12/2/2018 Midterms

Question 1 This is the required return on investment of the common shareholders of the company.
Not yet
answered
Select one:
Marked out of
1.00
a. Cost of Equity

b. Return on common share

c. Return on Equity

d. Return on Investment

Question 2 This is the credit extended by

Not yet one trader to another for the purchase
answered
of goods and services
Marked out of
1.00
Select one:
a. trade credit
b. notes

c. debentures
d. bank loans

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12/2/2018 Midterms
Question 3 FPL Company has a gross working capital of 100,000 and the company has 200,000 total liabilities of which 150,000 are long
Not yet term debts. What is the net capital?
answered

Marked out of Select one:

1.00
a. 150,000

b. 250,000

c. 100,000
d. 50,000

Question 4 Which of the following has a wrong order based on the discussion in capital budgeting
Not yet (https://blended.amauonline.com/mod/page/view.php?id=57604) process
answered

Marked out of Select one:

1.00
a. Evaluation - Implementing - Performance Review

b. Matching of Proposals- Performance Review - Final Approval

c. Identification of Proposals - Evaluation - Final Approval

d. Identification of Proposals - Screening of Proposals - Evaluation

Question 5 This is a measurement of the degree to which a firm or project incurs a combination of fixed and variable costs
Not yet
answered
Select one:
Marked out of
1.00
a. Combined Degree of Leverage
b. Degree of Operating Leverage

c. Leverage
d. Degree of Financial Leverage

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12/2/2018 Midterms
Question 6 Which is not a part of capital budgeting (https://blended.amauonline.com/mod/page/view.php?id=57604) process?
Not yet
answered
Select one:
Marked out of
1.00
a. Observation of proposal making

b. Screening proposals

c. Fixing property
d. Performance Review

Question 7 FPL company has machineries and equipment worth 150,000, land and building for business 1,000,000, Cash 150,000,
Not yet Inventories 30,000 and accounts receivables 50,000. He also owes 200,000 to a bank. How much is the gross working
answered
capital?
Marked out of
1.00
Select one:
a. Php 380,000
b. Php 1,180,000

c. Php 230,000

d. Php 1,380,000

Question 8 FPL Company has a gross working capital of 100,000 and the company has 200,000 total liabilities of which 150,000 are long
Not yet term debts. What is the total current assets?
answered
Marked out of Select one:
1.00
a. 100,000
b. 250,000

c. 150,000
d. 50,000

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12/2/2018 Midterms
Question 9 FPL Company has a total Assets worth 400,000 of which 250,000 are non current the company also has 200,000 total
Not yet liabilities of which 150,000 are long term debts. What is the gross working capital?
answered

Marked out of Select one:

1.00
a. 150,000

b. 200,000

c. 100,000
d. 300,000

Question 10 This determines the amount of profit to be distributed among shareholders and amount of profit to be treated as retained
Not yet earnings for financing its long term growth
answered

Marked out of Select one:

1.00
a. Share Issuance Policy

b. Net income sharing

c. Dividend Policy

d. Income Distribution Ratio

Question 11 This is the required return on investment of the lenders of a company.

Not yet
answered
Select one:
Marked out of
1.00
a. Total return

b. Return on debt

c. Cost of capital

d. Cost of debt

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12/2/2018 Midterms
Question 12 These are sources of finances which have a required of payment for a period not exceeding one year.
Not yet
answered
Select one:
Marked out of
a. Perpetual
1.00
b. Medium-term
c. Long-term

d. Short-term

Question 13 A corporation is issuing 10% common stock that should be sold for Php 15 each. The business will incur flotation costs of Php
Not yet 2 per share. With growth rate of 5% What is the cost of capital?
answered

Marked out of Select one:

1.00
a. 61.54%

b. 16.54%

c. 4.12%

d. 13.54%

Question 14 Examples of this outlay are the purchase of fixed assets such as land and building, plant and machinery, expenses relating to
Not yet improvement or renovation these fixed assets and costs incurred for the research and development projects
answered
Marked out of Select one:
1.00
a. Fixed Assets

b. Working Capital

c. Working Assets
d. Fixed capital

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12/2/2018 Midterms
Question 15 This is the use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an
Not yet investment.
answered

Marked out of Select one:

1.00
a. leverage

b. efficacy
c. efficiency

d. capital efficiency

Question 16 This is the capital invested in total current assets of the business concern.
Not yet
answered
Select one:
Marked out of
1.00
a. Financial casipal
b. Gross Working Capital

c. Net Woking Capital

d. Fixed Capital

Question 17 Which of the following does not belong to the group?

