38 of 50

8.0 PointsThe mix of debt and equity that maximizes a stock's price is called:A.the capital mix

B.the bond equity blend

C.the optimal capital structure

D.there is no such theory asserting that some such mixture exists

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Question 39 of 50

8.0 PointsYou found a firm's earnings before interest and taxes (EBIT) to be $118,000. Its corporate income tax rate is 24%. The firm's total invested capital is $804,000. What is the firm's return on invested capital? ROIC =% Report your answer to the nearest percent.

Question 40 of 50

8.0 PointsA measure of the extent to which debt is used in a firm's capital structure is:A.the target degree

B.operating leverage

C.financial leverage

D.mechanical leverage

E.there is no measure of this concept

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Part 14 of 16 -

Question 41 of 50

8.0 PointsWhich of the following factors is the most critical to dividend decision makingA.earnings

B.cash flow

C.EPS (Earnings per share)

D.ROE

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Question 42 of 50

8.0 PointsWhich of the following statements is correct?A.In general, stock repurchases are taxed the same way as dividends.

B.One nice feature of dividend reinvestment plans is that they enable investors to reduce the taxes paid on their dividends.

C.On average, companies send a negative signal to the marketplace when they announce an increase in their dividend.

D.If a company is interested in issuing new equity capital, a new stock dividend reinvestment plan probably makes more sense than an open market dividend reinvestment plan.

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Question 43 of 50

8.0 PointsWhat is the expected effect of a stock repurchase plan?A.lower stock prices

B.more shares of stock outstanding

C.reduced earnings per share for shares remaining outstanding

D.increased earnings per share and stock prices

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Part 15 of 16 -

Question 44 of 50

8.0 PointsA firm has average daily sales of $15,000, daily cost of goods sold total $9,000 and days' sales outstanding of 32 days. Receivables of this firm are $. Give your answer to the nearest dollar.

Question 45 of 50

8.0 PointsWhich of the following is not commonly regarded as being a credit policy variable?A.Credit period.

B.Collection policy.

C.Credit standards.

D.Cash discounts.

E.Long-term debt to asset ratio.

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Question 46 of 50

8.0 PointsFirms generally choose to finance temporary assets with short-term debt becauseA.Matching the maturities of assets and liabilities reduces risk.

B.Short-term interest rates have traditionally been more stable than long-term interest rates.

C.A firm that borrows heavily long-term is more apt to be unable to repay the debt than a firm that borrows heavily short-term.

D.The yield curve has traditionally been downward sloping.

E.Sales remain constant over the year, and financing requirements also remain constant.

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Part 16 of 16 -

Question 47 of 50

8.0 PointsWhich of the following theories is closely related to the "law of one price?"A.purchasing power parity

B.random asset pricing model

C.the international fragmentation effect

D.all of these theories are closely related to the law of one price

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Question 48 of 50

8.0 PointsThe number of U.S. dollar units needed to purchase one foreign currency unit in the U.S. is known as a/an:A.indirect quote

B.direct quote

C.introverted quote

D.European quote

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Question 49 of 50

8.0 PointsWhat does the acronym OECD represent?A.Overseas Economy Cleared for Development

B.Organization for Economic Cooperation and Development

C.Operation Equity Cancelled Debt

D.Office of European Coordinated Directions

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Question 50 of 50

8.0 PointsWhy do countries where subsidiaries are located sometimes restrict the amount of dividends that may be paid to the parent firm in its home country?A.by restricting such payments they make investment by other companies in their country more attractive

B.by restricting such payments they increase the return a company can expect to earn on their subsidiary

C.by restricting such payments they hope to force the multinational to invest more in their country

D.actually countries where subsidiaries never restrict such dividends as they prefer to get the money out of their economy