You are ready to retire. A glance at your 401(k) statement indicates that you have $750,000. If the funds remain in an account earning 9.0%, how much could you withdraw at the beginning of each year for the next 25 years? A) $55,620 B) $35,830 C) $2,500 D) $70,050 ANSWER D
Date: September 19th, 2020
Acme Incorporated has a debt ratio of .42, noncurrent liabilities of $20,000 and total assets of $70,000. What is Acme’s level of current liabilities? A) $9,400 B) $12,348 C) $10,600 D) $8,400 ANSWER A
Date: September 19th, 2020
Distinguish between the concepts of the maturity-risk premium and the liquidity-risk premium. What will be an ideal response? ANSWER Maturity-risk premium is the additional return required by investors in longer-term securities to compensate them for greater risk of price fluctuations on those securities caused by interest rate changes. Liquidity-risk premium is the additional […]
Date: September 19th, 2020
Financial progress is measured more appropriately by an increase in net worth rather than by an increase in total assets. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Corporations tend to be MORE reluctant to increase dividends than to cut them. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
How can investors reduce the risk associated with an investment portfolio without having to accept a lower expected return? A) Increase the amount of money invested in the portfolio. B) Purchase a variety of securities; i.e., diversify. C) Purchase stocks that have exceptionally high standard deviations. D) Wait until the stock market rises. […]
Date: September 19th, 2020
Big City Lumber Inc. has a levered beta of 1.70, a debt-equity ratio of 0.40, and a tax rate of 25%. What is the value of the firm’s unlevered beta? A) 0.78 B) 1.00 C) 1.31 D) 1.70 ANSWER C Explanation: C) βU = βL / (1 + (D/E) (1-t)) = 1.70/(1 + […]
Date: September 19th, 2020
Comparing a credit card with a debit card indicates that A) they are identical except that debt card can be used in more places. B) they are identical except some lenders prefer the name “debit card” over “credit card.” C) debit cards charge higher rates of interest. D) consumer protection with a credit card is […]
Date: September 19th, 2020
In the United States, financial statements are prepared following the Financial Accounting Standards Board’s generally accepted accounting principles (GAAP). Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Septon Inc. has an average collection period of 74 days. What is the accounts receivable turnover ratio for Septon Inc.? A) 2.66 B) 4.93 C) 2.47 D) 1.74 ANSWER B
Date: September 19th, 2020
