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Which financial statement reports the amounts of cash that the firm generated and
distributed during a particular time period?
statement of retained earnings
Income statement
Statement of cash flows
Balance sheet
Which of these provide a forum in which demanders of funds raise funds by issuing
new financial instruments, such as stocks and bonds?
Money markets
Investment banks
Primary markets
Secondary markets
The top part of Mars, Inc.s 2013 balance sheet is listed as follows (in millions of
dollars).
What are Mars, Inc.s current ratio, quick ratio, and cash ratio for 2013?
4.2, 1.0, 0.2
2.3333, 0.5556, 0.1111
10.5, 6.0, 1.0
0.1111, 0.5556, 0.2
Which of these ratios show the combined effects of liquidity, asset management,
and debt management on the overall operation results of the firm?
Financial
Profitability
Coverage
Liquidity
As new capital budgeting projects arise, we must estimate__________.
the cost of the stock being sold for the specific project
when such projects will require cash flows
the cost of the loan for the specific project
the float costs for financing the project
Whats the current yield of a 6 percent coupon corporate bond quoted at a price of
101.70?
6.1 percent
10.2 percent
6.0 percent
5.9 percent
We call the process of earning interest on both the original deposit and on the
earlier interest payments:
computing.
multiplying.
compounding.
discounting.
and if your business has a cost of capital of 14 percent, which one should you
choose?
Machine A
Machine B
Neither machine A nor B
Both machines A and B
When firms use multiple sources of capital, they need to calculate the appropriate
discount rate for valuing their firms cash flows as__________.
a simple average of the capital components costs
a weighted average of the capital components costs
a sum of the capital components costs
they apply to each asset as they are purchased with their respective forms of debt or
equity
Which of these is used as a measure of the total amount of available cash flow from
a project?
Operating cash flow
Investment in operating capital
Free cash flow
Sunk cash flow
Which of these does NOT perform vital functions to securities markets of all sorts
by channeling funds from those with surplus funds to those with shortages of
funds?
Secondary markets
Mutual funds
Insurance companies
Commercial banks
Wills Wheels, Inc. reported a debt-to-equity ratio of 0.65 times at the end of 2013. If
the firms total debt at year-end was $5 million, how much equity does Wills Wheels
have?
$7.69 million
$5 million
$0.65 million
$3.25 million
Which of these is the term for portfolios with the highest return possible for each
risk level?
Total portfolios
Modern portfolios
Optimal portfolios
Efficient portfolios
What are the tools available for the manager in financial planning?
Delaying disbursement of cash, reducing collection period, cash management, and
Increasing inventory turnover
Reducing collection period and delaying disbursement of cash
Increasing inventory turnover and reducing collection period
Delaying disbursement of cash and cash management
Suppose that Model Nails, Inc.s capital structure features 60 percent equity, 40
percent debt, and that its before-tax cost of debt is 6 percent, while its cost of equity
is 10 percent. If the appropriate weighted average tax rate is 28 percent, what will be
Model Nails WACC?
7.73 percent
8.40 percent
8.00 percent
16.00 percent
Five years ago, Jane invested $5,000 and locked in an 8 percent annual interest rate
for 25 years (ending 20 years from now). James can make a 20-year investment
today and lock in a 10 percent interest rate. How much money should he invest now
in order to have the same amount of money in 20 years as Jane?
$7,346.64
$5,089.91
$3,160.43
$3,464.11
The overall goal of the financial manager is to__________.
maximize net income
maximize earnings per share
maximize shareholder wealth
minimize total costs
Which of the following can create ethical dilemmas between corporate managers
and stockholders?
Auditors
Board of directors
Agency relationship
Venture Capitalist
A firm is expected to pay a dividend of $2.00 next year and $2.14 the following year.
Financial analysts believe the stock will be at their target price of $75.00 in two
years. Compute the value of this stock with a required return of 10 percent.
$79.14
$65.40
$65.57
$66.67
Which financial statement shows the total revenues that a firm earns and the total
expenses the firm incurs to generate those revenues over a specific period of time
generally one year?
Statement of cash flows
Statement of retained earnings
Balance sheet
Income statement
Which of the following is a true statement?
If interest rates fall, all bonds will enjoy rising values.