Hi, Can someone please help with the following questions from my finance 100 mid term? Thank you

Suppose the following rates are averages for banks in your area: interest checking accounts pay 1%, savings accounts pay 2%, and one-year certificates of deposit pay 3%. All accounts are federally insured by the FDIC. The difference in rates can be explained mainly by

a. liquidity premiums.

b. default risk premiums.

c. maturity premiums.

d. inflation risk premiums.

Q2. General Motors raises money by selling a new issue of common stock. This transaction occurs in

a. the secondary market.

b. the capital market.

c. the money market.

d. the futures market.

Q3. You are considering an investment in a U.S. Treasury bond but you are not sure what rate of interest it should pay. Assume that the real risk-free rate of interest is 1.0%; inflation is expected to be 1.5%; the maturity risk premium is 2.5%; and, the default risk premium for AAA-rated corporate bonds is 3.5%. What rate of interest should the U.S. Treasury bond pay?

a. 8.5%

b. 6.0%

c. 5.0%

d. 2.5%

Q4. Money market instruments include

a. common stock.

b. preferred stock.

c. T-bonds.

d. T-bills.

Q5. Commercial banks that also provide investment banking services are called

a. conglomerate banks.

b. multi-purpose banks.

c. investment enhanced banks.

d. universal banks.

Q6. A wealthy private investor providing a direct transfer of funds is called

a. a venture capitalist.

b. an investment banker.

c. a financial intermediary.

d. an angel investor.

Q7. An example of a primary market transaction is

a. a new issue of common stock by AT&T.

b. a sale of some outstanding common stock of AT&T by an investor.

c. AT&T repurchasing its own stock from a stockholder.

d. all of the above

Q8. The Securities and Exchange Commission (SEC)

a. regulates only initial public offerings, or IPOs.

b. regulates only primary market transactions to ensure investors are provided with adequate and accurate information on new securities.

c. regulates both primary and secondary markets.

d. regulates initial public offerings, but not seasoned equity offerings, in the primary market.

Q9. John calls his stockbroker and instructs him to purchase 100 shares of Microsoft Corporation common stock. This transaction occurs in the

a. secondary market.

b. primary market.

c. credit market.

d. futures market.

Q10. Which of the following statements is an example of a futures market transaction?

a. An investor purchases 100 shares of IBM hoping to sell it in two years for a profit

b. A company purchases an option to buy 1000 barrels of oil anytime between now and the end of the year.

c. A company agrees to purchase 1000 barrels of oil for delivery in six months at a price of $70 per barrel.

d. An executive has a portion of his current year salary deferred until he retires.

Q11. Insurance companies invest in the "long-end" of the securities market by purchasing securities with longer maturities. In which of the following instruments would an insurance company be least likely to invest most of its assets?

a. corporate stocks

b. corporate bonds

c. mortgages

d. commercial paper

Q12. California Retailing Inc. has sales of $4,000,000; the firm's cost of goods sold is $2,500,000; and its total operating expenses are $600,000. The firm's interest expense is $250,000, and the corporate tax rate is 40%. The firm paid dividends to preferred stockholders of $40,000, and the firm distributed $60,000 in dividend payments to common stockholders. What is California Retailing's "Addition to Retained Earnings"?

a. $650,000

b. $390,000

c. $330,000

d. $290,000

Q13. The Colorado Jet Boat Company had a cash balance of $3 million at the beginning of 2010. During 2010, Sales were $8 million and expenses were $7 million. Therefore

a. the cash balance at the end of 2010 is $4 million.

b. the cash balance at the end of 2010 must be greater than $3 million.

c. the cash balance at the end of 2010 must be less than $11 million.

d. the cash balance at the end of 2010 cannot be determined from the information given.

Q14. Rogue Industries reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; and Taxes = $300,000. Rogue's operating income is equal to

a. $770,000.

b. $1,070,000.

c. $1,100,000.

d. $1,500,000.

Q15. Rogue Industries reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; and Taxes = $300,000. Rogue's gross profit is equal to

a. $770,000.

b. $1,070,000.

c. $1,100,000.

d. $1,500,000.

Q16. Two companies have identical assets and operating activities. Which of the follow statements is true?

a. Both companies have the same net income.

b. The company with more debt will have lower operating income due to interest expense.

c. The company with more debt will have higher operating income due to leverage.

d. The company with more debt will have lower net income due to interest expense.

