QUESTION 1 Which topic in managerial accounting provides the appropriate insight into issues that a business faces when raising money? A. Costing. B. Cost-Volume-Profit. C. Incremental Analysis. D. The Balanced Scorecard.

QUESTION 2 You are employed by the president of a manufacturing company to monitor activities from the Federal Reserve. The reason you are monitoring activities from the Federal Reserve is it can affect the company's cost of capital. Which one of the following activities from the Federal Reserve would cause the greatest harm to the company's cost of capital? A. Decreasing the discount rate and decreasing the fed funds rate. B. Decreasing the discount rate and increasing the fed funds rate. C. Increasing the discount rate and decreasing the fed funds rate. D. Increasing the discount rate and increasing the fed funds rate.

QUESTION 3 If a company raises money by issuing debt or preferred stock, what must it receive from customers in order to make these types of financing effective? A. Cash. B. Credit. C. Sales. D. Cash, credit, and sales

QUESTION 4 Which bond term best applies to the "quality of debt" concept? A. Bond Ratings. B. Coupon Rate. C. Maturity. D. Par Value.

QUESTION 5 Which one of the following statements about Basket Wonders' cost of preferred stock is true? A. The cost of the company's preferred stock is a relationship between the preferred stock's dividend per share and market value. B. The cost of the company's preferred stock is a relationship between the preferred stock's dividend per share and par value. C. The cost of the company's preferred is greater than the company's cost of equity capital. D. The cost of the company's preferred stock is less than the company's cost of debt.

QUESTION 6 A company's degree of operating leverage is 7.25. The company has $75,000 in fixed costs and $125,000 in variable costs. Based on the data presented the company's operating income is A. $8,000. B. $12,000. C. $16,000. D. $20,000.

QUESTION 7 Which one of the following statements about the secondary market is true? A. Purchases and sales of new stocks and bonds occur in the secondary market. B. The secondary market decreases the liquidity of securities outstanding and required returns of investors. C. The secondary market increases the liquidity of securities outstanding and required returns of investors. D. Transactions in the secondary market do not provide additional monies to companies. QUESTION 8 Which one of the following statements is the best description of the Bob Lamkin case from a microeconomics perspective? A. Bob provides financial capital and receives financial capital. B. Bob provides human capital and receives financial capital. C. Bob provides intangible capital and receives financial capital. D. Bob provides physical capital and receives financial capital.

QUESTION 9 Which preferred stock term serves as a basis for establishing legal capital? A. Dividend Rate. B. Maturity. C. Par Value. D. Dividend Rate, Maturity, and Par Value. 1 points Save Answer QUESTION 10 A company's degree of financial leverage is 6.75. The company's only source of long-term financing is debt. If the company's interest expense is $450,000, the company's operating income is A. $527,750. B. $528,250. C. $528,750. D. $529,250. 1 points Save Answer QUESTION 11 You are employed as a financial analyst at a technology company. Your primary responsibility is to assess through financial statement ratios the ability of this company to conduct relationships with stakeholders. Which financial statement ratio best assesses the ability of this company to conduct relationships with stockholders? A. Debt to Equity. B. Profit Margin. C. Return on Assets. D. Return on Equity. 1 points Save Answer QUESTION 12 The tax rate is taken into consideration when calculating the cost of A. debt. B. equity capital. C. preferred stock. D. debt, equity capital, and preferred stock.

