FIN 3430

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you are currently holding a call option on a stock with an exercise price of 100

$(10)

if two projects are completely and positively linear

+1

the coefficient of correlation that indicates

-0.11

listed below are four numbers

-1.0

a company has cash of 100 million

0.78

at the end of the current year, B Co.

1.0

if the return on the market portfolio is 10% and the risk free rate is 5%

1.5% increase

the following information pertains to a company's potential investment

10%

beginning January 2, year 1, a company

10,500

using the capital asset pricing model (CAPM) with beta of 1.5

11%

what is the weighted average cost of capital for a firm using 65%

11.725%

dividends are equal to $5

12.2%

what is the after-tax cost of preferred stock that sells for $5 per share

15%

an analysis covering Guilderland Mining Co.

15.4%

using the capital asset pricing model (CAPM) with beta of 1.25

16%

this year, Nelson Industries increased earnings

2.47

a stock priced at $50 per share

30%

a corporation has 50,000 in equity

30,000

Sharif Co. has a total debt of 420,000

330,000

Konstans Corp.

4%

a vendor offered Wyatt Co.

4,000 loss

at the beginning of year 1, 100,000 is invested at 5% interest

5,250.00

Aaron Co's vendor will be offering discounts

5/20 , net 60

a company has equity of 9,000

6,200

during the current year, Rand Co.

6.0

the following information was take from Culver Co's

60%

City Development Inc,

7.5%

selected information from the accounting records of Bolingbroke company follows

78

Bates Corp. has 100,000

80,000

what is the price of a 10 year, 10% coupon bond

887.00

a company purchased 10,000 of merchandise inventory on may 1

9,800

Scrunch-Tech Inc,

9.36%

because of the large number of factors that could affect the demand

Monte Carlo simulation

which of the following classes of securities

US treasury bond;

an investor is currently holding income bonds

US treasury bonds

each of the following financial instruments is a derivative except

a fixed interest, 5 year note payable

which of the following corporate characteristics would favor

a high tax rate

which of the following is considered a corporate equity security

a share of callable preferred stock

each of the following business functions is considered part of a company's value chain except

accounting

a measure that describes the risk of an investment project relative to other investments

beta coefficient

the main reason that a firm would strive to reduce the number of days sales

cash

Bander Co.

common stock

one type of risk to which investment securities

company unique risk

all of the following are alternative marketable securities

convertible bonds

Global companies that deal with the political

country risk

the relationship of the total debt to the total equity if a corporation is a measure of

creditor risk

net working capital is the difference between

current assets and current liabilities

if a firm is considering the use of learning curve analysis

decreases

prior to the introduction of the euro

exchange-rate risk

the risk of loss because of fluctuations

exchange-rate risk

an analysis of a company's planned equity financing

expected market earning, the risk free rate, and the beta coefficient

if Dexter Industries

expected return should approximate the overall market

which of the following is most useful when risk is being prioritized

expected value

which one of the following is not a determinant in valuing a call option

forward contract price

an investment security with high risk will have a

high standard deviation

many assumptions and factors may be considered to determine the fair value except

historical cost

given demand in excess of capacity, no spoilage or waste

increase for successive periods

as a company becomes more conservative

increase in the ratio of current assets

During the year, Mason Company's

increased by 170,000

if Brewer Coporation's bonds are currently

interest is deductible for tax purposes

in general, it is more expensive for a company to finance with equity capital

investors are exposed to greater risk with equity capital

serial bonds are attractive to the investors because

investors can choose the maturity

the expected monetary value of an event

is equal to the payoff

if a call option is "out-of-the-money"

it is not worth excreting because the value of the underlying asset is less than the exercise price

when managing cash and short-term investments

liquidity and safety

when purchasing temporary investments

liquidity risk

the yield curve shown implies that the

long-term interest rates have a higher annualized yield than short-term rates

a financial institution looking to assess its investment portfolio's

market value at risk analysis

Osgood Products

maximize the net worth of the firm

from an investor's viewpoint, the least risky

mortgage bond

an organization would usually offer credit terms of 2/10, net 30 when

most competitors are offering

which of the following may be used to estimate how inventory

multiple regression analysis

which of the following statements are correct regarding corporate debt

neither

the use of derivatives to either hedge of speculate results in

offsetting risk when hedging and increases risk when speculating

a forward contract involves a commitment today

on a specific future date at a price determined today

if a CPA's client experienced

precious metals

which one of the following statements is correct regarding the effect preferred stock has on a company

preferred shareholders' claims take precedence

the following excerpt was taken from a company's financial statements

preferred stock

preferred and common stock differ in that

preferred stock has a higher priority

management's financial estimates are based on all of the following except

prespecifications, known outcomes, irrelevance

the difference between the required rate of return on a given risky investment

risk premium

a put is an option that gives its owner the right to do which of the following

sell a specific security at fixed conditions of price and time

a widely used approach that managers use to

sensitivity analysis

through the use of decision models, managers thoroughly

sensitivity analysis

when the US dollar is expected to rise in value against foreign currencies

speed up collections and slow down payments

if a bond sells at a premium, the

stated coupon rate must be more

in decision theory, those

states of nature

the expected monetary value of an act is

sum of the conditional profit (loss) for each event times

a market analyst has estimated the equity beta of Modern Homes

systematic risk is higher

to assist in an investment decision, Gift Co.

the greatest probability

according to the capital asset pricing model (CAPM) with beta of 1

the required rate of return is equal to the market return

what does beta measure in the capital asset pricing model

the volatility of a stock relative to the market

if the ratio of total liabilities to equity increases, a ratio that must also increase

total liabilities to total assets

a Chinese conglomerate owns a construction subsidiary

translation exposure

which security is most often held as substitute for cash

treasury bills

the risk of a single stock is

unsystematic risk

short-term interest rates are

usually lower than long-term rates

in decision making under conditions of uncertainty

weighted average


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