Which of the following classes of U.S. securities have NOT averaged an annual rate of return that exceeds the average annual rate of inflation? (Data from 1926 – 2011) A) small company stocks B) large company stocks C) 90-day Treasury bills D) All of these classes of securities have averaged higher average annual rates of […]
Tony’s Beach T-Shirts has fixed annual operating costs of $75,000. Tony retails his T-shirts for $14.99 each and the variable cost per T-shirt is $4.99. Based on this information, the breakeven sales level in units is ________. A) 7,500 B) 15,030 C) 5,003 D) 3,754 ANSWER A
The pecking-order model of capital structure suggests the order in which firms prefer to raise capital is: A) debt, then retained earnings, then external equity. B) retained earnings, then debt, then external equity. C) preferred stock, then debt, then external equity. D) debt, then external equity, then retained earnings. ANSWER B
Managing the firm’s supply network is important because: A) the firm is reliant on the efforts of its supply network partners in order to produce its products and/or services. B) managers must manage the supply network for efficient, responsive procurement and distribution to meet their customers’ needs. C) plant or facilities management involves ensuring sufficient […]
A firm arranged for a 120-day bank loan at an annual rate of interest of 10 percent. If the loan is for $100,000, how much interest in dollars will the firm pay? (Assume a 360-day year.) A) $10,000 B) $30,000 C) $3,333 D) $1,000 ANSWER C
Your author describes an aspect of the 2007-2009 financial crisis concerning commercial paper and a financial instrument he refers to as an ABCP. Define an ABCP and the role it played in the financial crisis. What will be an ideal response? ANSWER The ABCP, or asset backed commercial paper market, consists of commercial […]
Rank the order of standard deviation of returns from highest to lowest for the following classes of U.S. securities for the time period 1926 – 2011. A) small stocks, large stocks, 30-year Treasury bonds, and 90-day T-bills B) large stocks, small stocks, 30-year Treasury bonds, and 90-day T-bills C) 90 -day T-bills, large stocks, 30-year […]
A firm has fixed operating costs of $253,750, a sales price per unit of $100, and a variable cost per unit of $65. The firm’s operating breakeven point in dollars is ________. A) $725,000 B) $700,000 C) $906,250 D) $390,385 ANSWER A
A firm arranges a discount loan at a 12 percent interest rate, and borrows $100,000 for one year. The stated interest rate is ________ and the effective interest rate is ________. A) 12.00%; 12.00% B) 13.64%; 12.00% C) 12.00%; 13.64% D) 12.00%; 10.71% ANSWER C
In a revolving credit agreement, the firm pays interest on ________. A) the full line of credit B) the unused portion of the line of credit C) the amount actually borrowed and compensating balance D) the amount actually borrowed and commitment fees on any unused portion of the loan ANSWER D
