Amongst corporations, sole proprietorships and partnerships, approximately what percentage of revenues are generated by corporations? 50% 42% 33% 82%

Question 2 What should be the financial goal of any firm? attracting and acquiring capital and investing it maximization of the owners wealth offering quality products at fair prices quality customer service

Question 3 4 pts Which of the following statement(s) is \ are true regarding the corporate management team? In a corporation, ownership and direct control are typically separate. Board of Directors is elected by shareholders and has ultimate decision-making authority The Chief Executive Officer (CEO) the Board typically delegates day-to-day decision making to the CEO. All of the above

Question 4 4 pts When calculating the present value of either a future single sum or a future annuity, it involves a process called discounting. The applicable interest rate to perform the discounting function is usually called the yield to maturity compound interest rate discount rate none of the above

Question 5 4 pts _________________ are used to present additional information about items included in the financial statements and to present additional financial information. stock certificates Notes to financial statements Preferred stocks Convertible securities Question 6 4 pts What should be the financial goal of any firm? maximization of the owners wealth attracting and acquiring capital and investing it offering quality products at fair prices quality customer service

Question 7 4 pts A competitive market is one in which a _____ numbers of producers compete with each other to satisfy the wants and needs of a _____ number of consumers. Large, small Small, small Large, large Small, large

Question 8 4 pts The Valuation Principle is an analysis between the value of the ______ of a financial alternative and the value of its ______. revenues, income benefits, costs expenses, costs

Question 9 4 pts The Net Present Value rule implies that we should compare a projects net present value (NPV) to___________. (zero \ future value \ the past). Zero Future Value The Past An Estimate

Question 10 4 pts The internal rate of return (IRR) rule will _______ agree with the Net Present Value rule on a given investment project. always never sometimes none of the above

Question 11 5 pts The law of one price exists due to arbitrage opportunities. If the price of a security, commodity or asset is different in two different markets, then an arbitrageur will ______ the asset in the more expensive market and ________ it where prices are lower. sell, purchase purchase, sell purchase, purchase sell, sell

Question 12 5 pts Approaching every problem using a timeline is a(n) ________ idea because timelines identify events in a transaction or investment which might otherwise be easily overlooked. good bad indifferent unrealistic

Question 13 5 pts The present value (PV) of a stream of cash flows is the _______ the present values of each individual cash flow difference between product of sum of same as

Question 14 5 pts As the number of periods increases, present value (increases\decreases\stays the same). increases decreases stays the same is unrelated

Question 15 5 pts When a constant cash flow will occur at regular intervals for a finite number of periods of time, it is called a(n) __________. annuity perpetuity interest payment principle payment

Question 16 5 pts When a constant cash flow will occur at regular intervals forever, it is called a(n) ___________. annuity perpetuity interest payment principle payment

Question 17 5 pts The NPV measures the ______ change in shareholder wealth that arises from undertaking a project. consistent dollar annual semi-annual

Question 18 5 pts When calculating the present value of either a future single sum or a future annuity, the applicable interest rate is usually called the _______ rate compounding inverted market discount

Question 19 5 pts To endow a perpetuity is the same as calculating the present value (PV) of a perpetuity. Say you want to endow an annual graduation party at your alma mater. You want the event to be a memorable one, so you budget $30,000 per year forever for the party. If the university earns 8% per year on its investments, and if the first party is in one years time, how much will you need to donate to endow the party? The formula for PV of a perpetuity = C ; = $30,000 \ 0.08; = $3,750 $37,500 $375,000 $3,750,000

Question 20 5 pts With an Ordinary Annuity, payments are required at the ________ of each period. An example of this is bonds which usually pay coupon payments at the end of every six months until the bond's maturity date. beginning middle end payments are not required

Question 21 5 pts Sales of securities that the seller does not own is called a: stop-loss order short sale limit order maintenance margin

Question 22 5 pts What is the name of the market where money market securities, bonds, and mortgages are originated and traded? debt securities market foreign exchange market derivative securities market equity securities market

Question 23 5 pts If an investor feels the price of a stock will decline in the future, which trade should the investor undertake? market order buy on margin limit order short sale

Question 24 5 pts For risk averse investors, how much return is expected for taking on more risk? lower equal zero higher

Question 25 5 pts A ___________________ is a highly regulated document which details the issuers operations and finances and must be provided to each buyer of a newly issued security. Prospectus An underwriting agreement A best efforts agreement none of the above

Question 26 5 pts Which of the following statements about liquidity ratios is true? The lower the quick ratio relative to the current ratio, the safer a firm is in terms of liquidity. The higher the current ratio, the more likely a firm is able to pay its short-term obligations. The quick ratio is always between 0 and 1. All the above statements are true.

Question 27 5 pts The ability of a firm to meet its short-term debt obligations as they come due is indicated by which of the following ratios: liquidity ratios asset utilization ratios financial leverage ratios profitability ratios

Question 28 5 pts Which one of the following financial statements reports a firms assets and the claims on assets? balance sheet income statement statement of changes in financial position cash flow statement

Question 29 5 pts The extent to which assets are used to support sales is indicated by which of the following ratios: liquidity ratios asset utilization ratios financial leverage ratios profitability ratios

Question 30 5 pts The extent to which assets are financed by borrowed funds and other liabilities is indicated by: liquidity ratios asset utilization ratios financial leverage ratios profitability ratios

Question 31 5 pts The basic price that equates the demand for and supply of loanable funds in the financial markets is the __________: interest rate yield curve term structure cash price none of the above

Question 32 5 pts Federal obligations usually issued for maturities of two to ten years are called: Treasury bonds Treasury notes Treasury bills Agency issues

Question 33 5 pts An increase in the demand for loan-able funds, holding supply constant, will cause interest rates to: increase decrease stay the same none of the above

Question 34 5 pts As interest rates rise, the prices of existing bonds will: rise stay the same fall either a or b

Question 35 5 pts In an inflationary period, interest rates have a tendency to: rise fall stay the same act erratically