apu-busn602-final-exam-october-2015

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Part 1
of 1 –

100.0 Points

Question 1 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

Question 2 of 25

4.0 Points

Reasons
to invest in marketable securities would not include:

A.transactions motives

B.precautionary motives

C.speculative motives

D.all the above are reasons to invest in
marketable securities

E.none of the above

Question 3 of 25

4.0 Points

The
three types of risk faced by investors in domestic bonds include all of the
following EXCEPT:

A.political risk

B.credit risk

C.interest rate risk

D.reinvestment rate risk

Question 4 of 25

4.0 Points

If
firms select the proportion of debt in their capital structures in order to
balance the benefits of tax-deducible interest payments with opportunity
costs, this would support the notion of:

A.the static trade-off hypothesis

B.pecking order theory

C.efficient markets hypothesis

D.none of the above

Question 5 of 25

4.0 Points

The
quick ratio of a firm with current assets of $300,000, current liabilities of
$100,000 and inventory of $100,000 is:

A.1:1

B.2:1

C.3:1

D.4:1

Question 6 of 25

4.0 Points

Preferred
stock can have which of the following characteristics ? It can be:

A.cumulative

B.non-cumulative

C.convertible

D.all of the above

Question 7 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 8 of 25

4.0 Points

Examples
of external economic data required for project analysis include all of the
following except:

A.business cycle stages.

B.inflation trends

C.labor-management relations

D.exchange rate trends

E.all of the above are included

Question 9 of 25

4.0 Points

What
types of information are included in an annual report?

Question 10 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 11 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 12 of 25

4.0 Points

Which
of the following would not be considered in the fixed charge coverage ratio?

A.sinking fund payments

B.dividend payments

C.lease payments

D.All the above are considered in the
fixed charge coverage ratio

Question 13 of 25

4.0 Points

A
statement that expresses the income statement items as a percent of total
sales is called:

A.a percentage of sales income statement

B.a cross-sectional income statement

C.a common size income statement

D.a ratio based income statement

E.none of the above

Question 14 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 15 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 16 of 25

4.0 Points

Portfolio
risk is comprised of:

A.systematic and market risk

B.unsystematic and microeconomic risk

C.systematic and unsystematic risk

D.systematic and macroeconomic risk

Question 17 of 25

4.0 Points

The
accrued liabilities of a firm are:

A.retained earnings from past years

B.reflect the prepayment of certain
expenses

C.owners’ equity in the firm

D.amounts owed but not yet due

Question 18 of 25

4.0 Points

A
firm’s degree of combined leverage can be measured as degree of operating
leverage __________ the degree of financial leverage:

A.plus

B.minus

C.times

D.divided by

Question 19 of 25

4.0 Points

On the
income statement, gross profit is defined as:

A.operating profits minus operating
expenses

B.gross profit minus operating expenses

C.sales revenue minus cost of goods sold

D.sales revenue minus operating expenses

E.none of the above

Question 20 of 25

4.0 Points

The
benefits of diversification are greatest when asset returns have:

A.negative correlations

B.positive correlations

C.zero correlations

D.low positive covariances

Question 21 of 25

4.0 Points

In
cost-volume-profit analysis, a firm “breaks even” when its total revenues:

A.equal variable costs

B.equal total costs

C.equal fixed costs

D.are less than the sum of variable and
fixed costs

Question 22 of 25

4.0 Points

The
Sarbanes-Oxley Act established this entity. .

A.Auditing Commission

B.Accounting Accuracy Board

C.FASB

D.SEC

E.Public Company Accounting Oversight
Board

Question 23 of 25

4.0 Points

Which
item is not included in the calculation for both the quick ratio and the
current ratio?

A.accounts receivable

B.current assets

C.inventories

D.current liabilities

Question 24 of 25

4.0 Points

The
after-tax cash flows without the project are referred to as:

A.the net investment

B.incremental cash flows

C.the base case

D.none of the above

Question 25 of 25

4.0 Points

Which
one of the following types of ratios indicates the ability to meet short-term
obligations to creditors as they come due?

