uiz - FIN:3000:0EXW Smr16 Introductory Financial Management - ICON

A firm has assets valued at $250M, liabilities properly valued at $100M. What is the maximum percentage drop in asset prices can the firm withstand before becoming insolvent?

Quiz - FIN:3000:0EXW Smr16 Introductory Financial Management - ICON Quiz - FIN:3000:0EXW Smr16 Introductory Financial Management - ICON

40.0%

25.0%

66.7%

60.0%

Question 1 options:

40.0%

25.0%

66.7%

60.0%

Quiz - FIN:3000:0EXW Smr16 Introductory Financial Management - ICON

Would you expect interest rates and consumer borrowing to be positively correlated or negatively correlated and why?

Question 2 options:

Negatively correlated because consumers will borrow more when interest rates are low

Positively correlated because consumers will borrow more when interest rates are low

Positively correlated because consumers will borrow more when interest rates are high

Negatively correlated because consumers will borrow more when interest rates are high

Quiz - FIN:3000:0EXW Smr16 Introductory Financial Management - ICON

Which of the following is an advantage of using IRR as a capital budgeting tool?

Question 3 options:

It is easier to ignore sunk costs in this method

There is not a simple Excel function to calculate IRR

Estimates are extremely sensitive to changes in the discount rate

It allows for an easy comparison against the discount rate or WACC

Quiz - FIN:3000:0EXW Smr16 Introductory Financial Management - ICON

In which scenario should a company be most inclined to issue additional equity?

Question 5 options:

The company has many investment opportunities, little debt, and an undervalued stock price

The company wishes to increase its leverage to increase returns on equity

The companys stock price has just doubled as they completed a 2-1 stock split

The company is illiquid with an overvalued stock price

Quiz - FIN:3000:0EXW Smr16 Introductory Financial Management - ICON

You take out a loan to buy a brand new car. If the Effective Annual Rate (EAR) is 8.3% when compounding monthly, calculate the EAR when compounding quarterly.

Question 6 options:

8.27%

8.24%

8.3%

8.0%