_____ 1.) A convertible bond sells for $860 and has a conversion ratio of 40. If the stock price of the

company is currently $18, what is the percent conversion premium for the bond?

A.) 0%

B.) 5.88%

C.) 16.28%

D.) 19.44%

E.) None of the above

_____ 2.) A company has a tax burden ratio of 0.4, a compound leverage factor of 0.6, a return on sales of 0.9, a leverage ratio of 0.7, and an asset turnover of 0.3. What is the ROE for the company?

A.) 2.90%

B.) 4.54%

C.) 6.48%

D.) 11.4%

E.) None of the above

_____ 3.) A company reports $600 million in total current assets, $300 million in total long-term assets, $500 million in total liabilities, and $300 million in current liabilities. What is the total shareholders

equity for the company?

A.) $100 million

B.) $400 million

C.) $500 million

D.) $1.7 billion

E.) None of the above

_____ 4.) You are in the 24% federal tax bracket. You are offered a taxable bond with a yield of 7.8%, and a municipal bond with a yield of 6.2%. What is the breakeven federal tax rate where you are indifferent regarding purchasing the taxable bond or the municipal bond? Should you buy the municipal bond or the taxable bond?

A.) 20.51% breakeven tax bracket; you should buy the municipal bond

B.) 20.51% breakeven tax bracket; you should buy the taxable bond

C.) 30.67% breakeven tax bracket; you should buy the municipal bond

D.) 30.67% breakeven tax bracket; you should buy the taxable bond

E.) None of the above

_____ 5.) A company has $80 million in total assets, $15 million in notes payable, and $50 million in

long-term debt. What is the debt ratio of the company?

A.) 18.8%

B.) 62.5%

C.) 81.3%

D.) None of the above