Which of the following is NOT a use of cash from investing activities? A) Proceeds from the sale of a business B) Investment in fixed assets C) Payment of dividends D) Both A and C ANSWER D
Date: September 19th, 2020
Transit Design Inc. recently paid a $1.00 dividend, has a beta of 0.75, has determined that the market risk premium is 10% and the current risk-free rate is 4%. What is the firm’s required return on equity? A) 14.00% B) 14.50% C) 11.50% D) 8.50% ANSWER C Explanation: C) r = rf + […]
Date: September 19th, 2020
In case of stock dividend, the shareholder’s proportion of ownership in a firm remains the same, and as long as the firm’s earnings remain unchanged, so does his or her share of total earnings. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The interested reader of a firm’s annual report will find which of the following to be of little value? A) Management’s discussion and analysis of financial conditions. B) Legal proceedings in which the firm is involved. C) A description of the firm’s operations and strategy. D) None of the above. Each item identified is of […]
Date: September 19th, 2020
1/15 net 30 date of invoice translates as ________. A) a 1 percent cash discount may be taken if paid in 15 days; if no cash discount is taken, the balance is due in 30 days after the middle of the month B) a 1 percent cash discount may be taken if paid in 15 […]
Date: September 19th, 2020
Which of the following is typically considered to be the most appropriate proxy for the risk-free rate when applying the CAPM? A) 10-year Treasury bonds B) 10-year AAA bonds C) the prime rate D) the firm’s current yield to maturity on outstanding debt ANSWER A
Date: September 19th, 2020
Which of the following statement i s NOT accurate? Financial statements serve a number of purposes: A) from a lender’s perspective they often form the basis for covenant restrictions. B) financial ratios are useful for planning and budgeting purposes C) financial ratios are only useful when using book values because market values change almost continuously […]
Date: September 19th, 2020
The IRR method of capital budgeting tells us what particular discount rate will result in a ________ NPV project. A) positive B) negative C) zero D) none of the above ANSWER C
Date: September 19th, 2020
An advantage of a ________ is that it avoids giving shareholders false hopes. A) constant-payout-ratio policy B) regular dividend policy C) low-regular-and-extra dividend policy D) target dividend policy ANSWER C
Date: September 19th, 2020
Some analysts claim that the true value of ratio analysis is not that ratios answer our questions, but rather that they help us ask better questions. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
