25 multiple choice questions. I need the answers within 1 hour. QUESTION 5

1. Which of the following specialized initial public offerings results in the formation of a legally separate firm?

   A.	both equity carve-outs and spin-offs
   B.	only tracking stocks
   C.	only equity carve-outs
   D.	only spin-offs
   E.	both tracking stocks and equity carve-outs

3.3334 points

QUESTION 6

1. Your firm has sales of $10,000,000, net income of $800,000, total assets of $10,000,000, and equity of $4,000,000. Your firm projects an increase in sales of 15 percent and has a dividend payout ratio of 30 percent? What is the sustainable growth rate, g?

   A.	16.28%
   B.	18.95%
   C.	14.32%
   D.	10.76%
   E.	12.57%

3.3334 points

QUESTION 7

1. What type of collection system is characterized by many collection points where transactions are received at retail outlets or collection offices?

   A.	Field-banking system
   B.	Lock-box systems
   C.	Automated clearinghouse systems
   D.	Electronic systems

3.3334 points

QUESTION 8

1. On average stock prices usually ______ when firms announce plans to conduct SEOs (Seasoned Equity Offerings).

   A.	fall 3%
   B.	fall 10%
   C.	fall 23%
   D.	rise 4%
   E.	rise 8%

3.3334 points

QUESTION 9

1. A $200,000 face value, 182-day Treasury Bill is currently selling at a quoted discount of 5.9%. What are the money market yield (MMY) and the bond equivalent yield (BEY)? (YOU MAY WANT TO SAVE YOUR CALCULATIONS FOR THE OTHER RELATED QUESTION.)

   A.	7.545%; 7.758%
   B.	5.784%; 5.891%
   C.	7.137%; 7.288%
   D.	6.081%; 6.166%
   E.	6.835%; 6.924%

3.3334 points

QUESTION 10

1. Barneycles Boat Shop sells 4,000 of its glow-in-the-dark boats each year and has fixed order costs of $180.61 per order. Carrying cost per boat is $200 per year. What is the optimal order quantity for these boats?

   A.	94
   B.	85
   C.	1800
   D.	170
   E.	133

3.3334 points

QUESTION 11

1. The key input required to build a cash budget is ______.

   A.	the external funds required
   B.	the cash disbursements
   C.	the sustainable growth model
   D.	the strategic plan
   E.	the firm's sales forecast

3.3334 points

QUESTION 12

1. Employing the EFR model, how much external funding will a firm require if it plans to increase sales from $2 million to $3.2 million, has total assets of $400,000, accounts payable of $60,000, net income of $150,000, and a dividend payout of 40 percent?

   A.	$279,000
   B.	none; it will have a surplus of $202,500
   C.	none; it will have a surplus of $ 41,500
   D.	$242,500
   E.	$ 60,000

3.3334 points

QUESTION 13

1. A speedup in ______ should ______ a firm's financing needs; whereas, a slowdown in ______ should ______ financing needs for a firm.

   A.	payments; increase; collections; increase
   B.	collections; decrease; payments; increase
   C.	collections; increase; collections; decrease
   D.	payments; increase; collections; decrease
   E.	collections; increase; payments; increase

3.3334 points

QUESTION 14

1. ______ loans are typically arranged for infrastructure projects--such as toll roads and tunnels.

   A.	Operating
   B.	Eurocurrency
   C.	Private placement
   D.	Project finance
   E.	Collateral

3.3334 points

QUESTION 15

1. Global Intelligence Co. (GIC) is a Canadian firm raising funds in Britain, Germany, and Switzerland through a Canadian-dollar bond issue. International Runners Attire (IRA) is a Swiss firm issuing U.S. dollar-denominated bonds in the United States. GIC is involved in the ______ market, while IRA is participating in the ______ market.

   A.	income bond; Eurobond
   B.	Eurobond; income bond
   C.	foreign bond; Eurobond
   D.	foreign bond; income bond
   E.	Eurobond; foreign bond

3.3334 points

QUESTION 16

1. What is the effective borrowing rate (EBR) for the following 6-month (182-day) line of credit: CL = total credit line $650,000; AL = Average outstanding amount $389,000; CF = Commitment fee 0.36% (not annualized) on unused line; IR = Annual Interest rate 2.1% over LIBOR (which is currently 4.7%)?

   A.	0.0730
   B.	0.0364
   C.	0.1412
   D.	0.3858
   E.	0.2206

3.3334 points

QUESTION 17

1. Which is not among The 5 Cs of Credit?

   A.	Classification
   B.	Capital
   C.	Capacity
   D.	Conditions
   E.	Character

3.3334 points

QUESTION 18

1. Which of the following is not a benefit of going public?

   A.	New capital
   B.	Stock price emphasis
   C.	Personal wealth and liquidity
   D.	Stock for use as a compensation vehicle

3.3334 points

QUESTION 19

1. The ______ is the primary disclosure document for a security offering.

   A.	supplemental disclosure
   B.	registration statement
   C.	none of the three documents
   D.	prospectus
   E.	all of the three documents

3.3334 points

QUESTION 20

1. The ______ allows the underwriting syndicate to purchase an additional allocation of securities following the initial distribution.

