If a firm has a positive debt-equity ratio, and a positive tax rate, then then levered beta for the firm must be ________ the unlevered beta for the firm. A) less than B) greater than C) equal to D) Can not definitively answer this question. ANSWER B
Date: September 19th, 2020
What has brought on the era of the multinational corporation? What will be an ideal response? ANSWER In the search for profits, U.S. corporations have been forced to look beyond our country’s borders. This movement was spurred on by the collapse of communism and the acceptance of the free market system in Third […]
Date: September 19th, 2020
Which of the following securities will likely have the highest default risk premium? A) Bbb-rated corporate bond maturing in 2020 actively traded on a major exchange B) Aaa-rated corporate bond maturing in 2015 not actively traded C) U.S. Treasury bond maturing in 2027 D) U.S. Treasury bill ANSWER A
Date: September 19th, 2020
Carl Lee lost his wallet at the beach five days ago. Carl is sure there were three credit cards in the lost wallet. Assuming he’s right and notifies the banks, Carl can lose as much as ________, assuming he has no private insurance protection. A) $ 150 B) $500 C) $650 D) unlimited losses […]
Date: September 19th, 2020
If a firm is trying to grow more rapidly, which of the following identifies a non-financially-related course of action? A) increase the retention ratio B) reduce dividends C) increase asset turnover D) increase the debt to equity ratio ANSWER C
Date: September 19th, 2020
In a surety arrangement, the party who benefits from the bond if the bonded party fails to perform is the A) principal. B) obligee. C) fidelity. D) surety. ANSWER A) principal. B) obligee. C) fidelity. D) surety. Answer: B
Date: September 19th, 2020
Al’s Electric Service is an electric contracting company in Metro City. The owner of the company, Al Richards, posted a bond guaranteeing that all work performed by his company will comply with local building codes. This bond is an example of a A) fiduciary bond. B) license and permit bond. C) contract bond. D) judicial […]
Date: September 19th, 2020
If a firm has an unlevered beta equal to 1.0 a debt-equity ratio of .50 and a tax rate of .30, calculate the value of the firm’s levered beta. A) 0.65 B) 1.00 C) 1.35 D) 1.73 ANSWER C Explanation: C) βL = (1+(D/E)(1-t))* βU = (1+(.50)(1-.30)*1 = 1.35.
Date: September 19th, 2020
An automobile is usually an example of a lifestyle asset. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
In the search for profits, U.S. corporations have been forced to look beyond our country’s borders. All of the following contributed to the movement EXCEPT A) acceptance of the free market system in Third World countries. B) collapse of communism. C) information technology revolution. D) trade protectionism. ANSWER D
Date: September 19th, 2020
