ETS Business Exam LS

19. Net income $100,000 Depreciation expense $10,000 Net increase in accounts receivable $5,000 Net increase in accounts payable $3,000 On the basis of the information provided in the table above for a corporation, the corporation's net cash flow from operating activities for the current year is (A) $98,000 (B) $102,000 (C) $108,000 (D) $118,000

$108,000

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? a. $ 4,000 b. $11,500 c. $ 6,000 d. $14,500 e. $16,000

$4,000 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.

8. On May 31, Company O's general ledger shows a cash balance of $5,123. The May 31 bank statement shows a balance of $4,905. Other information is available as follows: 1. A May 31 deposit of $300 does not appear on the bank statement; but a $3 service charge does. 2. A customer's $40 insufficient funds check has been returned with the bank statement. 3. Outstanding checks of $10, $15, and $100 are identified on May. What is the correct cash balance on May 31? (A) $4,905 (B) $5,080 (C) $5,166 (D) $5,204

$5080

31. In a large firm, the pool of applicants for the positions of sales manager and sales associate consists of three men and three women. If each candidate has an equal chance of being selected, what is the probability that both positions will be filled by men? (A) 0.20 (B) 0.25 (C) 0.33 (D) 0.50

0.20

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? a. 20% b. 25% c. 45% d. 56%

45% Return on investment =gain from investment/cost of investment The stakeholders have invested $2 million in assets in the firm (or, the cost of investment). The company had sales of $4.5 million and the operating expenses of $3.6 million - resulting in gain from investment = $900,000 ($4.5 million minus $3.6 million). The return on investment =900,000/2,000,000 = 0.45 = 45%

Dreamland Pillow Company sells the "Old Softy" model for $20 each. One pillow requires two pounds of raw material and one hour of direct labor to manufacture. Raw material costs $3 per pound and direct production labor is paid $4 per hour. Fixed supervisory costs are $2,000 per month and Dreamland rents its factory on a five-year lease for $4,000 per month. All costs are considered costs of production. Another firm has offered to produce "Old Softy" pillows and sell them to Dreamland for $12 each. Dreamland cannot avoid the factory lease payments, but can avoid all labor costs if it does not produce these pillows. Under these conditions, how many "Old Softy" pillows must Dreamland sell to earn monthly gross profits of $1,000? (A) 417 (B) 500 (C) 625 (D) 875

625

Dreamland Pillow Company sells the "Old Softy" model for $20 each. One pillow requires two pounds of raw material and one hour of direct labor to manufacture. Raw material costs $3 per pound and direct production labor is paid $4 per hour. Fixed supervisory costs are $2,000 per month and Dreamland rents its factory on a five-year lease for $4,000 per month. All costs are considered costs of production. 4. How many pillows must Dreamland produce and sell each month to earn a monthly gross profit of $1,000? (A) 300 (B) 350 (C) 600 (D) 700

700

18. In the statement of cash flows, the section for cash flows from operating activities will include which of the following? (A) Dividends paid (B) Issuance of common stock (C) A decrease in accounts payable (D) Purchase of a building financed entirely by a mortgage

A decrease in accounts payable

Other things being equal, the effect of a decrease in the price of Coca-Cola would cause which of the following? a. A rightward shift in the demand curve for Coca-Cola. b. A leftward shift in the demand curve for Coca-Cola. c. A downward movement along the demand curve for Coca-Cola. d. An upward movement along the demand curve for Coca-Cola.

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

Which of the following statements is CORRECT? a. The use of debt financing will tend to lower the basic earning power ratio, other things held constant. b. 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. 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. 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. e. All else equal, increasing the debt ratio will increase the ROA.

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.

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 a. a direct form of discrimination. b. affirmative action. c. employment at will. d. equal employment opportunity. e. an indirect form of discrimination.

Affirmative action

The Balance Sheet should be prepared a. before the income statement and after the statement of owner's equity. b. after the income statement and before the statement of owner's equity. c. before the income statement and the statement of owners equity. d. after the income statement and the statement of owner's equity.

After the income statement and the statement of owner's equity.

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.

