Larger firms and those with better credit ratings tend to also have less strict capital structure targets. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
What is the present value of $3,500 received 3 years from today if the prevailing interest rate is 6.10%? A) $2,732.98 B) $2,930.37 C) $3,625.14 D) $4,192.20 ANSWER B Explanation: B) PV = FV/(1+r)^n = $3,500/((1.0610 )^3 ) = $2,930.37.
Date: September 19th, 2020
During the past year the growth corporation increased its sales from $1,000,000 to $2,000,000 and its EBIT from $250,000 to $400,000. The result of this growth will be A) a higher operating profit margin and higher net income. B) a lower operating profit margin and higher net income. C) a lower operating profit margin and […]
Date: September 19th, 2020
A “normal” yield curve is A) upward sloping, then downward sloping. B) upward sloping. C) downward sloping, then upward sloping. D) downward sloping. ANSWER B
Date: September 19th, 2020
Consider the equation for present value. If you wished to increase the present value of a future amount by changing only one variable, which of the following actions should you take? A) increase the time period B) decrease the future value C) decrease the interest rate D) This statement cannot be answered with the information […]
Date: September 19th, 2020
Auto loan payments are an example of an inflexible expense. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Mary has developed a diet pill for obesity. She wants to create a new company with a major drug company. She is concerned about liability if someone becomes sick or dies after using the diet pill. What is the best form of business organization for the new company? A) A sole proprietorship B) General partnership […]
Date: September 19th, 2020
A cash management strategy does not involve which of the following activities? A) Deciding to your satisfaction what future interest rates will be B) Balancing your desires for safety, liquidity, and yield C) Obtaining information about alternative deposit accounts D) Keeping as little cash as possible ANSWER D
Date: September 19th, 2020
Given an identical contract rate, which of the following methods for determining finance charges provides the smallest monthly payment on an installment loan? A) Simple interest method B) Discount method C) Add-on method D) The monthly payment is the same under all three methods listed above. ANSWER A
Date: September 19th, 2020
Published betas are typically levered betas not unlevered betas if the firm in question has debt in its capital structure. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
