1) If a firm's quick ratio is equal to its current ratio:

A) It has a low level of current liabilities.

B) It has no inventory.

C) It faces a potentially serious liquidity crisis.

D) It is in a loss-making position.

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2) An all-equity firm reports a net profit margin of 10% on sales of $3 million. If the tax rate is 40%, what is the pretax profit

A) $100,000

B) $300,000

C) $500,000

D) $800,000

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3) Which of the following statements is correct for a 10% coupon bond that has a current yield of 7%?

A) The face value of the bond has decreased.

B) The bond's maturity value exceeds the bond's price.

C) The bond's internal rate of return is 7%.

D) The bond's market value is higher than its face value.

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4) What is the current yield of a bond with a 6% coupon, 4 years until maturity, and a price quote of 84?

A) 6.00%

B) 7.14%

C) 5.04%

D) 6.38%

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5) You purchased a 6% annual coupon bond at face value and sold it one year later for $1,015.16. What was your rate of return on this investment if the face value at maturity was $1,000?

A) 4.48%

B) 6.15%

C) 7.52%

D) 6.07%

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6) Which one of the following is more likely to be responsible for a firm having a low PVGO?

A) ROE exceeds required return.

B) Plowback is very high.

C) Market value of equity is close to book value.

D) Book value of equity is low.