公司理财选择1

d 15. Agency costs refer to:

a. the total dividends paid to stockholders over the lifetime of a firm.

b. the costs that result from default and bankruptcy of a firm.

c. corporate income subject to double taxation.

d. the costs of any conflicts of interest between stockholders and management.

e. the total interest paid to creditors over the lifetime of the firm.

d 5. A(n) ____ asset is on

e which can be quickly converted into cash without significant

loss in value.

a. current

b. fixed

c. intangible

d. liquid

e. long-term

c 21. Which one of the following accounts is generally the most liquid?

a. inventory

b.building

c.accounts receivable

d.equipment

e.patent

BOOK V ALUE

b 25. Book value:

a. is equivalent to market value for firms with fixed assets.

b.is based on historical cost.

c.generally tends to exceed market value when fixed assets are include

d.

d.is more of a financial than an accounting valuation.

e.is adjusted to market value whenever the market value exceeds the stated book

value.

a 26. When making financial decisions related to assets, you should:

a.always consider market values.

b.place more emphasis on book values than on market values.

c.rely primarily on the value of assets as shown on the balance sheet.

d.place primary emphasis on historical costs.

e.only consider market values if they are less than book values.

c 36. The cash flow to creditors includes the cash:

a.received by the firm when payments are paid to suppliers.

b.outflow of the firm when new debt is acquired.

c. outflow when interest is paid on outstanding debt.

d. inflow when accounts payable decreases.

e. received when long-term debt is paid of

f.

b 38. Which equality is the basis for the balance sheet?

a. Fixed Assets = Stockholder's Equity + Current Assets

b. Assets = Liabilities + Stockholder's Equity

c. Assets = Current Long-Term Debt + Retained Earnings

d. Fixed Assets = Liabilities + Stockholder's Equity

e. None of the above.

b 45. Which of the following is not included in the computation of operating cash flow?

a. Earnings before interest and taxes

b. Interest paid

c. Depreciation

d. Current taxes

e. All of the above are included.

BOOK V ALUE

c 54. Martha’s Enterprises spent $2,400 to purchase equipment three years ago. This

equipment is currently valued at $1,800 on today’s balanc e sheet but could actually

be sold for $2,000. Net working capital is $200 and long-term debt is $800. What is

the book value of shareholders’ equity?

a.$200

b.$800

c.$1,200

d.$1,400

e. The answer cannot be determined from the information provided. CORPORATION

a 9. A business created as a distinct legal entity composed of one or more individuals or

entities is called a:

a. corporation.

b. sole proprietorship.

c. general partnership.

d. limited partnership.

e. unlimited liability company.

CORPORATION

e 36. Which o

f the followin

g are advantages of the corporate form of business ownership?

I. limited liability for firm debt

II. double taxation

III. ability to raise capital

IV. unlimited firm life

a. I and II only

b. III and IV only

c. I, II, and III only

d. II, III, and IV only

e. I, III, and IV only

CORPORATION

a 37. Which one of the following statements is correct concerning corporations?

a. The largest firms are usually corporations.

b. The majority of firms are corporations.

c. The stockholders are usually the managers of a corporation.

d. The ability of a corporation to raise capital is quite limited.

e. The income of a corporation is taxed as personal income of the stockholders

FACE V ALUE

b 2. The principal amount of a bond that is repaid at the end of the loan term is called

the bond’s:

a. coupon.

b. face value.

c. maturity.

d. yield to maturity.

e. coupon rate.

MATURITY

c 3. The specifie

d dat

e on which the principal amount o

f a bond is repaid is called the

bond’s:

a. coupon.

b. face value.

c. maturity.

d. yield to maturity.

YIELD TO MATURITY

d 4. Th

e rate o

f return required by investors in the market for ownin

g a bond is called

the:

a. coupon.

b. face value.

c. maturity.

d. yield to maturity.

e. coupon rate.

e. coupon rate.

COUPON RATE

e 5. The annual coupon o

f a bond divided by its face value is called the bond’s:

a. coupon.

b. face value.

c. maturity.

d. yield to maturity.

e. coupon rate.

ZERO COUPON BONDS

e 22. A bond that makes no coupon payments and is initially priced at a deep discount is

called a _____ bond.

a. Treasury

b. municipal

c. floating-rate

d. junk

e. zero coupon

CURRENT YIELD

b 27. The annual coupon payment of a bond divided by its market price is called the:

a. coupon rate.

b. current yield.

c. yield to maturity.

d. bid-ask spread.

e. capital gains yield.

YIELD TO MATURITY AND CURRENT YIELD

e 48. All else constant, as the market price o

f a bond increases the current yield _____ and the yield to maturity _____

a. increases; increases.

b. increases; decreases.

c. remains constant; increases.

d. decreases; increases.

e. decreases; decreases.

ZERO COUPON BONDS

e 61. A zero coupon bond:

a. is sold at a large premium.

b. has a price equal to the future value of the face amount given a specified rate of

return.

c. can only be issued by the U.S. Treasury.

d. has less interest rate risk than a comparable coupon bond.

e. has implicit interest which is calculated by amortizing the loan.

