Generally speaking, when the information is available, investors prefer to use ________ rather than ________ when evaluating a firm. A) past data; current data B) market values; book values C) current data; market values D) book values; market values ANSWER Answer: B
Date: September 19th, 2020
Market values require multiplying the ________ of each component source of capital by the ________. A) price; quantity B) book value; quantity C) price; book value D) None of the above ANSWER Answer: A
Date: September 19th, 2020
The ________ of an asset or liability is its cost carried on the balance sheet. A) market value B) book value C) hybrid value D) theoretical value ANSWER Answer: B
Date: September 19th, 2020
The cash conversion cycle is the total number of days in the operating cycle less the average payment period for inputs to production. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
By efficiently managing a firm’s operating and cash conversion cycles, the financial manager can maintain a high level of cash investment and thereby contribute toward maximization of share value. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
When possible, investors and analysts prefer to use book value to market value for estimating the WACC. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: When possible, investors and analysts prefer to use MARKET value to BOOK value for estimating the WACC.
Date: September 19th, 2020
A typical involves changing some aspect the firm’s internal corporate governance, such as the structure or composition of a firm’s board of directors. a. proxy contest b. shareholder-initiated proposal c. initiation procedure d. takeover contest ANSWER B
Date: September 19th, 2020
The formula for the adjusted WACC = × Rd + × Rps + × Re × (1 – Tc). Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: The formula for the adjusted WACC = × Rd × (1 – Tc) + × Rps + × Re.
Date: September 19th, 2020
The following information comes from the balance sheet of Roamer Enterprises. The value of common stock is $60,000, retained earnings equal $40,000, total common equity equals $100,000, preferred stock has a value of $10,000 and long-term debt totals $120,000. For purposes of estimating the firm’s WACC, what are the weights of long-term debt, preferred stock, […]
Date: September 19th, 2020
To estimate the market value of a publicly traded bond that has a broad market with frequent trading, it is usually best to multiply the number of bonds outstanding by the bond par value. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: To estimate the market value of a […]
Date: September 19th, 2020
