Which type of dividend payment policy has the advantage that if a firm’s earnings drop, dividends will still be maintained at a relatively constant level? A) constant-payout-ratio policy B) regular dividend policy C) low-regular-and-extra dividend policy D) target dividend policy ANSWER B
Date: September 19th, 2020
The cost of preferred shares reflects the rate that the firm would need to offer if it issued new preferred shares today. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
If a firm anticipates stretching accounts payable, its cost of giving up a cash discount is reduced. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
For a project with ordinary cash flows (defined as negative initial cash flows followed by positive cash flows) and a positive NPV, which of the following statements is NOT necessarily true? A) The internal rate of return will be greater than the required rate of return. B) The modified internal rate of return will be […]
Date: September 19th, 2020
A grocery store chain with a high current ratio but a low quick ratio probably does not have a serious liquidity problem and would likely have little trouble selling inventory to meet the obligations of current liabilities. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The ________ is a popular and somewhat intuitive technique for estimating the required return on common equity. A) dividend model B) yield to maturity model C) future value model D) interest model ANSWER A
Date: September 19th, 2020
The problem with the regular dividend policy from a firm’s perspective is that ________. A) it regularly pays dividends which fluctuate with earnings B) if the firm’s earnings drop, the dividends may be low C) even when earnings are low, the company must pay a fixed dividend D) it increases the shareholders’ uncertainty […]
Date: September 19th, 2020
The ________ measure is similar to the yield to maturity measure for bonds. A) NPV B) IRR C) MIRR D) payback ANSWER B
Date: September 19th, 2020
The higher a firm’s long-term-debt-to-capital ratio is, the LESS financial risk the firm is taking on. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Which of the following does NOT represent cash outflows to the firm? A) Taxes B) Interest payments C) Dividends D) Depreciation ANSWER D
Date: September 19th, 2020
