How much would you be willing to pay (rounded to the nearest dollar) for a 20-year ordinary annuity if the payments are $4,500 per year and you want to earn a rate of return equal to 5.5% per year? A) $63,445 B) $84,500 C) $56,734 D) $53,777 ANSWER D
Date: September 19th, 2020
Cash flows between investors and the firm, what we call financing cash flows, occur in one of four ways EXCEPT: A) Pay stock dividend. B) Increase or decrease interest-bearing debt. C) Pay interest to lenders. D) Pay dividends to stockholders. ANSWER A
Date: September 19th, 2020
John Box Inc. has an annual interest expense of $30,000 and pays income tax equal to 40 percent of taxable income (EBT). John Box’s times-interest-earned ratio is 4.2. What is John Box’s net income? A) $57,000 B) $126,000 C) $57,600 D) $96,000 ANSWER C
Date: September 19th, 2020
In a recent comprehensive survey, corporate CFOs were asked why they did NOT use more equity in their capital structure. Which of the following choices was NOT cited by 50% or more of the CFOs responding to the survey? A) EPS dilution B) Concerns that equity was not the least expensive form of financing C) […]
Date: September 19th, 2020
Overdue bills are noncurrent liabilities. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Which of the following types of risk is diversifiable? A) systematic risk B) betagenic, or ecocentric risk C) market risk D) unsystematic, or company-unique risk ANSWER D
Date: September 19th, 2020
One of the advantages of a sole proprietorship is: A) limited liability for its owners. B) double taxation for its owners. C) complexity of transferring ownership. D) no significant legal requirements for starting the business. ANSWER D
Date: September 19th, 2020
Lenny, who lives in New York City, deposited in his checking account a certified check from his mother, who also lives in New York City. The bank must make the funds available A) immediately. B) on the next business day. C) two days after the deposit day. D) after the check clears the Federal Reserve […]
Date: September 19th, 2020
A promissory note and a security agreement A) must go together on any consumer loan. B) are actually the same thing one is used with a credit card while the other applies to a cash loan. C) are different the promissory note shows details of the loan while the security agreement gives the creditor an […]
Date: September 19th, 2020
Which of the following measures the average relationship between a stock’s returns and the market’s returns? A) coefficient of validation B) geometric regression C) standard deviation D) beta coefficient ANSWER D
Date: September 19th, 2020
