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
Dynamo Engines Inc., has an ROA of 10%, a profit margin of 6%, an assets to equity ratio of 1.30 and a retention ratio of 0.70. What is the firm’s sustainable growth rate? What will be an ideal response? ANSWER Sustainable growth rate = ROE * b, where b is the retention ratio. […]
A real interest rate is the interest rate on a fixed-income security that has no risk in an economic environment of high inflation. Indicate whether the statement is true or false ANSWER FALSE
Some financial institutions offer continuous compounding. This means that A) your effective yield will be about 20% higher than daily compounding. B) your effective yield will be only slightly higher than daily compounding. C) in reality they are offering only simple interest. D) you must deposit at least $10,000 to open an account offering this […]
Interest is deducted from the credit extended at the beginning of the loan under the A) simple interest method. B) add-on interest method. C) discount interest method. D) Rule of 78. ANSWER C
Assume that you have $100,000 invested in a stock whose beta is .85, $200,000 invested in a stock whose beta is 1.05, and $300,000 invested in a stock whose beta is 1.25. What is the beta of your portfolio? A) 0.97 B) 1.21 C) 1.02 D) 1.12 ANSWER D
Which of the following does your author suggest is NOT a lesson learned from the the Great Recession of 2007 -2009? A) Individuals and firms that took on too much debt suffered dramatically. B) Firms and individuals that relied too heavily on short-term debt to finance long-term assets suffered when financial liquidity dried up. C) […]
Which of the following statements about the corporate form of business organization is TRUE? A) The corporate form has the disadvantage of double taxation relative to a sole proprietorship. B) The corporate form is preferred over the sole proprietorship because a corporation is easier to form and faces less regulation. C) Sole proprietorship is the […]