QUESTION 13 Compensating employees through annual salaries is an example of a company using A. financial leverage. B. initial public offerings. C. operating leverage. D. venture capital. 1 points Save Answer QUESTION 14 A company has a 5.25% weighted average cost of capital. The company also has a 3% cost of debt, 6% cost of preferred stock, and 9% cost of equity. The respective weights of the company's long-term debt, preferred stock, and common stock equity are A. 0%, 50%, 50%. B. 25%, 25%, 50%. C. 25%, 50%, 25%. D. 50%, 25%, 25%. 1 points Save Answer QUESTION 15 A company wants to raise money by issuing common stock. The company wants its cost of equity to be 10%. The company also wants the common stock's dividend per share to be $1.75 per share. In addition the company expects the dividend to grow at an annual rate of 7%. Based on the data presented the common stock's market price per share will be A. $47.50. B. $52.50. C. $57.50. D. $62.50. 1 points Save Answer QUESTION 16 What is a synonym for financial leverage? A. Gearing. B. Pulling. C. Pushing. D. Shifting. 1 points Save Answer QUESTION 17 Who will put the greatest amount of pressure on entrepreneurs to initiate an IPO? A. Angel investors. B. Commercial lenders. C. Venture capitalists. D. Angel investors, commercial lenders, and venture capitalists. 1 points Save Answer QUESTION 18 A characteristic of raising money through private placement is the security is not subject to rules from the A. Department of Justice. B. Federal Reserve. C. Internal Revenue Service. D. Securities and Exchange Commission. 1 points Save Answer QUESTION 19 Which bond term best applies to Bob Lamkin's desire to make money? A. Bond Ratings. B. Coupon Rate. C. Maturity. D. Par Value. QUESTION 20 Which common stock term best applies to Bob Lamkin's desire to make money? A. Authorized Shares. B. Issued Shares. C. Outstanding Shares. D. Authorized, issued, and outstanding shares. 1 points Save Answer QUESTION 21 A company wants to raise money by issuing preferred stock. The preferred stock will have a par value of $50 per share. If the company expects the preferred stock to maintain a market value of $45 per share and wants a 5% cost of preferred stock, the dividend per share will be A. $.90. B. $2.25. C. $2.50. D. $5.00. 1 points Save Answer QUESTION 22 When securities are issued to the public who bears the risk of destroying shareholder wealth when a security fails to sell at an established price? A. The company. B. The lender. C. The stockholder. D. The underwriter. 1 points Save Answer QUESTION 23 Which preferred stock term best applies to Bob Lamkin's desire to make money? A. Dividend Rate. B. Maturity. C. Par Value. D. Dividend Rate, Maturity, and Par Value. 1 points Save Answer QUESTION 24 A way to minimize bias when calculating the cost of capital is through the use of a A. moving average. B. simple average. C. weighted average. D. moving average, simple average, and weighted average. 1 points Save Answer QUESTION 25 Who bears the greatest amount of risk when financing a business? A. Bondholder. B. Common stockholder. C. Preferred stockholder. D. Bondholder, common stockholder, and preferred stockholder.

QUESTION 26 Which one of the following statements about the Capital Asset Pricing Model is false? A. A beta greater than one decreases the cost of equity. B. A risk premium is the difference between the expected return on the market and the risk-free rate. C. The cost of equity, when using the Capital Asset Pricing Model, is the sum of the risk-free rate and the risk premium. D. Unlike the Dividend Discount Model the Capital Asset Pricing Model incorporates risk when calculating the cost of equity. 1 points Save Answer QUESTION 27 Which administrative function plays an important part in a company's relationship with people like Bob Lamkin? A. Accounting. B. Human Resources. C. MIS. D. Purchasing. 1 points Save Answer QUESTION 28 Which common stock term is found within a corporation's charter? A. Authorized Shares. B. Issued Shares. C. Outstanding Shares. D. Authorized Shares, Issued Shares, and Outstanding Shares. 1 points Save Answer QUESTION 29 Which element that affects the Weighted Average Cost of Capital formula should be given serious consideration when dealing with people like Bob Lamkin? A. The book value of common stock equity. B. The market value of common stock equity. C. The par value of preferred stock. D. The tax bracket of the company. 1 points Save Answer QUESTION 30 A company wants to raise money by issuing bonds. The bonds will have a face value of $1,000 and mature in 15 years. The company expects the bonds to maintain a market value of $450. The company also expects to incur income taxes at a rate of 35%. Based on the data presented the company's cost of debt will be A. 1%. B. 3%. C. 4%. D. 5%.