Q17. Corporation A decides to borrow $1,000,000 and use the money to buy back $1,000,000 of its common stock. The corporation pays 6% interest on its borrowed funds which exactly equals the amount of the dividend it used to pay on the common stock it repurchased. Therefore

a. Corporation A's operating income will decrease due to higher interest expense.

b. Corporation A's net income will increase due to the tax deductibility of interest expense.

c. Corporation A will have no change in its operating income since the interest expense exactly offsets the prior dividend payment.

d. Corporation A's gross profit will decrease.

Q18. Wheeler Corporation had retained earnings as of 12/31/15 of $15 million. During 2016, Wheeler's net income was $7 million. The retained earnings balance at the end of 2016 was equal to $20 million. Therefore

a. Wheeler paid a dividend in 2015 of $5 million.

b. Wheeler paid a dividend in 2015 of $2 million.

c. Wheeler sold common stock during 2015 for $5 million.

d. Wheeler purchased treasury stock in 2015 for $2 million.

Q19. Rogue Industries reported the following items for the current year: Sales = $3,000,000; Cost of Goods Sold = $1,500,000; Depreciation Expense = $170,000; Administrative Expenses = $150,000; Interest Expense = $30,000; Marketing Expenses = $80,000; and Taxes = $300,000. Rogue's net profit margin is equal to

a. 25.67%.

b. 35.67%.

c. 36.67%.

d. 50.00%.

Q20. The basic format of an income statement is

a. Sales - Expenses = Profits.

b. Income - Expenses = EBIT.

c. Sales - Liabilities = Profits.

d. Assets - Liabilities = Profits.

Q21. What information does a firm's balance sheet provide to the viewing public?

a. a report of investments made and their cost for a specific period of time

b. a complete listing of all of a firm's cash receipts and cash expenditures for a defined period of time

c. a report of revenues and expenses for a defined period of time

d. an itemization of all of a firm's assets, liabilities, and equity as of the balance sheet date

Q22. A firm's income statement reports the results from operating the business for a period of time, while the firm's balance sheet provides a snapshot of the firm's financial position at a specific point in time.

a. True

b. False

Q23. Changes in depreciation expense do not affect operating income because depreciation is a non-cash expense.

a. True

b. False

Q24. Siskiyou Corp. has cash of $75,000; short-term notes payable of $100,000; accounts receivables of $275,000; accounts payable of $135,000: inventories of $350,000; and accrued expenses of $75,000. What is the firm's net working capital?

a. $390,000

b. $175,000

c. $700,000

d. $210,000

Q25. A company borrows $2,000,000 and uses the money to purchase high technology machinery for its operations. These are examples of

a. cash flow from financing and cash flow from operations.

b. cash flow from investing and cash flow from operations.

c. cash flow from financing and cash flow from investing.

d. cash flow from investing and cash flow from financing.

Q26. Benkart Corporation has sales of $5,000,000, net income of $800,000, total assets of $2,000,000, and 100,000 shares of common stock outstanding. If Benkart's P/E ratio is 12, what is the company's current stock price?

a. $60 per share

b. $96 per share

c. $240 per share

d. $360 per share

Q27. Denver Systems has total assets of $1,000,000; common equity of $400,000; a gross profit of $800,000; total operating expenses of $620,000; interest expense of $20,000; income taxes of $74,000; and preferred dividends of $30,000. What is Denver Systems' return on equity?

a. 7.5%

b. 20.0%

c. 21.5%

d. 14.0%

Q28. When comparing inventory turnover ratios, other things being equal

a. a lower inventory turnover is preferred in order to keep inventory costs low.

b. a higher inventory turnover is preferred to improve liquidity.

c. higher inventory turnover results from old or obsolete inventory increasing the inventory balance on the balance sheet.

d. higher inventory turnover results from an increase in the selling price of the product.

Q29. Financial ratios are often reported by industry or line of business because differences in the type of business can make ratio comparisons uninformative or even misleading.

a. True

b. False

Q30. Acme Incorporated has a debt ratio of .42, noncurrent liabilities of $20,000 and total assets of $70,000. What is Acme's level of current liabilities?

a. $8,400

b. $9,400

c. $12,348

d. $10,600

Q31. An inventory turnover ratio of 7.2 compared to an industry average of 5.1 is likely to indicate that

a. the firm has higher sales than the industry average.

b. the firm is selling a product mix that includes more high margin items.

c. the firm is managing its inventory inefficiently.

d. the firm's products are in inventory for fewer days before they are sold than is average for the industry.