Not yet
answered
Select one:
Marked out of
1.00
a. Earning price approach

b. dividend price minus growth approach

c. dividend price plus growth approach

d. dividend price approach

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12/2/2018 Midterms
Question 18 A corporation is issuing 10% common stock that should be sold for Php 15 each. The business will incur flotation costs of
Not yet Php 5 per share. What is the cost of equity?
answered

Marked out of Select one:

1.00
a. 15%

b. 10%

c. 33.3%
d. 3%

Question 19 This is a decision support tool that uses a tree-like graph or model of decisions and their possible consequences, including
Not yet chance event outcomes, resource costs, and utility.
answered

Marked out of Select one:

1.00
a. Financial Tree Analysis
b. Decision Tree Analysis

c. Financial Tree Diagram

d. Tree of Chances Analysis

Question 20 This refers to the level of inventory at which the total cost of inventory comprising ordering cost and carrying cost.
Not yet
answered
Select one:
Marked out of
1.00
a. Economic Order Quantity (EOQ)

b. Cost Variance Analysis

c. Standard deviation
d. ABC Analysis

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12/2/2018 Midterms
Question 21 Which of the following does not belong to the group?
Not yet
answered
Select one:
Marked out of
a. net operating income approach
1.00
b. Intermediate Approach
c. Modigliani and Miller Approach
d. Net Income approach

Question 22 FPL Company plans to make Php50,000 loan with Php7,000 annual interest. If the cost incurred related to this instrument is
Not yet Php2,000 and the total tax rate is 30%, what is the cost of debt?
answered

Marked out of Select one:

1.00
a. 9.80%

b. 10.00%

c. 10.21%

d. 4.38%

Question 23 These proposals are those that compete with other. Therefore, the acceptance of one proposal will exclude the acceptance of
Not yet the other proposals.
answered
Marked out of Select one:
1.00
a. Accept-Reject
b. none of the above

c. Capital Rationing
d. Mutually Exclusive

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12/2/2018 Midterms
Question 24 This type of decision making applies when the projects proposed are independent from each other. The acceptance or
Not yet rejection of one proposal does not affect the decision on the other proposals.
answered

Marked out of Select one:

1.00
a. Capital Rationing

b. none of the above

c. Mutually Exclusive

d. Accept-Reject

Question 25 If you have a financial source that is required to be paid within ten years, this describes
Not yet
answered
Select one:
Marked out of
1.00
a. Long-term source
b. Perpetual source

c. Medium-term source

d. Short-term source

Question 26 This is a measure of both a company's efficiency and its short-term financial health.
Not yet
answered
Select one:
Marked out of
1.00
a. Financial Capital
b. Working Capital

c. Net Capital
d. Fixed Capital

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12/2/2018 Midterms
Question 27 This is the process in which a business determines and evaluates potential expenses or investments that are large in nature.
Not yet
answered
Select one:
Marked out of
a. Investment-expense Analysis
1.00
b. Capital Budgeting (https://blended.amauonline.com/mod/page/view.php?id=57604)
c. Financial Capital

d. Monetary Management

Question 28 This is the mix or proportion of a firm’s permanent long-term financing represented by debt, preferred stock, and common
Not yet stock equity.
answered

Marked out of Select one:

1.00
Equity and Debt
Investment Mix

Capital Structure
Retained earnings

Question 29 According to this approach, the mix of debt and equity capital can increase the value of the firm by reducing overall cost of
Not yet capital up to certain level of debt.
answered
Marked out of Select one:
1.00
a. Classical Approach
b. Medieval Approach

c. Modern Approach
d. Traditional Approach

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12/2/2018 Midterms
Question 30 If you have a financial source that is required to be paid within four years, you have a
Not yet
answered
Select one:
Marked out of
1.00
a. Medium-term source

b. Perpetual source

c. Long-term source
d. Short-term source

Question 31 This is a metric that measures the degree to which a company uses fixed income securities such as debt and preferred equity.
Not yet
answered
Select one:
Marked out of
a. Leverage
1.00
b. Degree of Operating Leverage

c. Combined Degree of Leverage

d. Degree of Financial Leverage

Question 32 This is a statistical measure of the variability of a distribution around its mean. It is the square root of the variance.
Not yet
answered
Select one:
Marked out of
1.00
a. Standard deviation
b. Financial Tree Analysis

c. Expected value
d. Squared variance analysis

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12/2/2018 Midterms
Question 33 This is the required return on investment of the preferred shareholders of the company.
Not yet
answered
Select one:
Marked out of
a. Cost of preference share
1.00
b. Return on Investment

c. Cost of capital
d. Return on Preference share

Question 34 Which of the following has a wrong order based on the discussion in capital budgeting
Not yet (https://blended.amauonline.com/mod/page/view.php?id=57604) process
answered

Marked out of Select one:

