BUS499

The Clydesdale Company has sales of $4,500,000. It also has invested assets of $2,000,000 and operating expenses of $3,600,000. The company has established a minimum rate of return of 7%. What is Clydesdale Company's rate of return on investment? Gains from Investment --------------------------- Cost of investment

45%

Mothers Against Drunk Driving (MADD) is a group that works to change attitudes and laws about driving under the influence of alcohol. MADD primarily markets

Ideas

Kashi Heart to HeartTM cereal is aimed at people concerned about their heart health. These people represent the Kashi

Target Market

Centrum vitamins segments its line of vitamins based on gender and age group (e.g., one line of vitamins is for men over the age of 50). This is an example of market segmentation based on variables of

a demographics

Yvonne and Garret are looking at information about how their organization's products could fit potential customers' needs. This information deals with demographic characteristics, product benefits sought, lifestyles, geographic factors, brand preferences, and usage rates. They are most likely looking at

a market segment profile.

Cost-benefit principles can be applied to the decision of:

a. profit-maximizing firms.

Economies of scale imply that within some range one can increase the size of operation and:

b. average total cost will decrease.

Economies of scale are created by greater efficiency of capital and by:

b. increased specialization of labor.

Which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

b. ratio of fixed assets to long-term liabilities

Companies HD and LD have the same sales, tax rate, interest rate on their debt, total assets, and basic earning power. Both companies have positive net incomes. Company HD has a higher debt ratio and, therefore, a higher interest expense. Which of the following statements is CORRECT?

Company HD pays less in taxes.

The Sarbanes-Oxley Act requires the _________ to vouch for the truthfulness and fairness of a firm's financial disclosures.

a. CEO and CFO

A company has a sales revenue of $10,000, cost of goods sold of $4500, and other operating expenses of $1500. What is this company's pre-tax income? Pre-tax income is the company's taxable income and is calculated as the difference between sales and ALL direct business expenses. It excludes revenues from non-primary business activities (e.g. investments in other firms). The revenues are $10,000 and the direct costs of business are cost of goods sold ($4500) plus operating expenses ($1500). Thus, pre-tax income is $10000 - $6000 = $4000.

b. $ 4,000

People who often create benefits for the minority and impose the cost on the majority are called:

b. special-interest groups.

The classified Balance Sheet will subsection the assets section as follows

c. Current Assets and Property, Plant, and Equipment

The Balance Sheet should be prepared

d. after the income statement and before the statement of owner's equity.

Which of the following statements is CORRECT?

e. The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the IRR.

Under U.S. law, it is illegal for a U.S. firm operating in a foreign country to pay bribes to get what it needs. Natives of some of those same countries consider the payment of bribes to be perfectly acceptable. Which of the following influences may account for this difference? a. Cultural differences b. Family influences c. Religious influences d. Value systems e. All of these.

All of these

Which of the following statements is CORRECT? a. The constant growth model cannot be used for a zero growth stock, where the dividend is expected to remain constant over time. b. The stock valuation model, P0 = D1/(rs - g), can be used to value firms whose dividends are expected to decline at a constant rate, i.e., to grow at a negative rate. c. The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate. d. The constant growth model is often appropriate for evaluating start-up companies that do not have a stable history of growth but are expected to reach stable growth within the next few years. e. If a stock has a required rate of return rs = 12% and its dividend is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%.

B

The makers of Tide Detergent recently created "pods" of the product, characterized by a small, square, plastic-wrapped packet that was easier to use. Since it is packaged in these square pods, it requires no measuring and can be transported more easily if one is carrying clothes to a laundromat. This change in packaging is a strategy that can most likely help boost sales in the ____ stage of the product life cycle.

Maturity

Which of the following statements applies to media planning? a. Characteristics of the product are the most important consideration in selecting the media for a campaign. b. The location of the advertising target is irrelevant in media planning. c. Total media dollars spent on advertising have decreased over the last 30 years. d. Regardless of the message to be conveyed, newspapers are one medium that is appropriate for almost any circumstances. e. The message content affects the types of media used for an advertising campaign

The message content affects the types of media used for an advertising campaign

Which of the following is generally regarded by academics as being the best single method for evaluating capital budgeting projects?

a. Net present value (NPV) method

Marissa, a product manager, thinks her company's InstaCup coffee maker is currently in the growth stage of the product life cycle. If so, the profits for the InstaCup coffee maker __________ and the number of competitors ____________.

a. are increasing; is growing

To calculate return on assets (ROA), the numerator will include which of the following?

a. net income

Other things being equal, the effect of a decrease in the price of Coca-Cola would cause which of the following?

b. A downward movement along the demand curve for Coca-Cola.

Which of the following alternatives to specialization would require continually adding new tasks and challenges as part of the job design?

b. Job enrichment

Which of the following statements is CORRECT? a. To implement the corporate valuation model, we discount projected net income at the weighted average cost of capital. b. To implement the corporate valuation model, we discount projected free cash flows at the weighted average cost of capital. c. The corporate valuation model requires the assumption of a constant growth rate in all years. d. To implement the corporate valuation model, we discount net operating profit after taxes (NOPAT) at the weighted average cost of capital. e. To implement the corporate valuation model, we discount projected free cash flows at the cost of equity capital.

b. To implement the corporate valuation model, we discount projected free cash flows at the weighted average cost of capital.

