Operating profits or EBIT is used to measure a firm’s profits on assets because it does not include the firm’s cost of debt financing. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Accounting profits is the most relevant variable the financial manager uses to measure returns. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The CEO of JLI Corp. decided to expand into a new market in 2010. At the end of 2010, JLI’s stock price had decreased 5% since the beginning of the year. Which of the following statements is MOST correct? A) The CEO made a poor decision to expand because the stock price decreased during the […]
Date: September 19th, 2020
A car manufacturer offers either $2,000 cash back or zero percent financing for 5 years. A rational consumer will always take the cash back because money received today is worth more than money received in the future. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Which of the following is NOT a benefit provided by the existence of organized security exchanges? A) establishing and publicizing fair security prices B) standardization of all debt agreements C) helping businesses raise new capital D) providing a continuous market ANSWER B
Date: September 19th, 2020
Insurance companies invest in the “long-end” of the securities market by purchasing securities with longer maturities. In which of the following instruments would an insurance company be least likely to invest most of its assets? A) corporate stocks B) mortgages C) corporate bonds D) commercial paper ANSWER D
Date: September 19th, 2020
Artificially low interest rates helped create the housing bubble because low interest rates (r value) create higher values (higher PVs). Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The CEO of High Tech International decides to change an accounting method at the end of the current year. The change results in reported profits increasing by 5%, but the company’s cash flows are not changed. If capital markets are efficient, then A) the stock price will increase only if the accounting change will also […]
Date: September 19th, 2020
In August 2004, Google first sold its common stock to the public at $85 per share and raised $1.76 billion. This is an example of A) a secondary market transaction. B) a money-market transaction. C) a venture capital firm transaction. D) a primary market transaction. ANSWER D
Date: September 19th, 2020
Additional Paid in Capital on the balance sheet equals the amount paid by investors for the company’s common stock that exceeds the market price of the stock at the time of purchase. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