ZERO COUPON BONDS

b 62. The total interest paid on a zero-coupon bond is equal to:

a. zero.

b. the face value minus the issue price.

c. the face value minus the market price on the maturity date.

d. $1,000 minus the face valu

e.

e. $1,000 minus the par value.

YIELD TO MATURITY

e 66. The yield to maturity is

a. the rate that equates the price of the bond with the discounted cash flows.

b. the expected rate to be earned if held to maturity.

c. the rate that is used to determine the market price of the bon

d.

d. equal to the current yield for bonds priced at par.

e. All of the above.

FACE V ALUE

e 70. Face value is

a. always higher than current price.

b. always lower than current price.

c. the same as the current price.

d. the coupon amount.

e. None of the above.

YIELD TO MATURITY

c 74. If its yiel

d to maturity is less than its coupon rate, a bond will sell at a _____, and

increases in market interest rates will _____.

a. discount; decrease this discount.

b. discount; increase this discount.

c. premium; decrease this premium.

d. premium; increase this premium.

e. None of the above.

BOND V ALUATION

c 82. Consider a bon

d which pays 7% semiannually and has 8 years to maturity. The

market requires an interest rate of 8% on bonds of this risk. What is this bond's

price?

a. $ 942.50

b. $ 911.52

c. $ 941.74

d. $1,064.81

e. None of the above.

ZERO COUPON BOND

a 83. The value of a 20 year zero-coupon bond when the market required rate of return

of 9% (semiannual) is ____ .

a. $171.93

b. $178.43

c. $318.38

d. $414.64

e. None of the above.

YIELD TO MATURITY

c 84. The bonds issue

d by Jensen & Son bear a 6 % coupon, payabl

e semiannually. The

bond matures in 8 years and has a $1,000 face value. Currently, the bond sells at par.

What is the yield to maturity?

a. 5.87 %

b. 5.97 %

c. 6.00 %

d. 6.09 %

e. 6.17 %

PRICE OF COUPON BOND

a 87. Wine and Roses, Inc. offers a 7 % coupon bond with semiannual payments and a

yield to maturity of 7.73 %. The bonds mature in 9 years. What is the market price

of a $1,000 face value bond?

a. $953.28

b. $953.88

c. $1,108.16

d. $1,401.26

e. $1,401.86

NET PRESENT V ALUE

d 17. If a project has a net present valu

e equal to zero, then:

I. the present value of the cash inflows exceeds the initial cost of the project.

II. the project produces a rate of return that just equals the rate required to accept the project.

III. the project is expected to produce only the minimally required cash inflows.

IV. any delay in receiving the projected cash inflows will cause the project to have a negative net present value.

a. II and III only

b. II and IV only

c. I, II, and IV only

d. II, III, and IV only

e. I, II, and III only

c 51. The average accounting return is determine

d by:

a. dividing the yearly cash flows by the investment.

b. dividing the average cash flows by the investment.

c. dividing the average net income by the average investment.

d. dividing the average net income by the initial investment.

e. dividing the net income by the cash flow.

d 54. Th

e shortcoming(s) o

f the average accountin

g return (AAR) method is (are):

a. the use of net income instead of cash flows.

b. the pattern of income flows has no impact on the AAR.

c. there is no clear-cut decision rule.

d. All of the abov

e.

e. None of the above.

A VERAGE ACCOUNTING RETURN

d 89. A project has averag

e net income o

f $2,100 a year over its 4-year life. The initial cost of the project is $65,000 which will be depreciated usin

g straight-line depreciation to a book value of zero over the life of the project. The firm wants to earn a minimal average accounting return of 8.5 percent. The firm should _____ the project based on the AAR of _____

a. accept; 6.46 percent.

b. accept; 9.69 percent.

c. accept; 12.92 percent.

d. reject; 6.46 percent.

e. reject; 12.92 percent.

NET PRESENT V ALUE

a 45. Which of the following does not characterize NPV?

a. NPV does not incorporate risk into the analysis.

b. NPV incorporates all relevant information.

c. NPV uses all of the project's cash flows.

d. NPV discounts all future cash flows.

e. Using NPV will lead to decisions that maximize shareholder wealth.

USE OF DEBT

c 4. The use of debt is called

a. operating leverage.

b. production leverage.

c. financial leverage.

d. total asset turnover risk.

e. business risk

a 6. The W ACC is used to _______ the expected cash flows when the firm has

____________ .

a. discount; debt and equity in the capital structure

b. discount; short term financing on the balance sheet

c. increase; debt and equity in the capital structure

d. decrease; short term financing on the balance sheet

e. None of the above.

BETA

d 11. Th

e beta o

f a security provides an

a. estimate of the market risk premium.

b. estimate of the slope of the Capital Market Line.

c. estimate of the slope of the Security Market Line.

d. estimate of the systematic risk of the security.

e. None of the above.

b 18. Beta is useful in the calculation of the

a. company's variance.

b. company's discount rate.

c. company's standard deviation.

d. unsystematic risk.

e. company's market rate.