Question 1

4pts

The primary goal of financial management is to:

Group of answer choices

maximize current dividends per share of the existing stock.

maximize the value of stockholders or stakeholders.

avoid financial distress.

minimize operational costs and maximize firm efficiency.

maintain steady growth in both sales and net earnings.

Flag this Question

Question 2

4pts

Which one of the following is a source of cash?

Group of answer choices

an increase in accounts receivable

an increase in fixed assets

a decrease in long-term debt

the payment of a cash dividend

an increase in accounts payable

Flag this Question

Question 3

4pts

On September 1, a firm grants credit with terms of 2/10 net 45. The creditor:

Group of answer choices

must pay a penalty of 2% when payment is made later than September 1st.

must pay a penalty of 10% when payment is made later than 2 days after September 1st.

receives a discount of 2% when payment is made at least 10 days before September 1st.

receives a discount of 2% when payment is made before September 1st and pays a penalty of 10% if payment is made after September 1st.

receives a discount of 2% when payment is made within 10 days after the effective invoice date of September 1st.

Flag this Question

Question 4

4pts

Businesses in deciding to extend credit to new customers try to reduce defaults by:

Group of answer choices

determining the probability of non-payment.

gathering independent credit checks.

determining if it is profitable to extend credit.

All of these

None of these

Flag this Question

Question 5

4pts

In credit analysis of a customer, commonly used information includes the customer's:

Group of answer choices

financial statements.

credit report

payment history with the firm.

All of these

None of these

Flag this Question

Question 6

4pts

What is the annual ordering cost if the fixed cost per order is $2,000, carrying cost per unit is $20 per year, yearly units needed is 1,500, and the firm orders 12 times a year?

Group of answer choices

$40,000

$24,000

$288,000

$30,000

$360,000

Flag this Question

Question 7

4pts

The goal of inventory management is to:

Group of answer choices

reduce receivable days.

increase inventory days.

reduce receivable costs.

reduce total inventory costs.

All of these

Flag this Question

Question 8

4pts

The stated rate of interest is 10%. Which form of compounding will give the highest effective rate of interest?

Group of answer choices

Annual compounding

Monthly compounding

Daily compounding

Continuous compounding

It is impossible to tell without knowing the term of the loan.

Flag this Question

Question 9

4pts

The time value of money concept can be defined as:

Group of answer choices

The relationship between the supply and demand of money.

The relationship between money spent versus money received

The relationship between a dollar to be received in the future and a dollar today.

The relationship of interest rate stated and amount paid.

None of the above.

Flag this Question

Question 10

4pts

Todd is able to pay $160 a month for five years for a car. If the annual interest rate is 4.9%, how much can Todd afford to borrow today to buy a car?

Group of answer choices

$6,961.36

$8,499.13

$8,533.84

$8,686.82

$9,588.05

Flag this Question

Question 11

4pts

You would like to establish a trust fund that will provide $50,000 a year forever for your heirs. The trust fund is going to be invested very conservatively so the annual expected rate of return is only 2.75%. How much money must you deposit today to fund this gift for your heirs?

Group of answer choices

$1,333,333.33

$1,375,000.00

$1,425,000.00

$1,666,666.67

$1,818,181.82

Flag this Question

Question 12

4pts

The market price of a bond is equal to the present value of the:

Group of answer choices

face value minus the present value of the annuity payments.

annuity payments plus the future value of the face amount.

face value plus the present value of the annuity payments.

face value plus the future value of the annuity payments.

annuity payments minus the face value of the bond.

Flag this Question

Question 13

4pts

All else constant, a bond will sell at _____ when the yield to maturity is _____ the coupon rate.

Group of answer choices

a discount; higher than

at par; less than

at par; higher than

a premium; equal to

a premium; higher than

Flag this Question

Question 14

4pts

A General Co. bond has an 8% coupon and pays interest annually. The face value is $1,000 and the current market price is $1,020.50. The bond matures in 20 years. What is the yield to maturity?

