Question 14 pts

You are comparing the financial performance of two companies with similar Net Income and Asset Accounting Value. Company A has a debt equity ratio of .50/1 while Company B has a debt equity ratio of 2.0/1. Based on this, what general observation may be made regarding the two companies.

Group of answer choices

Company A has a higher level of debt relative to its total capital than Company B

Company B is better positioned to weather downturns in its business than Company A

Company A will report a higher return on Equity than Company B.

Company B will report a higher return on Equity than Company A

Company A will report a higher equity multiplier than Company B.

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Question 24 pts

A firm has Days Sales In Receivables of 42 days. Which of the following may be false regarding that ratio?

Group of answer choices

That is an excellent Ratio Value, management should be commended

That Ratio Value should be evaluated based on its trend over several years.

The Ratio Value should be evaluated with regard to the firm's credit policy.

The Ratio Value should be evaluated based on benchmarks of the firm's industry

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Question 34 pts

From the perspective of Finance, the value of a financial asset is most appropriately measured by:

Group of answer choices

Its cost as recorded on a firm's balance sheet

the expected proceeds from the sale of the asset

the expected future cash flows from the asset

the expected future cash flows from the asset discounted at an appropriate risk adjusted discount rate

The net book value of the asset on a firm's balance sheet

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Question 44 pts

A Treasury yield curve plots Treasury interest rates relative to which one of the following?

Group of answer choices

market rates

comparable corporate bond rates

time to maturity

inflation

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Question 54 pts

Which of the following would not affect the reconciliation of Net Income to Net Cash Provided by a firm (GAAP based Statement of Cash Flow)?

Group of answer choices

The firm's change in Non-Cash Current Assets and Liabilities.

The firm's Federal Income Tax Expense

The Dividends Paid by the firm

Common Stock dividends paid by the firm

The Firm's acquisition of Capital Assets

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Question 64 pts

The Balance Sheet Identity as expressed by Accounting Discipline is Assets = Liabilities + Shareholder's Equity. From the perspective of Finance, the Balance Sheet Identity is best expressed as:

Group of answer choices

Assets + Shareholders Equity = Liabilities

Assets + Liabilities = Shareholders Equity

Liabilities - Shareholder's Equity = Assets

Assets - Liabilities = Shareholders Equity

Sales - Net Income = Costs

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Question 74 pts

The Fisher effect is defined as the relationship between which of the following variables?

Group of answer choices

default risk premium, inflation risk premium, and real rates

real rates, inflation rates, and nominal rates

interest rate risk premium, real rates, and default risk premium

nominal rates, real rates, and interest rate risk premium.

real rates, interest rate risk premium, and nominal rates

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Question 84 pts

When comparing a Finance based Cash Flow Statement to a GAAP based Statement of Cash Flow, which of the following statements is (are) true?

Group of answer choices

The GAAP based Statement of Cash Flow measures changes in the cash retained by the firm as does the Finance based Statement of Cash Flow

The Finance based Statement of Cash Flow measures the cash distributed to the investors in the firm as does the GAAP based Statement of Cash Flow

The GAAP based Statement of Cash Flow measures the cash distributed to the investors in the firm

The Finance based Statement of Cash Flow measures changes in the cash retained by the firm

The GAAP based Statement of Cash Flow measures changes in the cash retained by the firm and the Finance based Statement of Cash Flow measures the cash distributed to the investors in the firm

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Question 94 pts

If the management of a firm is successful in increasing the financial value of the firm, one would see this increase in value

Group of answer choices

In the carrying value of the Assets on the firm's Balance Sheet

In the reported value of Shareholders Equity on the firm's Balance Sheet

In the stock price and total market capitalization of the firm

In the Fischer effect as seen in the firm's debt maturity profile

The firm's bounds would be priced at discount.

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Question 104 pts

As interest rates rise, one would expect bond prices to ___________.

Group of answer choices

decrease

increase

Remain Stable

There is no correlation between interest rates and bond prices

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Question 114 pts

Considering the article "The Merrill Lynch Money Machine", the actions of the Merrill Lynch managers and executives in creating the off-balance sheet entity to sell its troubled mortgage portfolio to is indicative of:

Group of answer choices

Sound tax planning

Finding the price of the securities through the auction process

Limiting the exposure of the Firm to the upcoming downturn in the economy

Failing to act appropriately as agents of the shareholders of Merrill Lynch

Protecting the liquidity of the firm's assets

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Question 124 pts

If inflation averages 2.5%/per year over your 40 to 50-year post graduate working life, you may expect prices for most goods and services to be _____________________ then than they are today.

Group of answer choices

That is not predictable, it depends on the pace of technological innovation and the Fischer effect during that period of time,

Substantially higher

About the same

Substantially lower