4. Which of the following statements is CORRECTRIC increases its sales while holding its accounts receivable constant, then other things held constant, its days' sales outstanding will decline security analyst saw that a firm's days' sales outstanding (DSO) was higher than the industry werage and was also increasing and trending stim higher, this would be interpreted as a sign of strength. firm increases its sales while holding its accounts receivable constant, then other things held constant, its days' sales outstanding (DSO) will increase relationship between the days' sales outstanding (DSO) and the average collection period (ACP). These ratios measure entirely different things. A reduction in accounts receivable would have no effect on the current ratio, but it would lead to an increase in the quick ratio. The YTMs of three $1.000 face value bonds that mature in 10 years and have the same level of risk are qual Band A has an 8% annual coupon, Bond B has a 10% annual coupon, and Bond Chas a 12% annual u n Bond B sells at par. Assuming interest rates remain constant for the next 10 years, which of the following statements is CORRECT? (C-5) a. Since the bonds have the same YTM, they should all have the same price, and since interest rates are not expected to change, their prices should all remain at their current levels until maturity. b. Bond C sells at a premium (its price is greater than par), and its price is expected to increase over the next year. c. Bond A sells at a discount (its price is less than par), and its price is expected to increase over the next year. d. Over the next year, Bond A's price is expected to decrease, Bond B's price is expected to stay the same, and Bond C's price is expected to increase. e. Bond A's current yield will increase each year. 6. Which of the following statements is NOT CORRECT? (C-1) a. When a corporation's shares are owned by a few individuals and are not traded on public markets, we say that the firm is "closely, or privately, held." b. "Going public" establishes a firm's true intrinsic value, and it also insures that a highly liquid market will always exist for the firm's shares. c. When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public," and the market for such stock is called the new issue market. d. Publicly owned companies have shares owned by investors who are not associated with management, and public companies must register with and report to a regulatory agency such as the SEC. e. It is possible for a firm to go public and yet not raise any additional new capital at the time. 7. Which of the following statements is CORRECT? (C-2) a. The more depreciation a firm has in a given year, the higher its EPS, other things held constant. b. Typically, a firm's DPS should exceed its EPS. c. Typically, a firm's EBIT should exceed its EBITDA. d. If a firm is more profitable than average (e.g., Google), we would normally expect to see its stock price exceed its book value per share
