Pro forma financial statements may be valuable for which of the following reasons? A) To help us estimate how profitable a firm is expected to be B) To help determine if and how much debt financing is required C) To help banks determine if firms are likely to meet lending standards D) All of the […]
Date: September 19th, 2020
Based on the information in Table 4-2, and assuming the company’s stock price is $50 per share, the P/E ratio is A) 24.44. B) 27.50. C) 10.89. D) 14.33. ANSWER C
Date: September 19th, 2020
Tom opened a store in a mall. His store is located between a theater and a department store. Tom counts on the theater and department store to generate walk-in business at his store While his store has been successful, Tom knows that if either or both of the other businesses closed, his store would suffer […]
Date: September 19th, 2020
Beta represents the average movement of a company’s stock returns in response to a movement in the market’s returns. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Financial Managers rely on the firm’s ________ department to relay key financial data, such as cash flow statements, to aid in capital budgeting and financing decisions. A) human resources B) accounting C) marketing D) operations ANSWER B
Date: September 19th, 2020
CompuFix services desktop and laptop computers. The owner of CompuFix is concerned that computers that are left with the business to be repaired may be damaged or destroyed. To address this risk, CompuFix should purchase A) mobile equipment and property insurance. B) coverage for property held by bailees. C) coverage for property of dealers—a “block” […]
Date: September 19th, 2020
What are the three major functions of an investment banker? What will be an ideal response? ANSWER The investment banker performs three basic functions: (1 ) underwriting, (2 ) distributing, and (3 ) advising. Underwriting: The term underwriting is borrowed from the field of insurance. It means assuming a risk. The investment banker […]
Date: September 19th, 2020
Consider a corporation that was originally 100% family owned. Which of the following statements is TRUE? A) Each time the company issues new shares family control may be reduced. B) If the family owns more than 50% of the shares they still have effective control of the firm. C) Even if the family owns less […]
Date: September 19th, 2020
Inter-Ocean Transfer owns 12 large cargo ships which transport goods. Inter-Ocean Transfer can obtain physical damage insurance on these vessels by purchasing A) hull insurance. B) cargo insurance. C) protection and indemnity insurance. D) freight insurance. ANSWER Answer: A
Date: September 19th, 2020
You own an annuity due contract that will pay you $3,000 per year for 12 years. You need money to pay back a loan in 5 years, and you are afraid if you get the annuity payments annually you will spend the money and not be able to pay back your loan. You decide to […]
Date: September 19th, 2020
