apu-busn602-final-exam-2

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn

BUSN602 Final Exam

Return to Assessment List

Part 1 of 1 – 100.0
Points

Question 1 of 25 4.0
Points

As a general rule, the capital structure that maximizes
stock price also:

A.minimizes the weighted average cost of
capital

B.maximizes the weighted average cost of
capital

C.minimizes the required rate of return on
equity

D.maximizes the cost of debt

Question 2 of 25 4.0
Points

The constant dividend growth model assumes:

A.a constant annual dividend

B.a constant dividend growth rate for no more
than the first 10 years

C.that the discount rate must be greater than
the dividend growth rate

D.two of above are true assumptions

Question 3 of 25 4.0
Points

As a general rule, the capital structure that:

A.minimizes the cost of equity also maximizes
the stock price

B.maximizes the stock price also minimizes the
weighted average cost of capital

C.minimizes the cost of debt also maximizes
the expected earnings per share

D.none of the above is a true statement

Question 4 of 25 4.0
Points

The financial statement that provides a snapshot view of the
financial condition of a business at a point in time is the:

A.balance sheet

B.income statement

C.statement of cash flows

D.statement of retained earnings

Question 5 of 25 4.0
Points

Consolidated Edison has just paid an annual dividend of $3
per share. If the expected growth rate for Con Ed is 10%, and your required
rate of return is 16%, how much are you willing to pay for this stock?

A.$55

B.$50

C.$46.50

D.none of the above

Question 6 of 25 4.0
Points

Internal rate of return (IRR) and net present value (NPV)
methods:

A.generally arrive at the same accept/reject
decisions

B.are less sophisticated than the payback
period

C.cannot make use of the same cash flows

D.can be substituted for by the payback period

Question 7 of 25 4.0
Points

What is ratio analysis? Also briefly describe the three
basic categories or ways that ratio analysis is used.

.

Question 8 of 25 4.0
Points

Cash flows from operating activities might include:

A.net income

B.increase in equity sold to investors

C.dividend payment

D.all the above

E.none of the above

Question 9 of 25 4.0
Points

A sinking fund:

A.is a special fund set up to pay of the
creditors of bankrupt firms

B.requires specific approval by the firm’s the
board of directors

C.requires the issuer to retire a bond issue
incrementally over time

D.none of the above

Question 10 of 25 4.0
Points

The actual disbursement of cash is recorded in which of the
following financial statements?

A.income statement

B.balance sheet

C.statement of cash flows

D.treasurer’s report

Question 11 of 25 4.0
Points

Which of the following accounts is usually part of the
owners’ equity for a corporation?

A.common stock

B.paid-in-capital

C.retained earnings

D.all of the above

Question 12 of 25 4.0
Points

Working capital does not include:

A.cash

B.accounts receivable

C.marketable securities

D.property, plant, and equipment

Question 13 of 25 4.0
Points

Cash flows from financing activities might include:

A.increase in bonds payable

B.increase in accounts payable

C.depreciation

D.all the above

E.none of the above

Question 14 of 25 4.0
Points

Which one of the following best explains the impact on a
firm that accepts a project with a negative NPV?

A.negative cash flows

B.decrease in the value of the firm

C.high marginal cost of capital

D.low initial returns

Question 15 of 25 4.0
Points

Chrysler has a bond outstanding with eight years remaining
to maturity, a coupon rate of 5%, and semiannual payments. If the market price
of the Chrysler bond is $729.05, what is the yield to maturity?

A.7%

B.9%

C.10%

D.11%

Question 16 of 25 4.0
Points

Several factors will be considered by the board of directors
and management as they consider the level of dividend payout. Some of these
factors include:

A.the ability of the firm to generate cash to
sustain the level of dividends.

B.legal and contractual considerations

C.growth opportunities

D.cost of other financing sources

E.all of the above

Question 17 of 25 4.0
Points

The estimate of how quickly a firm may grow by maintaining a
constant mix of debt and equity is called:

A.the retention growth rate

B.dividend growth rate

C.sustainable growth rate

D.the internal growth rate

Question 18 of 25 4.0
Points

Given the conflict between risk and return, the purpose of
capital structure management is to find the debt level:

A.that will always be kept below the equity
level

B.where the price of company stock is
maximized

C.that most adequately supports corporate
goals

D.that is equal in dollar value to the equity
level

Question 19 of 25 4.0
Points

The security market line can be used to determine the
expected return on a security if we know the:

A.risk-free rate

B.systematic risk of that security

C.market risk premium

D.all of the above

Answer Key: D

Question 20 of 25 4.0
Points

If a person requires greater return when risk increases,
that person is said to be:

A.risk seeking

B.risk averse

C.risk aware

D.risk indifferent

Question 21 of 25 4.0
Points

The term ___________ conveys a relationship of equality
between the assets of the business and the sources of funds for their
acquisition.

A.statement of cash flows

B.cash transactions statement

C.income statement

D.balance sheet

Question 22 of 25 4.0
Points

An individual or organization that represents the
bondholders to ensure the indenture’s provisions are respected by the bond
issuer is called a (n):

A.trust indenture

B.trustee

C.investment banker

D.trust organization

Question 23 of 25 4.0
Points

In general, the more net working capital a company has

A.the greater the risk.

B.the lower the risk.

C.the less likely creditors will lend to the
firm.

D.none of the above

Question 24 of 25 4.0
Points

Unsystematic risk is also known as:

A.market risk

B.nondiversifiable risk

C.firm-specific risk

D.macroeconomic risk

Question 25 of 25 4.0
Points

In an efficient market:

A.it is fairly easy to find stocks whose
prices do not fairly reflect the present value of future expected cash flows

B.expected news will cause a rapid change in
prices

C.information flows are random, both in timing
and in content

D.all the above

More to explorer

Change Management Presentation

Purpose of AssessmentDevelop specific strategies with supporting tactics to implement positive change within an organization. You may refer to the information that you

Driver Safety

 You were recently hired as the fleet safety manager of a company that operates a fleet of 25 delivery trucks within a

Answer:

Title: apu-busn602-final-exam-2

This question has been Solved!

Click the button below to order this solution.

Leave a Reply

Your email address will not be published. Required fields are marked *

Open chat