Group of answer choices

7.79%

7.82%

8.00%

8.04%

8.12%

Flag this Question

Question 15

4pts

What is the value of a 20 year zero-coupon bond with a face value of $1,000 when the annual market required rate of return is 9%?

Group of answer choices

$178.43

$171.93

$318.38

$414.64

$111.11

Flag this Question

Question 16

4pts

You have decided that you would like to own some shares of GH Corp. but need an expected 12% rate of return to compensate for the perceived risk of such ownership. What is the maximum you are willing to spend per share to buy GH stock if the company pays a constant $3.50 annual dividend per share?

Group of answer choices

$29.17

$26.04

$32.67

$34.29

$36.59

Flag this Question

Question 17

4pts

How much are you willing to pay for one share of stock if the company just paid an $.80 annual dividend, the dividends increase by 4% annually and you require an 8% rate of return?

Group of answer choices

$20.80

$19.23

$20.00

$20.40

$21.63

Flag this Question

Question 18

4pts

U.S. based Accor company has a subsidiary in Germany. The German subsidiary prepares its financial statements in euros. At the end of the year, Accor needs to prepare its consolidated financial statements in US$. What kind of foreign exchange exposure does Accor face?

Group of answer choices

Accounting exposure

Transaction exposure

Economic exposure

Strategic exposure

Competitive exposure

Flag this Question

Question 19

4pts

Singapore based company Bee Bee is launching its product to the Australian market. Since the product will be sold to retail customers in Australia., it will be collecting A$. What kind of foreign exchange exposure does Bee Bee face?

Group of answer choices

Economic exposure

Translation exposure

Accounting exposure

Transaction exposure

Contractual exposure

Flag this Question

Question 20

4pts

Which one of following statements is NOT correct?

Group of answer choices

There are no speculators in the foreign exchange market.

Importers are participants in the foreign exchange market.

Speculators are participants in the foreign exchange market.

Exporters are participants in the foreign exchange market.

Portfolio managers are participants in the foreign exchange market.

Flag this Question

Question 21

4pts

A futures contract on Japanese Yen where buyers and sellers agree to make or take delivery of Yen at 100 Yen/$ expires in 3 months.The current exchange rate is also 100 Yen/$.If the value of Yen rises and continues to rise every day over the 3 month period, then when the contract is settled, the buyer will_____and the seller will _____.

Group of answer choices

gain; lose

lose; gain

gain; break even

gain; gain

lose; lose

Flag this Question

Question 22

4pts

Two key features of futures contracts that make them more in demand than forward contracts are:

Group of answer choices

None of the these

futures are traded on exchanges and must be marked to the market.

futures contracts allow flexibility in delivery dates and provide a liquid market for netting positions.

futures are marked to the market and allow delivery flexibility.

futures are traded in liquid markets and require a performance bond.

Flag this Question

Question 23

4pts

Futures contracts contrast with forward contracts by:

Group of answer choices

All of these.

trading on an organized exchange.

marking to the market on a daily basis.

having specific contract sizes.

None of these.

Flag this Question

Question 24

4pts

ADZ is an importer who just bought 12.5m Yen worth of goods from a supplier in Japan. The supplier gave the company 3 months to pay, and the currency of invoice is Yen. To hedge its currency risk, ADZ decided to buy a call option on Yen with the strike price of 100 Yen/$.The premium for this option is $2,800. In 3 months' time when ADZ needs to pay its supplier, the exchange rate is 105Yen/$. How much does ADZ pay in total accounting for the option premium?

Group of answer choices

$121,848

$127,800

$116,248

$116,136

$122,200

Flag this Question

Question 25

4pts

You have A$500,000 worth of receivables you expect to collect in 2 months' time. To hedge your currency risk, you decided to hedge with a forward contract at a forward exchange rate of 1.5 A$/US$.In 2 months' time, the exchange rate is 1.4 A$/US$. How much do you receive?

Group of answer choices

$333,333

$700,000

$650,000

$750,000

$357,143