1.00
a. Identification of Proposals - Evaluation - Final Approval

b. Matching of Proposals - Final Approval - Performance Review

c. Final Approval - Implementing - Fixing Properties

d. Evaluation - Implementing - Performance Review

Question 35 Which does not belong to the classification of the sources of financing?
Not yet
answered
Select one:
Marked out of
1.00
a. based on ownership

b. based on period

c. based on the source of generation

d. based on interest

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12/2/2018 Midterms
Question 36 These are source of finances are those which are required for a period of more than five years.
Not yet
answered
Select one:
Marked out of
a. Long-term
1.00
b. Perpetual
c. Short-term
d. Medium-term

Question 37 The objective of having a good _____________________ is to maximize the value of the firm and minimize the overall cost of
Not yet capital.
answered

Marked out of Select one:

1.00
a. Operations

b. Business

c. Capital structure

d. Income

Question 38 This policy is usually used when the companies are facing constraints of earnings and unsuccessful business operation
Not yet
answered
Select one:
Marked out of
1.00
a. Stable Dividend Policy
b. Irregular Dividend Policy

c. Unstable Policy
d. Regular Dividend policy

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12/2/2018 Midterms
Question 39 FLP Company has 1000 existing common shares. The market value of the share is Php 90 and the net earnings is Php
Not yet 1,000. What is the cost of Capital assuming that the new shares will be issued at market price?
answered

Marked out of Select one:

1.00
a. 0.01%

b. 0.11%

c. 1.11%
d. 11.11%

Question 40 FPL Company has a net working capital of 100,000 and the company has 200,000 total liabilities of which 150,000 are long
Not yet term debts. What is the gross capital?
answered

Marked out of Select one:

1.00
a. 250,000
b. 150,000

c. 200,000
d. 300,000

Question 41 Which is not a motive of holding cash?

Not yet
answered
Select one:
Marked out of
1.00
a. Auto Motive
b. Precautionary motive

c. Speculative motive
d. Transaction motive

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12/2/2018 Midterms
Question 42 Given:
Not yet
Debt= 1,000,000 ; Common Shares = 10,000,000 ; Preference Shares = 5,000,000
answered

Marked out of Cost of Debt = 10% ; Cost of Preference Shares = 5% ; Cost of Equity = 3%
1.00

Find WACC

Select one:
a. 650,000

b. 1,050,000

c. 750,000

d. 1,250,000

Question 43 Which of the following is not considered a capital component for the purpose of calculating the weighted average cost of
Not yet capital (WACC) as it applies to capital budgeting (https://blended.amauonline.com/mod/page/view.php?id=57604)?
answered

Marked out of Select one:

1.00
a. Accruals

b. Common Stock

c. preferred Stock
d. Long-term debt

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12/2/2018 Midterms
Question 44 FPL Company owes Php20,000 to supplier A, Php30,000 to Supplier B, 50,000 to Supplier C and a long term bonds payable
Not yet 10,000. After struggling in its operations, the company ended up having Php20,000 cash on hand, Php30,000 worth
answered
inventories, Php40,000 Accounts receivable and equipment worth Php50,000. What is the net working capital?
Marked out of
1.00
Select one:
a. Php 40,000

b. Php 30,000

c. Php 70,000

d. none of these

Question 45 Which does not belong to the group?

Not yet
answered
Select one:
Marked out of
a. trade credit
1.00
b. Commercial papers

c. preference shares

d. retained earnings

Question 46 This is the after tax cost of long-term funds through borrowing.
Not yet
answered
Select one:
Marked out of
1.00
a. Cost of capital
b. Cost of debt

c. Return on debt

d. Total return

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12/2/2018 Midterms
Question 47 This is the required rate of return on the various types of financing.
Not yet
answered
Select one:
Marked out of
1.00
a. Return on debt

b. Total return

c. Cost of debt

d. Cost of capital

Question 48 These funds are obtained from banks and credit unions
Not yet
answered
Select one:
Marked out of
a. Short-term source
1.00
b. Owner's funds

c. borrowed funds

d. Long-term source

Question 49 In this approach, the mix of debt and equity capital can increase the value of the firm by reducing overall cost of capital up to
Not yet certain level of debt.
answered
Marked out of Select one:
1.00
a. Modigliani and Miller Approach

b. Intermediate Approach

c. Net Income approach

d. net operating income approach

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12/2/2018 Midterms
Question 50 Which of the following has a wrong order based on the discussion in capital budgeting
Not yet (https://blended.amauonline.com/mod/page/view.php?id=57604) process
answered

Marked out of Select one:

1.00
a. Identification of Proposals - Evaluation - Final Approval

b. Matching of Proposals- Performance Review - Final Approval

c. Evaluation - Implementing - Performance Review

d. Screening pf Proposals - Fixing Properties- Performance review

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