26. An information system that enables all business departments in the same firm to share relevant information and data is called (A) an enterprise resource planning (ERP) system (B) a material requirements planning (MRP) system (C) a decision support system (DSS) (D) a point-of-sale (POS) system

An enterprise resource planning (ERP) system

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 declining; is growing b. are negative; is growing c. are increasing; is growing d. have peaked; is declining e. are declining; is declining

Are increasing; is growing

Economies of scale imply that within some range one can increase the size of operation and: a. average total cost will decrease. b. total cost will decrease. c. average total cost will increase. d. average variable cost will decrease. e. fixed cost will decrease.

Average total cost will decrease

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

Before, during, and after the campaign through the use of pretests, inquiries, and post-tests.

In a competitive market, the quantity of a product produced and the price of the product are determined by: a. buyers. b. sellers. c. both buyers and sellers. d. neither buyers nor sellers.

Both buyers and sellers

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

Business creates problems and should therefore help solve them.

If a seller in a competitive market chooses to charge more than the going price, then: a. buyers will make purchases from other sellers. b. the owners of the raw materials used in production would raise the prices for the raw materials. c. the sellers' profits must increase. d. other sellers would also raise their prices.

Buyers will make purchases from other sellers.

The Sarbanes-Oxley Act requires the ____ to vouch for the truthfulness and fairness of a firm's financial disclosures. a. CEO, CFO, and COO b. COO c. CFO d. CEO e. CEO and CFO

CEO and CFO

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

Cash and U.S. Treasury bonds

Priceless Treasures is an antique jewelry retailer. Priceless Treasures' owner, Sally Thornton, wishes to replace the printed catalog with an online catalog. Ms. Thornton decides to conduct a market research project to explore how Priceless Treasures' target customers would respond to the online catalog approach. 32. From data collected by the retail jewelers' trade association, Ms. Thornton learns that sales of antique jewelry are rising and that the most common purchasers are older, upper-income couples. Though initially reluctant to purchase online, these customers are beginning to overcome their concerns. From United States Census Bureau data, she learns that this population segment is growing in number and will continue to do so throughout the next two decades. At this point what should Ms. Thornton do? (A) Summarize the research findings and recommend implementing the online catalog as the firm's market is clearly growing. (B) Collect primary data to determine whether these trends and preferences are reflected in Priceless Treasures' customer base. (C) Collect primary data on competitors to determine whether the online market for antique jewelry is saturated. (D) End the study and retain the current system as the major customer segment is clearly skeptical of online retailers.

Collect primary data to determine whether these trends and preferences are reflected in Priceless Treasures' customer base.

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? a. Company HD has a higher times-interest-earned (TIE) ratio. b. Company HD has a higher ROA. c. Company HD has more net income. d. Company HD has a lower equity multiplier. e. Company HD pays less in taxes.

Company HD pays less in taxes.

27. The central processing unit (CPU) in a personal computer contains the (A) control unit and primary memory (B) control unit and arithmetic/logic unit (C) arithmetic/logic unit and bus (D) arithmetic/logic unit only

Control unit and arithmetic/logic unit

21. Green desires to form a new company to manufacture lawn mowers. Green is concerned about having his personal assets exposed to liability for the new company's contracts and torts. Furthermore, he wants to retain control over the company's operations and growth for the next few years. He will need an infusion of equity capital to begin operations. He hopes to take the company public in about five years if it is advantageous to do so at the time. Which of the following types of business associations would be best for Green's new company? (A) Corporation (B) General partnership (C) Limited partnership (D) Member-managed limited-liability company

Corporation

3. The term "net working capital" refers to (A) inventories, receivables, and current notes and investments (B) assets divided by liabilities (C) current assets less short-term liabilities (D) net assets left over after subtracting cost of goods sold

Current assets - short term liabilities

The classified Balance Sheet will subsection the assets section as follows a. Current Assets and Other Assets b. Current Assets and Short-Term Assets c. Current Assets and Property, Plant, and Equipment d. Other Assets and Property, Plant and Equipment

Current assets and property, plant, and equipment

Priceless Treasures is an antique jewelry retailer. Priceless Treasures' owner, Sally Thornton, wishes to replace the printed catalog with an online catalog. Ms. Thornton decides to conduct a market research project to explore how Priceless Treasures' target customers would respond to the online catalog approach. 33. Ms. Thornton plans to conduct an online survey of her customers. What is the most significant problem with using this survey method rather than a traditional mail approach? a. Respondents may not answer the survey truthfully. b. Customers who do not use the Internet will not be in the sample. c. Respondents will not be able to see the entire survey and thus may answer only part of it. d. Online surveys cannot prevent multiple or inappropriate responses to complex questions.

