Which of the following lessons from the Great Recession is NOT true? A) The financial crisis really drove home the point that capital structure DOES matter in that firms with too much debt suffered greatly. B) Firms that relied too much on short-term financing were severely affected by the global liquidity crisis. C) Capital markets […]
Standard Inc. has an annual interest expense of $40,000. If Standard’s times-interest-earned ratio is 3.0, what is Standard’s Earnings Before Taxes (EBT)? A) $47,000 B) $80,000 C) $160,000 D) $120,000 ANSWER B
The true owners of the corporation are the: A) holders of debt issues of the firm. B) board of directors of the firm. C) creditors. D) common stockholders. ANSWER D
A firm that grows too rapidly risks requiring too LITTLE financial leverage. Indicate whether the statement is true or false ANSWER FALSE
The Druid Fund has a NAV of $9.00 and an offer price of $9.45. We know, then, that A) Druid is a load fund. B) Druid is about to be issued to the public as a no-load fund with a $0.45 offer cost. C) shares can be purchased only through a stockbroker. D) there is […]
Consider the four components identified by the author in the sustainable growth equation. Which if nay of these components are heavily influenced by executive management? What will be an ideal response? ANSWER Each of the four components is heavily influenced by management. The profit margin is a function of how well managers control […]
Assume that you have $165,000 invested in a stock whose beta is 1.25, $85,000 invested in a stock whose beta is 2.35, and $235,000 invested in a stock whose beta is 1.11. What is the beta of your portfolio? A) 1.85 B) 1.57 C) 1.37 D) 2.01 ANSWER C
The distinguishing feature of a corporation is that: A) a corporation is a legally defined, artificial being, separate from its owners. B) there are no legal differences between the corporation and its owners. C) it spreads the liability for its corporate obligations to all shareholders. D) it provides limited liability only to small shareholders. […]
A redemption charge is a A) back-end load. B) font-end load. C) management fee. D) carrying fee. ANSWER A
Based on the information contained in Tables 4-5, what was the total amount of Yen’s common stock dividend for 2010? A) $9,000 B) $8,000 C) $12,800 D) $17,000 ANSWER A
