1. Beach Wear has current liabilities of $450,000, a quick ratio of 1.5, inventory turnover of 1.25, and a current ratio of 3. What is the cost of goods sold?
2. 843,750
3. 735,450
4. 655,750
5. 133,500
6. 964,500

2. The Jordan Company has return on total assets of 13%, and the debt-equity ratio is 0.65. What is Jordans ROE?

USE AT LEAST TO 4 DECIMAL PLACES

1. 24.25%
2. 23.11%
3. 22.94%
4. 21.45%
5. 24.66%

3. A firm has a debt-to-equity ratio of 0.55. What is the total debt ratio?

USE AT LEAST 4 DECIMAL PLACES

1. 45.48%
2. 155.55%
3. 25.55%
4. 35.48%
5. 100.00%

4. If coupon rate is lower than its yield to maturity, then the bond would sell at a discount.

a. true

b. false

5. Lee Michaels Jewelers recently issued a $1,000 face, 10 year zero coupon bond. The initial offering sold in January, 2008 for $500. Despite the fact that the bond doesnt pay interest, the IRS says you must declare the implicit interest for tax purposes. What is the implicit interest for this bond in year 5?

a. $18.90

b. $44.59

c. $20.25

d. $39.90

e. $47.36

6. GEO Inc. has paid annual dividends of $1, $1.50, and $1.70 a share over the past three years, respectively. The company now predicts that it will maintain a constant dividend since its business has leveled off and sales are expected to remain relatively flat. Given the lack of future growth, you will only buy this stock if you can earn at least a rate of return of 17 percent. What is the maximum amount you are willing to pay for one share of this stock today?

a. $5.00

b. $100.00

c. $50.00

d. $10.00

e. $25.00

7. DTech is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 15 percent a year for the next four years and then decreasing the growth rate to 4 percent per year. The company just paid its annual dividend in the amount of $2.00 per share. What is the current value of one share of this stock if the required rate of return is 10 percent?

USE AT LEAST 4 DECIMAL PLACES

1. approx. $60
2. approx. $30
3. approx. $40
4. approx. $20
5. approx. $50

8. You own a bond with a face value of $1,000 that pays $75 every 6 months. It matures in 6 years. Your required rate of return is 11% per year. Calculate this bonds current yield.

USE AT LEAST 4 DECIMAL PLACES

1. 12.79%
2. 10.40%
3. 8.21%
4. 7.61%
5. 11.00%

9. Yield to maturity reflects the current market rate and it is the appropriate discount rate that matches the present value of the bond's cash flow stream and price of a bond.

a. true

b. false

10. In the two-stage dividend discount model , both of the growth rate must always be smaller than the required return, R.

a. true

b. false

11. The Docksider has net income for the most recent year of $25,000. The tax rate was 20 percent. The firm paid $2,500 in total interest expense and deducted $1,500 in depreciation expense. What was the cash coverage ratio for the year?

a. 14.10

b. 15.02

c. 9.55

d. 18.55

e. 7.10

12. The Los Angeles Airport Authority has bonds on the market with 10.5 years to maturity, a yield to maturity of 8%, and a current price of $925. The bonds make semi-annual payments. What must the coupon rate be on LA Airports bonds?

USE AT LEAST 4 DECIMAL PLACES.

1. 11.88%
2. 3.47%
3. 6.93%
4. 10.50%
5. 9.13%

13. In 2010, Apple issued $1000 face bonds with a 7% semi-annual coupon. The bonds mature in 2030. Exactly 5 years later, a company financially similar to Apple is preparing to issue 20 year $1000 face bonds with a 6.5% semi-annual coupon. What will be Apple bonds' price in year 2015?

a. $1047.45

b. $991.95

c. $908.92

d. $1465.50

14. The constant growth dividend discount model requires the growth rate to be less than the required return.

a. true

b. false

15. Wholesome Market paid an annual dividend of $2.00 a share last month. Today, the company announced that future dividends will be increasing by 3 percent annually. If you require a return of 12 percent, how much are you willing to pay to purchase one share of this stock today?

a. $35.66

b. $20.22

c. $31.23

d. $18.98

e. $22.89

16. All government bonds and municipal bonds are always tax-exempt (both federal and state taxes).

a. true

b. false