The effectiveness of an advertising campaign can be measured a. before, during, and after the campaign through the use of pretests, inquiries, and posttests. b. during the campaign to determine whether more or less funds should be allocated, but not after the campaign. c. only after the campaign has been carried out completely and results have been tabulated. d. only before the campaign begins, to prevent unnecessary expenditures. e. several weeks after the beginning of the campaign to determine whether the campaign is headed in the right direction.

before, during, and after the campaign through the use of pretests, inquiries, and posttests.

Which of the following concepts of cash is not appropriate to use in preparing the statement of cash flows? a. Cash b. Cash and cash equivalents c. Cash and U.S. Treasury bonds d. Cash and money market funds

c. Cash and U.S. Treasury bonds

According to the law of demand, when will higher corn prices reduce the quantity demanded of corn?

c. When nonprice determinants, like income and the number of buyers, are unchanged.

A minority surgeon on a Chicago hospital staff was admitted to the internship program because of his ethnicity, even though he had lower grades and test scores than other applicants. This acceptance, which was mandated by the government, indicates that the hospital used

c. affirmative action.

In a competitive market, the quantity of a product produced and the price of the product are determined by:

c. both buyers and sellers.

All of the following are common arguments against social responsibility for organizations EXCEPT a. involvement in social programs gives businesses too much power. b. there is potential for conflicts of interest. c. business creates problems and should therefore help solve them. d. the purpose of businesses in the United States is to generate profit for the owners. e. businesses lack the expertise needed to manage social programs.

c. business creates problems and should therefore help solve them. (Not True)

If a seller in a competitive market chooses to charge more than the going price, then:

c. buyers will make purchases from other sellers.

Given the environment in which organizations must function today, which of the following statements about human resource management (HRM) is FALSE? a. HRM should be a part of the strategic planning process. b. HRM oversees the firm's strategic investment in attracting, retaining, and motivating an effective workforce. c. HRM should be viewed as a means of significantly increasing productivity. d. HRM should be left to line managers because they know their people best. e. HRM should have an important place because of the complex legal environment

d. HRM should be left to line managers because they know their people best.

A stock is expected to pay a year-end dividend of $2.00, i.e., D1 = $2.00. The dividend is expected to decline at a rate of 5% a year forever (g = -5%). If the company is in equilibrium and its expected and required rate of return is 15%, which of the following statements is CORRECT? a. The company's dividend yield 5 years from now is expected to be 10%. b. The constant growth model cannot be used because the growth rate is negative. c. The company's current stock price is $20. d. The company's expected stock price at the beginning of next year is $9.50. e. The company's expected capital gains yield is 5%.

d. The company's expected stock price at the beginning of next year is $9.50.

Which of the following statements is CORRECT, assuming stocks are in equilibrium? a. A stock's dividend yield can never exceed its expected growth rate. b. A required condition for one to use the constant growth model is that the stock's expected growth rate exceeds its required rate of return. c. Assume that the required return on a given stock is 13%. If the stock's dividend is growing at a constant rate of 5%, its expected dividend yield is 5% as well. d. The dividend yield on a constant growth stock must equal its expected total return minus its expected capital gains yield. e. Other things held constant, the higher a company's beta coefficient, the lower its required rate of return.

d. The dividend yield on a constant growth stock must equal its expected total return minus its expected capital gains yield.

Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT? Stock A Market price $25Required return 10%Expected growth 7% Stock B Market price $40Required return 12%Expected growth 9% a. These two stocks must have the same expected capital gains yield. b. These two stocks should have the same price. c. These two stocks should have the same expected return. d. These two stocks must have the same dividend yield. e. These two stocks must have the same expected year-end dividend.

d. These two stocks must have the same dividend yield.

Which of the following statements is CORRECT? a. If two firms have identical sales, interest rates paid, operating costs, and assets, but differ in the way they are financed, the firm with less debt will generally have the higher expected ROE. b. All else equal, increasing the debt ratio will increase the ROA. c. The numerator used in the TIE ratio is earnings before taxes (EBT). EBT is used because interest is paid with post-tax dollars, so the firm's ability to pay current interest is affected by taxes. d. The use of debt financing will tend to lower the basic earning power ratio, other things held constant. e. A firm that employs financial leverage will have a higher equity multiplier than an otherwise identical firm that has no debt in its capital structure

e. A firm that employs financial leverage will have a higher equity multiplier than an otherwise identical firm that has no debt in its capital structure.

At the Olympics, American "dream teams" have frequently failed to win the gold medal. The teams usually have a lot of great players who are not comfortable sharing the spot light. This is an example of decreasing cohesiveness due to

e. intragroup competition.

The Hospital for Special Surgery (HSS) is staffed with over 200 doctors. If a patient has a toe injury she goes to a foot and ankle specialist. Later if she injures her hand, she will see a different doctor. Each doctor has assistants based around the specialty. The HSS uses a ____ basis for departmentalization.

functional

Dial Soap's advertising slogan "Aren't you glad you use Dial? Don't you wish everybody did?" exemplifies the use of ____ advertising.

reinforcement