Holding all other things constant, which of the following does not represents a cash inflow?

The company sells a machine.

The company acquires inventory.

The company receives a bank loan.

The company increases accounts payable.

Company FDC Inc. posted the following balance sheet and income statement. What is Company FDCs, Inc.s quick ratio?

Balance Sheet Cash $60,000 Accounts Payable $185,000 Accounts Receivable 135,000 Notes Payable 125,000 Inventories 225,000 Long-term debt 115,000 Net Plant and Equipment 525,000 Common Stock 360,000 Retained earnings 160,000 Total Assets $925,000 Total liabilities and Stockholders Equity $925,000

Income Statement Sales $525,000 Cost of goods sold 215,000 Depreciation 65,000 Earnings before interest and taxes 245,000 Interest expense 35,000 Net profit before taxes 210,000

0.5968

1.2903

1.9565

0.8871

Flag this Question Question 3 6 pts

Which of the following is an example of systematic risk?

IBM posts lower than expected earnings.

Intel announces record earnings.

The national trade deficit is higher than expected.

All of the above are correct.

Flag this Question Question 4 6 pts

As a result of an injury settlement with your insurance you have the choice between (1) receiving $5,000 today or (2) $6,500 in three years. If you could invest your money at 7% compounded annually, which option should you pick?

(1), because it has a higher PV.

You are indifferent between the two choices.

(2), because it has a higher PV.

You do not have enough information to make that decision.

Flag this Question Question 5 6 pts

Which finance career classification involves analyzing a firms business processes and strategies as well as recommending a change in practice in order to make a firm more competitive?

corporate finance

commercial banking

investment banking

consulting

Flag this Question Question 6 6 pts

Which of the following is correct?

American Stock Exchange has the most strict listing requirements

NASDAQ has the most strict listing requirements

New York Stock Exchange has the most strict listing requirements

Pacific Stock Exchange has the most strict listing requirements

Flag this Question Question 7 6 pts

Bavarian Brew Float Bavarian Brew receives about 350 checks a day with an average check size of $550. Currently customers payments spend 2 days in the mail. Once a check is received it takes about 1.5 days to process it and another 4 days to clear the banking system. The firms opportunity cost is 10%. Assume a 365-day year.

What is Bavarian Brews collection float?

4 days

2 days

1.5 days

7.5 days

Flag this Question Question 8 6 pts

Bavarian Sausage just issued a 10 year 7% coupon bond. The face value of the bond is $1,000 and the bond makes annual coupon payments. If the required return on the bond is 10%, what is the bonds price?

$815.66

$923.67

$1,000.00

$1,256.35

Flag this Question Question 9 6 pts

Last national bank offers a CD paying 8% interest (compounded annually). If you invest $1,000 how much will you have at the end of year 5.

$712.99

$1,469

$1,350

$1,000

Flag this Question Question 10 6 pts

Which of the following items cannot be found on a balance sheet?

Accounts receivable

Long-term debt

Sales

Inventory

Flag this Question Question 11 6 pts

A 15-year, 9%, $1000 face value bond is currently trading at $958. The yield to maturity of this bond must be

less than 9%.

equal to 9%.

greater than 9%.

unknown.

Flag this Question Question 12 6 pts

Of the following bonds, which one has the highest degree of interest rate risk?

20 year 8% bond

5 year 8% bond

10 year 8% bond

Not enough information.

Flag this Question Question 13 6 pts

The first public sale of company stock to outside investors is called a/an

seasoned equity offering.

shareholders meeting.

initial public offering.

proxy fight.

Flag this Question Question 14 6 pts

You bought a share of Company FDC Inc stock for $46.50 at the beginning of the year. During the year the stock paid a $3.75 dividend and at the end of the year it trades at $52.75. What is the total return of your stock investment?

5.91%

13.44%

26.69%

21.05%

Flag this Question Question 15 6 pts

What is the purpose of diversification?

Maximize possible returns.

Increase the risk of your portfolio.

Lower the overall risk of your portfolio.

All of the above are correct.

Flag this Question Question 16 6 pts

The portion of your total return from a stock investment that is caused by an decrease in the value of the stock?

Dividend yield.

Risk-free return.

Capital loss.

None of the above.

Flag this Question Question 17 6 pts

Bonds issued by US states or local governments are called:

Treasury bonds.

Municipal bonds.

Corporate bonds.

Yankee bonds.

Flag this Question Question 18 6 pts

How much do you have to invest today at an annual rate of 9%, if you need to have $5,000 six years from today?

$3,150.85

$4,236.75

$7,934.37

$2,735.23

Flag this Question Question 19 6 pts

Company FDC Inc. posted the following balance sheet and income statement. What is Company FDCs, Inc.s operating cash flow?

Balance Sheet Cash $60,000 Accounts Payable $185,000 Accounts Receivable 135,000 Notes Payable 125,000 Inventories 225,000 Long-term debt 115,000 Net Plant and Equipment 525,000 Common Stock 360,000 Retained earnings 160,000 Total Assets $925,000 Total liabilities and Stockholders Equity $925,000

Income Statement Sales $525,000 Cost of goods sold 215,000 Depreciation 65,000 Earnings before interest and taxes 245,000 Interest expense 35,000 Net profit before taxes 210,000

$394,000

$191,000

$236,500

$359,000

Flag this Question Question 20 6 pts

Which of the following statements is true?

In an annuity due payments occur at the beginning of the period.

In an ordinary annuity payments occur at the end of the period.

A perpetuity will mature at some point in the future.

One cannot calculate the present value of a perpetuity.

Flag this Question Question 21 6 pts

Which of the following is not one of the five basic corporate finance functions?

external financing function

capital budgeting function

risk management

auditing

Flag this Question Question 22 6 pts

Suppose Sarah can borrow and lend at the risk free-rate of 3%. Which of the following four risky portfolios should she hold in combination with a position in the risk-free asset?

portfolio with a standard deviation of 15% and an expected return of 12%

portfolio with a standard deviation of 19% and an expected return of 15%

portfolio with a standard deviation of 25% and an expected return of 18%

portfolio with a standard deviation of 12% and an expected return of 9%

Flag this Question Question 23 6 pts

What is correct?

The market value of all outstanding debt is the market capitalization of a company.

The book value of the companys debt is the market capitalization of a company.

The market value of all outstanding shares is the market capitalization of a company.

The book value of the companys total equity is the market capitalization of a company.

Flag this Question Question 24 6 pts

The risk-free rate is 5% and the expected return on the market portfolio is 13%. A stock has a beta of 2.5, what is its expected return?

17%

12%

37.5%

25%

Flag this Question Question 25 6 pts

Which of the following is correct?

According to the CAPM (capital asset pricing model), the intercept of the security market line should be equal to zero

According to the CAPM (capital asset pricing model), the intercept of the security market line should be equal to the expected risk premium on the market portfolio

According to the CAPM (capital asset pricing model), the intercept of the security market line should be equal to the risk-free rate

According to the CAPM (capital asset pricing model), the intercept of the security market line should be equal to the expected return on the market portfolio