________ measures such as debt-to-capital along with coverage ratios focus on a firm’s ability to meet its long-term debt obligations, as well as its optimal use of debt. A) Liquidity B) Leverage C) Profitability D) Resource management ANSWER B
Date: September 19th, 2020
Freightway Trucking Inc uses the CAPM to help estimate their cost of equity. Given the following information, what is the firm’s estimated cost of equity? The risk-free return in the market is currently 3%, the market risk premium is 8%, the expected return on the market portfolio if 11% and the firm has a beta […]
Date: September 19th, 2020
The market risk premium represents the expected difference between: A) the return on AAA bonds and Treasury bonds. B) the prime rate and the 3-month Treasury bill rate. C) the return on the stock market and the return on preferred shares. D) the return on the stock market investment and the risk-free return. […]
Date: September 19th, 2020
The payment of a stock dividend is a shifting of funds between stockholders’ equity accounts rather than an outflow of funds. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
What is the Internal Rate of Return (IRR) for the cash flows provided in the table below? Note: The negative cash flow for year 0 is the initial investment for the project. The required rate of return is 8%. Year Cash Flow 0 -$100,000 1 $45,000 2 $45,000 3 $45,000 A) 8.00% B) 9.70% C) […]
Date: September 19th, 2020
Accruals and accounts payable are ________. A) negotiated and secured sources of long-term financing B) negotiated and unsecured sources of short-term financing C) secured sources of short-term financing D) spontaneous and unsecured sources of short-term financing ANSWER D
Date: September 19th, 2020
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
If a project has a ________ NPV, it should also have an IRR ________ the hurdle rate. A) positive; greater than B) positive; less than C) negative; greater than D) negative; equal to ANSWER A
Date: September 19th, 2020
The author presents the Return on Equity (ROE) as one of our most important benchmarks because it measures the return to the owners of the firm. because stockholders own the firm, maximizing their returns is considered an important goal. Use the DuPont method to de construct the ROE into three components and briefly discuss what […]
Date: September 19th, 2020
The advantage of using the extra dividend policy is that ________. A) a firm can avoid giving false hopes to shareholders B) if a firm’s earnings drop, so does the dividend payment C) the extra dividend may become a regular event D) cyclical shifts in earnings may be avoided ANSWER A
Date: September 19th, 2020
