In response to the banking crisis and economic collapse of 2007 and 2008, the U.S. government moved to increase interest rates in order to attract foreign capital seeking high returns in U.S. banks. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
According to an international survey of CFOs of publicly traded firms, which of the following was NOT considered to be an important factor in determining the optimal amounts of debt in a firm’s capital structure? A) Credit ratings B) The tax shield C) The ability to maintain dividends D) All of the above were considered […]
Date: September 19th, 2020
The Truth in Lending Act (TILA) requires creditors A) to inform you of the amount of monthly interest but not how it is determined. B) to tell you the APR, the interest rate applicable during a period, and the method used to determine the balance to which the rate is applied. C) to inform you […]
Date: September 19th, 2020
Which of the following checks does not guarantee payment? A) A personal check with a restrictive endorsement B) A certified check C) A cashier’s check D) A traveler’s check ANSWER A
Date: September 19th, 2020
Limited partnerships are not as prevalent as corporations because: A) limited partners can lose up to three times the amount they invested in the partnership if the business goes bankrupt. B) limited partnerships have the disadvantage of double taxation. C) the general partner has no liability, making it difficult for the partnership to borrow money. […]
Date: September 19th, 2020
If sales growth is SLOWER than the sustainable growth rate then the ROE is also lower. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
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
