Corporate Finance I

Negotiator: Agent Principal

Agent

NYSE Dealer or auction market?

Auction

The decision to issue additional shares of stock is an example of which one of the following? working capital management net working capital decision capital budgeting controller's duties capital structure decision

Capital structure decision

The cash flow of a firm which is available for distribution to the firm's creditors and stockholders is called the: operating cash flow. net capital spending. net working capital. cash flow from assets. cash flow to stockholders.

Cash flow from assets

interest earned on both the initial principal and the interest reinvested from prior periods is called: free interest. dual interest. simple interest. interest on interest. compound interest.

Compound interest

Accounting functions- Treasurer or Controller?

Controller

Treasurer or Controller? Tax Manager Cost Accounting Manager Financial Accounting Manager Informational Technology manager

Controller

Mary just purchased a bond which pays $60 a year in interest. What is this $60 called? coupon face value discount call premium yield

Coupon

Which term relates to the cash flow which results from a firm's ongoing, normal business activities? operating cash flow capital spending net working capital cash flow from assets cash flow to creditors

Operating Cash flow

Shelley won a lottery and will receive $1,000 a year for the next ten years. The value of her winnings today discounted at her discount rate is called which one of the following? single amount future value present value simple amount compounded value

Present value

Purchaser is called the? Agent Principal

Principal

Treasurer or Controller? Cash manager credit manager capital expenditures Financial planning

Treasurer

Which one of the following categories of securities had the lowest average risk premium for the period 1926-2007? long-term government bonds small company stocks large company stocks long-term corporate bonds U.S. Treasury bills

U.S. Treasury bills

Which one of the following terms is used to describe a loan wherein each payment is equal in amount and includes both interest and principal? amortized loan modified loan balloon loan pure discount loan interest-only loan

amortized loan

Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date? income statement creditor's statement balance sheet statement of cash flows dividend statement

balance sheet

Which one of the following is a capital budgeting? determining how much inventory to keep on hand deciding whether or not to purchase a new machine for the production line deciding how to refinance a debt issue that is maturing determining how many shares of stock to issue determining how much money should be kept in the checking account

deciding whether or not to purchase a new machine for the production line

If interest Rate increases the value of your bond will:

decrease

Which one of the following is a capital structure decision? determining the amount of funds needed to finance customer purchases of a new product determining how much inventory will be needed to support a project determining how to allocate investment funds to multiple projects determining which one of two projects to accept determining how much debt should be assumed to fund a project

determining how much debt should be assumed to fund a project

Which one of the following terms is defined as dividends paid expressed as a percentage of net income? dividend retention ratio dividend yield dividend payout ratio dividend portion dividend section

dividend payout ratio

An ordinary annuity is best defined by which one of the following? increasing payments paid for a definitive period of time increasing payments paid forever equal payments paid at regular intervals over a stated time period equal payments paid at regular intervals of time on an ongoing basis unequal payments that occur at set intervals for a limited period of time

equal payments paid at regular intervals over a stated time period

Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time? income statement balance sheet statement of cash flows tax reconciliation statement market value report

income statement

The percentage of the next dollar you earn that must be paid in taxes is referred to as the _____ tax rate. mean residual total average marginal

marginal

Which one of the following is a working capital management decision? determining whether or not a project should be accepted determining the number of shares of stock to issue to fund an acquisition determining whether to pay cash for a purchase or use the credit offered by the supplier determining the amount of long-term debt required to complete a project determining the amount of equipment needed to complete a job

Determining whether to pay cash for a purchase or use the credit offered by the supplier

The most acceptable method of evaluating the financial statements of a firm is to compare the firm's current: financial ratios to the firm's historical ratios. financial statements to the financial statements of similar firms operating in other countries. financial ratios to the average ratios of all firms located within the same geographic area. financial statements to those of larger firms in unrelated industries. financial statements to the projections that were created based on Tobin's Q.

Financial ratios to the firm's historical ratios

Which one of the following statements concerning a sole proprietorship is correct? A sole proprietor can generally raise large sums of capital quite easily. A sole proprietorship is taxed the same as a C corporation. The life of a sole proprietorship is potentially unlimited. Transferring ownership of a sole proprietorship is easier than transferring ownership of a corporation. It is easy to create a sole proprietorship.

It is easy to create a sole proprietorship

Ratios that measure a firm's financial leverage are known as _____ ratios. asset management long-term solvency short-term solvency profitability book value

Long term solvency

Currently, the bond market requires a return of 11.6 percent on the 10-year bonds issued by Winston Industries. The 11.6 percent is referred to as which one of the following? coupon rate face rate call rate yield to maturity coupon rate

Yield to maturity

The mixture of debt and equity used by a firm to finance its operations is called: capital budgeting. working capital management. agency cost analysis. financial depreciation

capital structure

Net working capital is defined as: total liabilities minus shareholders' equity. current liabilities minus shareholders' equity. fixed assets minus long-term liabilities. total assets minus total liabilities. current assets minus current liabilities.

current assets minus current liabilities

Which one of the following terms is applied to the financial planning method which uses the projected sales level as the basis for determining changes in balance sheet and income statement account values? percentage of sales method sales dilution method sales reconciliation method common-size method trend method

percentage of sales method

Which one of the following accurately defines a perpetuity? a limited number of equal payments paid in even time increments payments of equal amounts that are paid irregularly but indefinitely varying amounts that are paid at even intervals forever unending equal payments paid at equal time intervals unending equal payments paid at either equal or unequal time intervals

unending equal payments paid at equal time intervals

Which one of the following categories of securities had the highest average return for the period 1926-2007? U.S. Treasury bills large company stocks small company stocks long-term corporate bonds long-term government bonds

Small company stocks