In the over-the-counter market, dealers are linked with the purchasers and sellers of securities through the ________ system. A) NASDAQ B) NYSE C) AMEX D) SEC E) NYMEX ANSWER A
Date: September 19th, 2020
You estimate that if a new 4D computer graphic display product is launched by your firm, revenues will increase by $3,053 in the first year and 10% each year for the next 3 years. Expenses will be 50% of revenues. Depreciation is computed using MACRS for an asset with a 3-year life and a basis […]
Date: September 19th, 2020
Swanson & Sons has two separate divisions. Each division is in a separate line of business. Division A is the largest division and represents 65 percent of the firm’s overall sales. Division A is also the riskier of the two divisions. Division B is the smaller and least risky of the two. When the company […]
Date: September 19th, 2020
The over-the-counter market is A) the New York Stock Exchange. B) an organized stock exchange. C) a physical place where securities are bought and sold. D) an intangible market for unlisted securities. E) where commodities futures are bought and sold. ANSWER D
Date: September 19th, 2020
If a firm applies its overall cost of capital to all its proposed projects, then the divisions within the firm will tend to: A) receive more funding if they represent the riskiest operations of the firm. B) avoid risky projects so that they will receive more funding. C) become less risky over time based on […]
Date: September 19th, 2020
Which of the following statements is true regarding common and preferred shares? A) Preferred shareholders have more voting power than common shareholders. B) Common shareholders are guaranteed a fixed dividend. C) Common shareholders have a more senior claim against assets than preferred shareholders. D) Preferred shareholders are entitled to their dividends before common shareholders E) […]
Date: September 19th, 2020
The Boeing Corp is considering building a new aircraft, the 787–larger than the 747 and larger than the Airbus A380. The company’s Renton WA Facility, where 747s are currently manufactured, would have to be expanded. Expansion costs are forecast to be $2.5B, incurred at t = 0. Also at time t = 0, before production […]
Date: September 19th, 2020
Last month, Springfield Power Co announced that shareholders of record on this coming Friday will receive a dividend of $4.5 per share. (Assume that the dividend will also be paid on Friday). After this Friday, the next dividend is expected in one year’s time. Dividends are expected to be paid annually in perpetuity and are […]
Date: September 19th, 2020
What is the interest tax shield? A) The tax increase to deter companies from using too much debt B) The amount by which taxes are reduced due to interest tax deductibility C) The tax benefit given to companies for buying bonds D) The benefit from not reporting interest income E) The decrease in taxes paid […]
Date: September 19th, 2020
Benson’s, Inc has an overall cost of equity of 10.24 percent and a beta of 1.2. The firm is financed 100 percent with common stock. The risk-free rate of return is 4 percent. What is an appropriate cost of capital for a division within the firm that has an estimated beta of 1.5? A) 11.6 […]
Date: September 19th, 2020
