Rogue Corp. has sales of $4,250,000; the firm’s cost of goods sold is $2,500,000; and its total operating expenses are $600,000. The firm’s interest expense is $250,000, and the corporate tax rate is 40%. What is Rogue’s tax liability? A) $600,000 B) $360,000 C) $260,000 D) $258,000 ANSWER B
Date: September 19th, 2020
Tenth National Bank extended a $2 million loan to ABC Development Company. Tenth National accepted a mortgage on a building as collateral for the loan. The mortgagee’s signature on the loan, however, was a forgery. The resulting loss is covered by which financial institution bond coverage? A) Insuring Agreement A— Fidelity B) Insuring Agreement D—Forgery […]
Date: September 19th, 2020
A firm that is growing more slowly than its sustainable growth rate may generates excess cash. If the firm chooses to keep the excess cash which of the following is NOT true? A) Holding on to excess cash may signal OVER utilization of assets. B) Holding on to excess cash often is a negative stock […]
Date: September 19th, 2020
By definition, a lifestyle asset must depreciate over time. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
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
What are the differences between GAAP and IFRS? What will be an ideal response? ANSWER The United States follows Generally Accepted Accounting Principles (GAAP). GAAP is rule-based accounting standards established by the Financial Accounting Standards Board (FASB). It sets out the standards, conventions, and rules that accountants must follow when preparing audited financial […]
Date: September 19th, 2020
State X hired Build-Right Construction to build a bridge. State X required that construction be completed within 2 years after the contract was signed. Les Johnson is the president of Build-Right. State X required that Build-Right’s promise to perform be guaranteed by a third party. Build-Right purchased a performance bond from Rock Solid Indemnity. The […]
Date: September 19th, 2020
Which of the following is/are true? A) Two points on the Characteristic Line are the T-bill and the market portfolio. B) Most of the unsystematic risk is removed by the time a portfolio contains 30 stocks. C) The greater the total risk of an asset, the greater the expected return. D) All securities have a […]
Date: September 19th, 2020
