FIN 320 Final

Which one of the following statements related to the static theory of capital structure is correct?

A firm's value is maximized when a firm operates at its optimal debt level.

Which one of the following best defines legal bankruptcy?

A legal proceeding for liquidating or reorganizing a business

Kelly just completed compiling a listing of her firm's accounts receivables with each invoice segregated according to the length of time the invoice has been outstanding. What is the name given to this listing?

Aging schedule

Moore & Moore has just finished projecting its expected cash receipts and expenditures for next year. What is this projection called?

Cash budget

The length of time a firm grants its customers to pay for their purchases is called the:

Credit Period

Which one of the following is the date on which the board of directors agrees to pay a dividend and passes a resolution to do so?

Declaration Date

Which term is defined as having international operations in a world where relative currency values change?

Exchange rate risk

Which one of the following is the equity risk arising from the capital structure selected by a firm?

Financial risk

An agreement to exchange currencies sometime in the future is referred to as which of the following?

Forward trade

Which of these is the most indicative of a flexible short-term financial policy?

High ratio of current assets to sales

Which one of the following is least apt to limit the amount of cash dividends a firm can pay?

Increasing stock price

Which of these is most likely the fastest method of collecting cash?

Initiating a financial electronic data interchange at the time of sale

The operating cycle is equal to the:

Inventory period plus the accounts receivable period.

Which one of the following is a system for managing demand-dependent inventories that minimizes the amount of inventory on hand?

Just-in-time inventory system

Which one of the following specifies the length of time that must pass after an initial public offering (IPO) before insiders are permitted to sell their shares?

Lockup period

Which one of the following commences on the day inventory is purchased and ends on the day the payment for the sale of that inventory is collected? Assume all sales and purchases are on credit.

Operating cycle

Which one of the following is the best universal definition of an exchange rate?

Price of one country's currency expressed in terms of another country's currency

Ted is trying to decide what cost of capital he should assign to a project. Which one of the following should be his primary consideration in this decision?

Risk level of the project

You own 400 of the 21,000 outstanding shares of DLK stock. The firm just announced that it will be issuing an additional 3,000 shares to the general public in a cash offer at $16 per share. What type of event are you participating in if you opt to purchase 100 of these additional shares?

Seasoned equity offering

Accounts receivable financing is the term used to describe which one of the following types of loans that involve either the assignment or the factoring of a firm's accounts receivable?

Secured short-term loan

GW Underwriters retains the difference between its buying price and its offering price on new securities. What is this amount called?

Spread

Which of these is a noncash payment made by a firm to its shareholders that lessens the value of each outstanding share?

Stock dividend

Which of these is defined as an agreement to exchange two securities or two currencies?

Swap

Which one of the following is an intended result of a lockup agreement?

Temporary support of the market price of IPO shares

JTL has 148,000 shares of stock outstanding. The firm has extra cash so it announced this morning that it is willing to repurchase 18,000 of its shares. What type of offer is the firm making?

Tender offer

Which statement is true?

The more an issue is underpriced, the more it tends to be oversubscribed.

Tuesday, December 1, is the ex-dividend date for Alpha stock. Which one of the following dates is the record date? Assume there are no banking holidays to consider.

Thursday, December 3

What is the advertisement, commonly found in financial newspapers, that announces a public offering of securities and provides the name of the underwriters called?

Tombstone

The length of time a retailer owes its supplier for an inventory purchase is called the:

accounts payable period

The cash cycle is equal to the:

accounts receivable period minus the accounts payable period plus the inventory period.

When using the pure play approach for a proposed investment, a firm is primarily seeking a rate of return that:

best matches the risk level of the proposed investment.

The terms of sale are best defined as the:

conditions under which a firm sells its goods or services for either cash or credit.

An increase in a levered firm's tax rate will:

decrease the firm's cost of capital.

A share repurchase will:

increase the earnings per share and decrease the PE ratio.

An American Depositary Receipt is defined as a security

issued in the U.S. that represents shares of a foreign stock

Eurobonds are best defined as international bonds issued in ________ and denominated in ________.

multiple countries; a single currency

AJ's Market generally holds $50,000 in cash in case an unexpected investment opportunity arises. This is an example of the ________ motive for holding cash.

speculative