. Which of the following best describes this type of corporate debt?
A:a mortgage bond B:a debenture C:an asset-backed bond D:a note 35.A portfolio has three stocks — 110 shares of Yahoo (YHOO), 210 Shares of General Motors (GM), and 70 shares of Standard and Poor's Index Fund (SPY). If the price of YHOO is $20, the price of GM is $20, and the price of SPY is $130, calculate the portfolio weight of YHOO and GM.
A:9.9%, 25.7% B:14.2%, 27.1% C:13.5%, 24.4% D:10.6%, 13.5% 36.If you want to value a firm but do not want to explicitly forecast its dividends, the simplest model for you to use is ________.
A:the discounted free cash flow model B:the dividend-discount model C:the enterprise value model D:None of the above models can be used if you do not want to forecast dividends or use of debt. 37.A company buys a color printer that will cost $16,000 to buy, and last 5 years. It is assumed that it will require servicing costing $500 each year. The equivalent annual annuity of this deal is $-4507, given a cost of capital of 8%?
A:对 B:错 38.The coupon payment of a 25-year $1000 bond with a 4.5% coupon rate with quarterly payments is $11.25
A:错 B:对 39.The relative proportions of debt, equity, and other securities that a firm has outstanding constitute its capital structure.
A:错 B:对 40.Luther Industries has $7 million in excess cash and 1.2 million shares outstanding. Luther is considering investing the cash in one-year Treasury bills that are currently paying 5% interest and then using the cash to pay a dividend next year. Alternatively, Luther can pay the cash out as a dividend immediately and the shareholders can invest in the Treasury bills themselves. Assume that capital markets are perfect. If Luther decides to pay the dividend immediately the dividend per share will be $11.67.
A:正确 B:错误 41.Before it matures, the price of any bond is always less than its face value.
A:错 B:对 42.Amazon.com stock prices gave a realized return of 15%, 15%, 15%, and 10% over four successive quarters. The annual realized return for Amazon.com for the year is 67.3%.
A:错 B:对 43.You are trying to decide between three mutually exclusive investment opportunities. The most appropriate tool for identifying the correct decision is net present value (NPV).
A:对 B:错 44.The practice of maintaining relatively constant dividends is called dividend smoothing.
A:对 B:错 45.The real interest rate is the rate of growth of one's purchasing power due to money invested.
A:对 B:错 46.Stocks have both diversifiable risk and undiversifiable risk, but only diversifiable risk is rewarded with higher expected returns.
A:错误 B:正确 47.Bonds with a high risk of default generally offer high yields.
A:对 B:错 48.Free cash flow measures the cash generated by a firm after payments to debt or equity holders are considered.
A:正确 B:错误 49.For a free-risk investment, the opportunity cost of capital will generally be more than the interest rate offered by U.S. Treasury securities with a similar term.
A:错误 B:正确 50.A growing perpetuity, where the rate of growth is greater than the discount rate, will have an infinitely large present value (PV).
A:错 B:对 51.A bond that makes payments in a certain currency contains the risk of holding that currency and so is priced according to the yields of similar bonds in that currency.
A:对 B:错 52.Effective annual rate (EAR) is the interest rate that would earn the same interest with annual compounding.
A:错 B:对 53.A firm's statement of cash flows uses the balance sheet and the income statement to determine the amount of cash a firm has generated and how it has used that cash during a given period.
A:错 B:对 54.A real option is the obligation to take a particular business action.
A:对 B:错 55.Gross profit is calculated as total sales minus cost of sales; cost of goods sold.
A:错 B:对 56.A firm is considering changing their credit terms. It is estimated that this change would result in sales increasing by $1,600,000. This in turn would cause inventory to increase by $125,000, accounts receivable to increase by $100,000, and accounts payable to increase by $90,000. The firm's expected change in net working capital is $135000
A:错 B:对