A.liquidity ratios

B.asset management ratios

C.capital structure ratios

D.profitability ratios

E.market value ratios

Part 1 of 1 – 100.0 Points

Question 1 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

Question 2 of 25 4.0 Points

Reasons to invest in marketable securities
would not include:

A.transactions motives

B.precautionary motives

C.speculative motives

D.all the above are reasons to invest in marketable securities

E.none of the above

Question 3 of 25 4.0 Points

The three types of risk faced by investors
in domestic bonds include all of the following EXCEPT:

A.political risk

B.credit risk

C.interest rate risk

D.reinvestment rate risk

Question 4 of 25 4.0 Points

If firms select the proportion of debt in
their capital structures in order to balance the benefits of tax-deducible
interest payments with opportunity costs, this would support the notion of:

A.the static trade-off hypothesis

B.pecking order theory

C.efficient markets hypothesis

D.none of the above

Question 5 of 25 4.0 Points

The quick ratio of a firm with current
assets of $300,000, current liabilities of $100,000 and inventory of $100,000
is:

A.1:1

B.2:1

C.3:1

D.4:1

Question 6 of 25 4.0 Points

Preferred stock can have which of the
following characteristics ? It can be:

A.cumulative

B.non-cumulative

C.convertible

D.all of the above

Question 7 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 8 of 25 4.0 Points

Examples of external economic data required
for project analysis include all of the following except:

A.business cycle stages.

B.inflation trends

C.labor-management relations

D.exchange rate trends

E.all of the above are included

Question 9 of 25 4.0 Points

What types of information are included in
an annual report?

Question 10 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 11 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 12 of 25 4.0 Points

Which of the following would not be
considered in the fixed charge coverage ratio?

A.sinking fund payments

B.dividend payments

C.lease payments

D.All the above are considered in the fixed charge coverage ratio

Question 13 of 25 4.0 Points

A statement that expresses the income
statement items as a percent of total sales is called:

A.a percentage of sales income statement

B.a cross-sectional income statement

C.a common size income statement

D.a ratio based income statement

E.none of the above

Question 14 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 15 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 16 of 25 4.0 Points

Portfolio risk is comprised of:

A.systematic and market risk

B.unsystematic and microeconomic risk

C.systematic and unsystematic risk

D.systematic and macroeconomic risk

Question 17 of 25 4.0 Points

The accrued liabilities of a firm are:

A.retained earnings from past years

B.reflect the prepayment of certain expenses

C.owners’ equity in the firm

D.amounts owed but not yet due

Question 18 of 25 4.0 Points

A firm’s degree of combined leverage can be
measured as degree of operating leverage __________ the degree of financial
leverage:

A.plus

B.minus

C.times

D.divided by

Question 19 of 25 4.0 Points

On the income statement, gross profit is
defined as:

A.operating profits minus operating expenses

B.gross profit minus operating expenses

C.sales revenue minus cost of goods sold

D.sales revenue minus operating expenses

E.none of the above

Question 20 of 25 4.0 Points

The benefits of diversification are
greatest when asset returns have:

A.negative correlations

B.positive correlations

C.zero correlations

D.low positive covariances

Answer Key: A

Question 21 of 25 4.0 Points

In cost-volume-profit analysis, a firm
“breaks even” when its total revenues:

A.equal variable costs

B.equal total costs

C.equal fixed costs

D.are less than the sum of variable and fixed
costs

Question 22 of 25 4.0 Points

The Sarbanes-Oxley Act established this
entity. .

A.Auditing Commission

B.Accounting Accuracy Board

C.FASB

D.SEC

E.Public Company Accounting Oversight Board

Question 23 of 25 4.0 Points

Which item is not included in the
calculation for both the quick ratio and the current ratio?

A.accounts receivable

B.current assets

C.inventories

D.current liabilities

Question 24 of 25 4.0 Points

The after-tax cash flows without the
project are referred to as:

A.the net investment

B.incremental cash flows

C.the base case

D.none of the above

Question 25 of 25 4.0 Points

Which one of the following types of ratios
indicates the ability to meet short-term obligations to creditors as they come
due?

A.liquidity ratios

B.asset management ratios

C.capital structure ratios

D.profitability ratios

E.market value ratios

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