FIN 320 Final

The primary goal of financial management is most associated with increasing the: a. Dollar amount of each sale b. Traffic flow within the firm's storage c. The fixed costs while lowering the variable costs d. Firm's liquidity e. Market value of the firm

e

The ___ cycle is the time from when inventory is acquired until cash is collected from the sale of a product a. operating b. billing c. cash d. inventory

a

Which statement is true? a. From a legal perspective, preferred stock is a form of corporate equity b. All classes of stock must have equal voting rights per share c. Common shareholders elect the corporate directors while the preferred shareholders vote on mergers and acquisitions d. Preferred dividends provide tax-free income to individual investors e. Preferred shareholders prefer noncumulative dividends over cumulative dividends

a

Uses of cash can involve increasing a(n) ___ account (select all that apply): a. fixed asset b. equity c. long-term debt d. non cash current asset

a & d

What can we say about dividends paid to common and preferred stakeholders? (select all that apply): a. dividends to preferred stakeholders are fixed b. preferred stock dividends change every year based on the earnings on the firm c. dividends are guaranteed for both preferred and common stockholders d. dividends to common stockholders are not fixed

a & d

If the financial markets are semi-strong form efficient, then: a. Only the most talented analysts can determine the true value of a security b. Only individuals with private information have a marketplace advantage c. Technical analysis provides the best tool to use to gain a marketplace advantage d. No one individual has an advantage in the marketplace e. Every security offers the same rate of return

b

T/F: the SML approach is advantageous because all it requires is estimation of beta a. true b. false

b

T/F: the primary disadvantage of the dividend growth model approach is its simplicity a. true b. false

b

The time between paying cash for inventory and receiving cash from selling a product is called the ___ a. operating cycle b. cash cycle c. accounts payable period d. accounts receivable period

b

Which of the following combinations will always result in an increased dividend yield? a. Increase in the stock price combined with a lower dividend amount b. Increase in the stock price combined with a higher dividend amount c. Decrease in the stock price combined with a lower dividend amount d. Decrease in the stock price combined with a higher dividend amount e. Increase in the stock price combined with a constant dividend amount

b

Short-term finance is concerned with current assets and current liabilities, whereas long-term finance is concerned with _____ (select all that apply): a. inventory management b. dividend policy c. accruals policy d. capital structure e. capital budgeting

b, d, & e

A firm's liquidity level decreases when: a. Inventory is purchased with cash b. Inventory is sold on credit c. Inventory is sold for cash d. An account receivable is collected e. Proceeds from a long-term loan are received

c

By definition, a bank that pays simple interest on a savings account will pay interest: a. Only at the beginning of the investment period b. On interest c. Only on the principal amount originally invested d. On both the principal amount and the reinvested amount e. Only if all previous interest payments are reinvested

c

Which of the following is tax-deductible to the firm? a. dividends paid on common stock b. dividends paid on preferred stock c. coupon interest paid on bonds d. principal amounts paid on debt

c

Which of the following activities decrease cash? (select all that apply): a. increasing current liabilities b. decreasing fixed assets c. increasing fixed assets d. decreasing equity

c & d

A call provision grants the bond issuer the: a. Right to contact each bondholder to determine if he/she would like to extend his/her bonds b. Option to exchange the bond for equity securities c. Right to automatically extend the bond's maturity date d. Right to repurchase the bonds on the open market prior to maturity date e. Option of repurchasing the bonds prior to maturity at a prespecified price

e

All else held constant, the present value of an annuity will decrease if you: a. Increase the annuity's future value b. Increase the payment amount c. Increase the time period d. Decrease the discount rate e. Decrease the annuity payment

e

One year ago, you purchased 600 shares of a stock. This morning you sold those shares and realized a total return of 3.1%. Given this information, you know for sure the: a. Stock price increased by 3.1% over the last year b. Stock increased in value over the past year c. Stock paid a dividend d. Dividend yield is greater than zero e. Sum of the dividend and the capital gains yield is 3.1%

e

T/F: an interest rate swap occurs when two parties exchange a sub-par loan for a market-rate security a. True b. False

b

T/F: buying raw materials requires a decisions bout how much cash should be collected a. true b. false

b

T/F: for publicly traded companies, the component of the dividend yield that must be estimated is the dividend a. true b. false

b

A 30-year home mortgage is a classic example of: a. A set of unequal cash flows b. An ordinary annuity c. A perpetuity d. An annuity due e. A consol

d

Given a profitable firm, depreciation: a. Increases net income b. Increases net fixed assets c. Decreases net working capital d. Lowers taxes e. Has no effect on net income

d

Which one of the following will increase the profit margin of a firm, all else held constant? a. Increase in interest paid b. Increase in fixed costs c. Increase in depreciation expense d. Decrease in the tax rate e. Decrease in sales

d

Which one of these transactions will increase the liquidity of a firm? a. Cash purchase of new production equipment b. Payment of an account payable c. Cash purchase of inventory d. Credit sale of inventory at cost e. Cash payment of employee wages

d

Which one of the following is an ordinary annuity, but not a perpetuity? a. $75 paid at the beginning of each monthly period for 50 years b. $15 paid at the end of each monthly period for an infinite period of time c. $40 paid quarterly for 5 years, starting today d. $50 paid every year for 10 years, starting today e. $25 paid weekly for 1 year, starting one week from today

e