Fundamentals of Corporate Finance, help! Multiple choice homework, no working out needed: 1. The local ABC Cash Access store offers credit to customers at an annual rate of 12 percent and compounds interest monthly. What is the effective annual interest rate on this lending arrangement?

Select one:

a.

12.68%

b.

12.73%

c.

12.36%

d.

12.59%

2. A negotiable instrument that involves a drawer, acceptor and payee is a. Negotiated overdraft b. Secured promissory note c. Bill of exchange d. Negotiable certificate of deposit

3. Agency costs refer to:

a. the total interest paid to bondholders over a period of 10 years. b. the total dividends paid to shareholders over a period of 10 years. c.. the costs of conflict of interest between shareholders and management. d. both the total dividends paid to shareholders and the interest paid to bondholders over a period of 10 years

4. ANZD PTY LTD has current liabilities of $778,000 and accounts receivable of $1,376,000. The firm has total assets of $6,224,000 and net non-current assets of $3,418,000. The shareholders equity has a book value of $4,538,000. What is the amount of the net working capital?

a. 160,000 b. 598,000 c. 2,028,000 d. -598,000

5.You have just won the grand prize in a national investment funding contest! As your prize, you will receive $25,000 a month for the next twenty years. If you can earn 5% on your money, what is this prize worth to you today?

a.

3,788,132.83

b.

2,522,527.10

c.

311,555.25

d.

3,584,110.60

6. Some months ago you purchased a Government bond for $2,100,000, that promises to pay $110,000 per year over the next 6 years. The market price of the bond subsequently increased to $2,300,000. A likely reason for this is:

Select one:

a.

interest rates, in general, have decreased

b.

interest rates, in general, have increased

c.

the face value of the bond has been increased

d.

the bond is perceived by the market to be more risky now than before

7. Futurama Ltd is expected to pay an annual dividend of $2.20 per share next year. The dividends are anticipated to grow at a constant rate of 4.00% in perpetuity. If one Futurama Ltd share currently sells for $18.80, what is the required rate of return?

a. 15.83% b. 14.65% c. 19.35% d. 15.70%

8. ABC Ltd requires short-term finance of approximately $1,000,000 for a period of 180 days. ABC Ltd has prepared a bill and has requested Com Bank to act as the acceptor. The bill has a $1,000,000 face value and a maturity of 180 days. The appropriate market rate is 5.50% p.a. What is the cash inflow ?

Select one:

a.

$973,988.66

b.

$973,592.96

c.

$1,000,000

d.

$972,223.11

9. ________ are a cross between a loan and a share

Select one:

a. Convertible notes

b.

Redeemable debentures

c.

Registered unsecured notes

d.

Registered secured note

10. Barrys Sports began the year with $5,000,000 in current assets and $2,500,000 in current liabilities. At the end of the year current assets had grown to $10,000,000 and current liabilities had increased to $3,500,000. What is the change in net working capital for the year?

Select one:

a. A decrease of $4,000,000

b. An increase of $4,000,000

c.An increase of $6,000,000

d.A decrease of $6,000,000

11. A debenture has a 6% coupon rate, with payments made semi-annually, and the debenture has 8 years to maturity. If the current value of the debenture is $97.04, what is the current annual yield (YTM) of the debenture?

Select one:

a. 100.00

b. 6.480

c.6.00

d. 3.240