   A.	none of the selections
   B.	prospectus
   C.	Green Shoe option
   D.	lockup agreement
   E.	Securities Act of 1944

3.3334 points

QUESTION 21

1. Large, well-known public companies can issue approved securities anytime during a two year period by using a(n):

   A.	Subchapter S registration
   B.	Shelf registration
   C.	Underwriting syndicate
   D.	Secondary market registration
   E.	"Red Herring" registration

3.3334 points

QUESTION 22

1. Your firm has annual sales of 11 million. Cost of goods sold represent 85percent of this value and purchases are 80 percent of cost of goods sold. Your firm has an AAI (Average Age of Inventory) of 60 days, an APP (Average Payment Period) of 25 days, and an ACP (Average Collection Period) of 45 days. What is your firm's CCC (cash conversion cycle)? (YOU MAY WANT TO SAVE YOUR CALCULATIONS FOR THE OTHER TWO RELATED QUESTIONS.)

   A.	80 days
   B.	85 days
   C.	130 days
   D.	40 days
   E.	105 days

3.3334 points

QUESTION 23

1. Which of the following is a positive covenant?

   A.	maintain satisfactory accounting records
   B.	prohibit borrowing additional long-term debt
   C.	fixed asset restrictions
   D.	prohibit the sale of accounts receivable
   E.	prohibit business combinations

3.3334 points

QUESTION 24

1. A $200,000 face value, 182-day Treasury Bill is currently selling at a quoted discount of 5.9%. What are the dollar discount and purchase price? (YOU MAY WANT TO SAVE YOUR CALCULATIONS FOR THE OTHER RELATED QUESTION.)

   A.	$6,327.02; $193,672.98
   B.	$5,965.56; $194,034.44
   C.	$4,751.36; $195,248.64
   D.	$5,233.98; $194,766.02
   E.	$6,847.12; $193,152.88

3.3334 points

QUESTION 25

1. The first, and most important, aspect of accounts receivable management is ______.

   A.	the operating cycle
   B.	setting credit terms
   C.	the float
   D.	the credit scoring
   E.	setting credit standards

3.3334 points

QUESTION 26

1. Your firm has annual sales of 11 million. Cost of goods sold represent 85percent of this value and purchases are 80 percent of cost of goods sold. Your firm has an AAI (Average Age of Inventory) of 60 days, an APP (Average Payment Period) of 25 days, and an ACP (Average Collection Period) of 45 days. What is your firm's OC (operating cycle)? (You may want to save your work/calculation for the other two related questions.)

   A.	85 days
   B.	80 days
   C.	40 days
   D.	105 days
   E.	130 days

3.3334 points

QUESTION 27

1. If a lease is classified as an operating lease, ______, while a lease classified as a financial lease ______.

   A.	the lessee generally receives an option to cancel and the lease need not be capitalized; obligates the lessee to make payments over a predefined period and must be shown on a firm's balance sheet
   B.	total payments over the lease period are greater than the lessor's initial cost; includes a lessor which supplies about 20 percent of the cost of the asset
   C.	the asset that is leased has a useful life that is longer than the lease's term; deals with assets prone to obsolescence
   D.	its duration is usually five years or less and the underlying asset has significant market value when the lease ends; is for a longer term and ownership of the underlying asset must be transferred to the lessee
   E.	it may contain an option to purchase at a "bargain price"; may contain an option to purchase at "fair market value"

3.3334 points

QUESTION 28

1. A company offers credit terms 5/20 net 30. What is the effective annual rate (i.e., the rate incorporating compounding) faced by borrowers who do not take the discount?

   A.	109.9%
   B.	23.9%
   C.	13.6%
   D.	143.8%
   E.	192.1%

3.3334 points

QUESTION 29

1. When considering a lease-versus-purchase decision, a firm will find purchasing more attractive if there is a ______ risk of obsolescence, borrowing opportunities are ______, and required lessor returns are ______.

   A.	low; inexpensive; high
   B.	low; expensive; high
   C.	high; inexpensive; high
   D.	low; expensive; low
   E.	high; expensive; high

3.3334 points

QUESTION 30

1. Your firm has annual sales of 11 million. Cost of goods sold represent 85percent of this value and purchases are 80 percent of cost of goods sold. Your firm has an AAI (Average Age of Inventory) of 60 days, an APP (Average Payment Period) of 25 days, and an ACP (Average Collection Period) of 45 days. What total amount of resources has your firm invested in its cash conversion cycle? (YOU MAY WANT TO SAVE YOUR CALCULATIONS FOR THE OTHER TWO RELATED QUESTIONS.)

   A.	$2,893,150
   B.	$1,960,329
   C.	$2,380,822
   D.	$1,536,986
   E.	$3,405,479