All else equal, investors “like” ________ and “dislike” ________. A) risk; return. B) return; risk. C) standard deviation; risk. D) diversification; return. ANSWER B
Date: September 19th, 2020
Because dividends are taxed at the same rate as capital gains under the 2003 Tax Act, a firm’s strategy of paying low or no dividends primarily offers tax advantages to wealthy stockholders through tax deferral. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
How many randomly selected securities must be added to a portfolio so that on average almost all of the risk that can be diversified away has been diversified away? A) 1-3 B) 20 -30 C) 100-150 D) 450-550 ANSWER B
Date: September 19th, 2020
In establishing a dividend policy, a firm should retain funds for investment in projects yielding higher returns than the owners could obtain from external investments of equal risk. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The ________ ratio measures the extent to which a firm is able to cover its short-term obligations (usually defined as obligations due within the next year) with its short-term assets. A) ROE B) current C) inventory turnover D) working capital ANSWER B
Date: September 19th, 2020
Cost of sales is calculated by: A) adding the cost of inventory on hand at the start of the period minus the cost of any purchases of materials during the year and then subtract the cost of ending inventory. B) adding the cost of the inventory at the start of the period plus the cost […]
Date: September 19th, 2020
If a firm pays out a higher percentage of earnings, new equity capital will have to be raised with common stock, which will result in higher control and earnings for the existing owners. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
________ look at a firm’s ability to meet its long-term obligations, as well as its overall optimal use of debt. A) Leverage measures B) Profitability measures C) Liquidity measures D) Efficiency measures ANSWER A
Date: September 19th, 2020
A firm’s cost of capital is: A) the average cost of raising funds. B) the key driver of the overall value of the firm. C) reflects the required rate of return of investors and lenders. D) All of the above. ANSWER D
Date: September 19th, 2020
The statement of financial performance is known as the: A) statement of cash flows. B) statement of stockholders’ equity. C) balance sheet. D) income statement. ANSWER D
Date: September 19th, 2020