Customers who do not use the internet will not be in the sample.

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. lifestyles. b. personality characteristics. c. psychographics. d. demographics. e. behavior.

Demographics

29. Family branding refers to a group of (A) similar brands of products from different makers (B) different brands of products from different makers within the same industry (C) different products marketed under a single brand name (D) similar products sold by small, family-owned firms

Different products marketed under a single brand name.

10. A project consists of 150 jobs. The expected completion time for each job is given in days. The project has three critical paths with two jobs in common, J and K. In order to finish the project one day early, the completion time should be reduced one day for (A) each of the 150 jobs (B) each of the jobs on the three critical paths (C) either Job J or Job K (D) both Job J and Job K

Either Job J or Job K

12. Which of the following would most likely occur as a result of the United States government's imposing tariffs on foreign steel imports? (A) The price of steel produced in the United States would decrease. (B) The price of imported steel in the United States would decrease. (C) Employment in the United States steel industry would increase. (D) Government tax revenue would fall.

Employment in the United States steel industry would increase.

2. In organizational decision making, managers are able to exercise the greatest degree of discretion in the (A) enforcement of internal policies (B) settlement of legal disputes (C) restructuring of outstanding loans (D) compliance with federal regulations

Enforcement of internal policies

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

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

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 a. political figures. b. services. c. applications. d. goods. e. ideas.

Ideas

24. Based on his scientific management theory, Frederick Taylor developed what pay principle? (A) Hourly pay (B) Incentive pay (C) Profit sharing (D) Monthly salary with bonus

Incentive pay

13. In an economy the unemployment rate is 10 percent and the inflation rate is 1 percent. An appropriate fiscal policy in this phase of the business cycle would be to (A) increase government spending (B) increase income taxes (C) decrease transfer payments (D) decrease the money supply

Increase government spending

Economies of scale are created by greater efficiency of capital and by: a. increased specialization of labor. b. better wages for labor. c. smaller plant sizes. d. longer chains of command in management.

Increased specialization of labor

30. Saint Martin Hospital boasts one of the world's leading medical imaging programs. Its radiology department specializes in the early detection of particularly serious forms of stomach, intestinal, and colon cancer. The hospital plans to invest in a new system of digital medical imaging and image transmission technologies that will enable its radiologists to view and evaluate intestinal scan results from anywhere in the world. With this investment, the hospital is attempting to overcome which of the constraints of services marketing? (A) Inventory (B) Intangibility (C) Inconsistency (D) Inseparability

Inseparability

15. If the spread between the spot and forward exchange rates of two currencies equals the interest rate difference between the two countries, this phenomenon is referred to as (A) purchasing-power equality (B) commodity arbitrage (C) currency hedging (D) interest-rate parity

Interest-rate parity

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 a. group size. b. domination. c. disagreement on goals. d. intragroup competition. e. unpleasant experiences.

Intragroup competition

7. Which of the following statements about a systems flowchart is true? (A) It is used in systems design to define and describe each piece of data. (B) It is a method of writing programs using only three basic constructs: sequence, selection, and repetition. (C) It documents the sequence of processing steps that take place in an information system. (D) It documents the logical design of an information system.

It documents the sequence of processing steps that take place in an information system.

6. Which of the following statements about the tort of negligence is true? (A) It cannot be used as a basis for liability for defective products. (B) It is a strict liability tort with no defenses. (C) It requires proof of some intentional conduct. (D) It requires proof of breach of a statutory or common-law duty.

