FINA 3000

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Which of the following statements is NOT true?

Accepting a zero NPV project has a negative impact on the share holders wealth

Which of the following statements regarding Operating cash flow are false?

All else equal, an increase in accounts payable from one year to the next will decrease the firm's OCF

Which of the following is the main cause of the financial crisis?

Excessive deficits by our government hurt our credit rating and the credit rating of our largest banks leading to a need for a bailout

A bond with a credit rating of BBB is considered a junk bond

False

Bond holders have voting rights. They just don't get as many votes as shareholders

False

If a bond credit rating gets upgraded, we expect to see the price of the bond decline

False

Lemann sees a benefit to buying Heinz Ketchup as he owns controlling interest in Wendy's

False

Municipal bonds carry risk because the projects that they fund are often poor investments

False

The beta for a company like Kellogg's cereal might be expected to be greater than 1

False

The largest weakness of CAPM is finding a truly risk free investment

False

The largest weakness of the infinite pricing model is that we assume future selling price of a stock

False

There is no liability in owning a share of stock

False

When we build a portfolio the key determining factor of portfolio risk is the variances of the individual securities

False

You cannot achieve diversification in a portfolio unless the two stocks have a correlation less than .50

False

What is a free cash flow?

Free cash flow is available to all investors in the firm before any payments to investors are made

Which of the following is an example of a negative side effect?

Home Depot opens a second store in the Athens area

In the article, "Betting on boring stocks pays off", what is the reason boring stocks are being favored by some investors

Investors are looking for bond substitutes as the federal reserve has pushed down bond returns

If a firm expects that ____, Then it expects to have claimed too _____in depreciation expenses at the end of the project and it expects to pay taxes on the gain to the government at the project's termination

MV<BV; much

Which tax break was eliminated at the beginning of the year?

Payroll tax

Synovous Bank had real estate issues with which resort?

Sea Island

Which of the following is true about the NPV method?

The NPV assumes that all cash flows are reinvested at teh firm's discount rate

Two porjects are considered to be contingent if

The acceptance of one projects depends on the acceptance of the other

Apple has seen its share prices drop to near $500 per share. Which reason below is the greatest factor in the decline?

The rise of Samsung is impacting Apple's market share

What is the likely effect on South Florida real estate from the death of Chavez

There will be downward pressure on real estate as some of the main purchasers of real estate are now out of the market

A debenture bond has a greater risk than a mortgage bond

True

A lease is typically classified as an annuity due

True

All else equal, the greater the Beta, the greater the required return

True

As the rate of interest increases the PV of a lump sum decreases

True

Beta represents the systematic risk of a stock compared to the systematic risk of a market portfolio

True

In the housing update article, there is concern by builders because the number of new houses being built declined in January

True

In the personal finance article, you are spending too much if your credit card balance has not changed in the past year

True

The USPS is going to discontinue delivery service on Saturdays

True

The amount of interest paid in an amortized loan is greatest in the first year

True

The current ratio is always equal or greater than the quick ratio

True

The term that applies to a new product hurting the sales of an existing product is referred to as

cannibalization

Net Working Capital is a measure of a firm's

liquidity

Common stock holders are

owners of the firm


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