Q32. Rural Hydroponics has total equity of $560,000; sales of $2,250,000; current assets of $700,000; and total liabilities of $435,000. What is Rural Hydroponics' total asset turnover?

a. 4.02

b. 3.21

c. 2.26

d. 5.51

Q33. Financial analysis

a. uses historical financial statements and is thus useful only to assess past performance.

b. relies on generally accepted accounting principles to make comparisons between companies valid.

c. uses historical financial statements to measure a company's performance and in making financial projections of future performance.

d. is accounting record-keeping using generally accepted accounting principles.

Q34. Smith Corporation has earned a return on capital invested of 10% for the past two years, but an investment analyst reviewing the company has stated the company is not creating shareholder value. This may be due to the fact that

a. the risk free rate of interest is 3%.

b. the corporation's inventory turnover is high.

c. investors' required rate of return is 8%.

d. investors' required rate of return is 12%.

Q35. A firm that wants to know if it has enough cash to meet its bills would be most likely to use which kind of ratio?

a. liquidity

b. leverage

c. efficiency

d. profitability

Q36. XYZ Corporation has a P/E ratio of 20 and EFG Corporation has a P/E ratio of 10. It is likely that

a. XYZ's earnings per share are twice the earnings per share of EFG.

b. investors expect XYZ's earnings to grow faster than EFG's earnings.

c. investors believe that for the same level of earnings growth, XYZ is a higher risk company.

d. investors believe XYZ stock is overvalued.

Q37. RBW Corp. has cash of $48,000; short-term notes payable of $35,000, accounts receivable of $100,000; accounts payable of $120,000; inventories of $200,000; and accruals of $90,000. What is RBW's current ratio?

a. 1.57

b. 2.71

c. 1.42

d. 0.64

Q38. In an ideal world, which of the following would be used to evaluate firm performance?

a. book value of assets

b. corporate retained earnings from the day of incorporation

c. accounting assets and profits

d. market value of assets

Q39. WRJ has a debt ratio of .4, current liabilities of $18,000, and total assets of $120,000. What is the level of WRJ's total liabilities?

a. $22,000

b. $48,000

c. $58,000

d. $63,934

Q40. Assume that an investor is offered a choice of a risk-free government bond that is expected to return 3.5% or a high-risk corporate stock. According to one of the principles of finance, what would induce the investor to purchase the corporate stock?

a. a return that is substantially lower than 3.5%

b. cash dividends

c. a return that is substantially higher than 3.5%

d. none of the above

Q41. When making financial decisions, managers should always look at marginal, or incremental cash flows.

a. True

b. False

Q42. Cash flows and profits are synonymous; in other words, higher cash flows equal higher profits.

a. True

b. False

Q43. The sole proprietorship has no legal business structure separate from its owner.

a. True

b. False

Q44. The primary goal of a publicly owned corporation is to ________.

a. maximize dividends per share

b. maximize shareholder wealth

c. maximize earnings per share after taxes

d. minimize shareholder risk

Q45. Which of the following is an advantage of the sole proprietorship?

a. limited liability for its owners

b. double taxation for its owners

c. no significant legal requirements for starting the business

d. easily transferred ownership

Q46. Shareholder wealth maximization means

a. maximizing earnings per share.

b. maximizing dividends per share.

c. maximizing the price of existing common stock.

d. maximizing stockholders equity.

Q47. Capital budgeting is concerned with

a. whether a company's assets should be financed with debt or equity.

b. managing a firms cash budgeting procedures.

c. what long-term investments a firm should undertake.

d. planning sales of a corporation's equity capital.

Q48. To measure value, the concept of time value of money is used

a. to determine the interest rate paid on corporate debt.

b. to bring the future benefits and costs of a project, measured by its expected profits, back to the present.

c. to bring the future benefits and costs of a project, measured by its cash flows, back to the present.

d. to ensure that expected future profits exceed current profits today.

Q49. Investors will be indifferent between two investments if both investments have the same expected return.

a. True

b. False

Q50. An investment project is acceptable if the total cash received over the life of the project exceeds the total cash spent over the life of the project.

a. True

b. False