It requires proof of breach of a statutory or common-law duty

Which of the following alternatives to specialization would require continually adding new tasks and challenges as part of the job design? a. Job stabilization b. Horizontal job loading c. Job rotation d. Job enrichment e. Job specialization

Job enrichment

17. In a period of rising prices, which inventory valuation method would generally yield both the lowest ending inventory value and the lowest net income figure? (A) First in, first out (FIFO) (B) Last in, first out (LIFO) (C) Weighted average (D) Standard cost

Last in, first out (LIFO)

23. A department manager telephoned two managers in other departments to discuss a cost savings idea that would benefit their departments as well as her own. Which of the following most accurately defines the communication channel that the manager was using? (A) Upward (B) Lateral (C) Downward (D) Hierarchical

Lateral

25. When a domestic firm permits a foreign company to manufacture and sell its product in exchange for a fee or royalty, the process is termed (A) importing (B) exporting (C) licensing (D) countertrading

Licensing

16. A firm that would like to know whether it has enough cash to meet its bills would be most likely to use which category of financial ratio? (A) Liquidity (B) Leverage (C) Efficiency (D) Profitability

Liquidity

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. a product life cycle analysis. b. the sales force survey results. c. a market segment profile. d. the results of sales forecasting. e. a market trend analysis.

Market segment profile.

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. a. growth b. market reduction c. decline d. maturity e. introduction

Maturity

To calculate return on assets (ROA), the numerator will include which of the following? a. net income plus interest expense b. net income minus preferred dividends c. net income d. net income plus tax expense

Net income Return on assets is the return from total assets invested in a business, or assets leveraged to generate income. It is the ratio of net income divided by average total assets in a year. Net income is the income derived after subtracting cost of goods sold, sales and general administrative expenses, depreciation and amortization, interest, and taxes from net sales. Tax expense, interest expense, and preferred dividends all refer to monies that the company pays out, or the company's liabilities, not its assets, so they do not belong in a ROA calculation. Therefore, net income is the appropriate numerator for the ROA calculation.

Which of the following is generally regarded by academics as being the best single method for evaluating capital budgeting projects? a. Payback method b. Discounted payback method c. Internal rate of return (IRR) method d. Modified internal rate of return (MIRR) method e. Net present value (NPV) method

Net present value (NPV) method

11. The Organization of the Petroleum Exporting Countries (OPEC) reduces production by 10 percent, and the growth rate of the world economy begins to escalate. How will the simultaneous occurrence of these events affect the equilibrium price and quantity in the world petroleum market? (A) Price will increase, but quantity will remain unchanged. (B) Price will increase, but quantity is indeterminate. (C) Quantity will increase, but price is indeterminate. (D) Both price and quantity will increase.

Price will increase, but quantity is indeterminate.

Cost-benefit principles can be applied to the decision of: a. profit-maximizing firms. b. majority-rule voting. c. which project receives the most votes. d. rational ignorance. e. all of these.

Profit-maximizing firms

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? a. ratio of net sales to assets b. ratio of fixed assets to long-term liabilities c. rate earned on stockholders' equity d. number of days' sales in receivables

Ratio of fixed assets to long-term liabilities The option ratio of fixed assets to long-term liabilities is the correct answer as it indicates the amount of fixed assets available for $1 of long-term liability. If the ratio is greater than 1, then the firm has more assets than current long-term obligations. If a firm's ratio is 1.5, then it has $1.5 in assets and $1 long-term liability. This means it can still finance up to $0.5 through long-term lending. If the ratio is below 1, it indicates that the firm has more long-term liability than the value of its assets. For example, if it is 0.75, then for every $1 of long-term liabilities, only $0.75 worth of assets are available; this is not good news for bondholders in case of bankruptcy, as they will only get 75 cents on every dollar they lent the company.

34. Because pictures of products, either in print or on the Internet, can differ from the actual appearance of a piece of jewelry, Priceless Treasures' customers are sometimes disappointed by items they have purchased. To reduce customer dissatisfaction, the firm's customer service representatives call customers to answer any questions they have, confirm their satisfaction with the purchase, and communicate the firm's refund/return policies. The firm is seeking to influence the customers' purchase decision process by a. stimulating customers to recognize a need of which they were previously unaware b. facilitating an information search by providing new information c. influencing alternative assessment by emphasizing the value of the purchased item d. reducing cognitive dissonance through the reassurance of personal contact

Reducing cognitive dissonance through the reassurance of personal contact.

