Which of the following equations represents a simple and effective way to think about anticipated external funding? A) External funds required = assets – liabilities – equity B) External funds required = assets + liabilities – equity C) External funds required = assets + liabilities + equity D) External funds required = assets – liabilities […]
Which of the following statements about the Homeowners 6 (unit-owners form) policy is true? A) It includes personal liability coverage. B) It covers personal property on an open-perils basis. C) It covers the dwelling on an open-perils basis. D) It is designed for tenants who rent an apartment or a home. ANSWER Answer: […]
Which of the following transactions will increase a corporation’s operating return on assets? A) sell 10-year bonds and use the money to pay off current liabilities B) negotiate a new contract that lowers raw material costs by 10% C) sell stock and use the money to pay off some long-term debt D) increase sales by […]
Assume that you have $330,000 invested in a stock that is returning 11.50%, $170,000 invested in a stock that is returning 22.75%, and $470,000 invested in a stock that is returning 10.25%. What is the expected return of your portfolio? A) 12.9% B) 14.8% C) 18.3% D) 15.6% ANSWER A
A bond maturing in 10 years pays $80 each year (including year 10 ) and $1,000 upon maturity. Assuming 10 percent to be the appropriate discount rate, the present value of the bond is A) $1,000.00. B) $877.11. C) $416.39. D) $1,785.67. ANSWER B
A financial manager is considering two projects, A and B; both are expected to add $5 million to profits. Project A is expected to add $5 million to profits this year, while Project B is expected to add $1 million to profits each year over the next five years. Which of the following statements is […]
Based on the information in Table 3-1, calculate the amount of dividends paid by Jones Company in 2010 (no assets were disposed of during the year, and there was no change in interest payable or taxes payable). A) $4,000 B) $2,000 C) $3,500 D) $2,500 ANSWER B
A group of investment bankers organized to distribute large securities issues is known as a syndicate. Indicate whether the statement is true or false ANSWER TRUE
Which of the following goals are in the best long-term interest of shareholders? A) Profit maximization B) Risk minimization C) Maximizing the market value of the existing shareholders’ common stock D) Maximizing sales revenue ANSWER C
The manager of Golden Ray Corporation receives a bonus if company profits exceed $1,000,000 this year. During the final week of the year, the manager changes an accounting policy that will increase reported profits from $950,000 to $1,025,000, triggering his bonus. The change in profits of $75,000 will reverse itself in the next year, and […]