14. Which of the following is an appropriate Federal Reserve action to stimulate the United States economy? (A) Selling government bonds on the open market (B) Increasing the discount rate (C) Reducing the reserve requirement (D) Cutting taxes

Reducing the reserve requirement

Dial Soap's advertising slogan "Aren't you glad you use Dial? Don't you wish everybody did?" exemplifies the use of ____ advertising. a. offensive b. reinforcement c. institutional d. defensive e. comparative

Reinforcement

9. Within the context of the capital asset pricing model (CAPM), the risk measure known as beta is often computed by regressing the return of the company's stock against the (A) return on the company's bonds (B) return on the market portfolio (C) change in the gross domestic product (D) change in the consumer price index

Return on the market portfolio

1. In marketing research, a firm might consider using secondary data over primary data because (A) secondary data usually cost less (B) secondary data are usually more accurate (C) primary data are usually non specific (D) primary data are likely to be outdated

Secondary data usually costs less.

28. Web 2.0 is best represented by which of the following phenomena? (A) Social networking sites (B) Word processing (C) Internet browsers (D) Text messaging

Social networking sites

People who often create benefits for the minority and impose the cost on the majority are called: a. fair-interest groups. b. special-interest groups. c. laissez-faire groups. d. encounter groups.

Special-interest groups.

Kashi Heart to Heart cereal is aimed at people concerned about their heart health. These people represent the Kashi a. target market. b. marketing strategy. c. marketing mix. d. marketing tactic. e. consumer advocates.

Target market

22. A small number of people with complementary skills who are committed to a common purpose, a set of performance goals, and an approach for which they hold themselves mutually accountable is referred to as a (A) committee (B) task force (C) group (D) team

Team

Which of the following statements is CORRECT? a. The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the IRR. b. The NPV method does not consider all relevant cash flows, particularly cash flows beyond the payback period. c. The NPV method assumes that cash flows will be reinvested at the risk-free rate, while the IRR method assumes reinvestment at the IRR. d. The IRR method does not consider all relevant cash flows, particularly cash flows beyond the payback period. e. The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the risk-free rate.

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

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 capital gains yield is 5%. e. The company's expected stock price at the beginning of next year is $9.50.

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. Other things held constant, the higher a company's beta coefficient, the lower its required rate of return. b. 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. c. 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. d. A stock's dividend yield can never exceed its expected growth rate. e. The dividend yield on a constant growth stock must equal its expected total return minus its expected capital gains yield.

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

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

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

20. All of the following are true regarding a seller's rights to reduce legal liability in the sale of nonconsumer goods EXCEPT: (A) The seller can disclaim consequential damages if it is done clearly and conspicuously. (B) The seller can limit the remedy available to the buyer if he or she does so clearly and fairly. (C) The seller can place reasonable conditions on the warranty coverage and a shorter time limit of warranty coverage. (D) The seller can disclaim all implied warranties by simply stating that there are no implied warranties.

The seller can disclaim all implied warranties by simply stating that there are no implied warranties.

Which of the following statements is CORRECT? a. 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. b. 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. c. The constant growth model cannot be used for a zero growth stock, where the dividend is expected to remain constant over time. d. The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate. 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%.

The stock valuation model, PO = 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.

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 AMarket price $25Required return 10%Expected growth 7%Stock BMarket price $40Required return 12%Expected growth 9% a. These two stocks must have the same expected year-end dividend. b. These two stocks must have the same expected capital gains yield. c. These two stocks must have the same dividend yield. d. These two stocks should have the same price. e. These two stocks should have the same expected return.

These two stocks must have the same dividend yield.

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

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

According to the law of demand, when will higher corn prices reduce the quantity demanded of corn? a. When nonprice determinants, like income and the number of buyers, are unchanged. b. When there are no shortages or surpluses of corn. c. When the supply of corn is fixed. d. Always.

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

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. a. location b. functional c. customer d. product e. sequence

functional