Chapter 4 财务管理(英语)作业
大连海事,财务管理研究生公司理财chapter04
Revenues Equity 600
Costs
2000 1600
Total 1000 Total 1000 Net Income
400
4-7
Example: Pro Forma Income Statement
• Initial Assumptions
• Revenues will grow at 15% (2000*1.15)
4-6
Example: Historical Financial Statements
Gourmet Coffee Inc. Balance Sheet
December 31, 2004 Assets 1000 Debt 400
Gourmet Coffee Inc.
Income Statement For Year Ended
• Understand the financial planning process and how decisions are interrelated
• Be able to develop a financial plan using the percentage of sales approach
because they depend on management decisions about capital structure • The change in the retained earnings portion of equity will come from the dividend decision
• Plug Variable – determined by management decisions about what type of financing will be used (makes the balance sheet balance)
罗斯《公司理财》英文习题答案DOCchap004
公司理财习题答案第四章Chapter 4: Net Present Value4.1 a. $1,000 ⨯ 1.0510 = $1,628.89b. $1,000 ⨯ 1.0710 = $1,967.15c. $1,000 ⨯ 1.0520 = $2,653.30d. Interest compounds on the I nterest already earned. Therefore, the interest earnedin part c, $1,653.30, is more than double the amount earned in part a, $628.89.4.2 a. $1,000 / 1.17 = $513.16b. $2,000 / 1.1 = $1,818.18c. $500 / 1.18 = $233.254.3 You can make your decision by computing either the present value of the $2,000 that youcan receive in ten years, or the future value of the $1,000 that you can receive now.Present value: $2,000 / 1.0810 = $926.39Future value: $1,000 ⨯ 1.0810 = $2,158.93Either calculation indicates you should take the $1,000 now.4.4 Since this bond has no interim coupon payments, its present value is simply the presentvalue of the $1,000 that will be received in 25 years. Note: As will be discussed in the next chapter, the present value of the payments associated with a bond is the price of that bond.PV = $1,000 /1.125 = $92.304.5 PV = $1,500,000 / 1.0827 = $187,780.234.6 a. At a discount rate of zero, the future value and present value are always the same.Remember, FV = PV (1 + r) t. If r = 0, then the formula reduces to FV = PV.Therefore, the values of the options are $10,000 and $20,000, respectively. Youshould choose the second option.b. Option one: $10,000 / 1.1 = $9,090.91Option two: $20,000 / 1.15 = $12,418.43Choose the second option.c. Option one: $10,000 / 1.2 = $8,333.33Option two: $20,000 / 1.25 = $8,037.55Choose the first option.d. You are indifferent at the rate that equates the PVs of the two alternatives. Youknow that rate must fall between 10% and 20% because the option you wouldchoose differs at these rates. Let r be the discount rate that makes you indifferentbetween the options.$10,000 / (1 + r) = $20,000 / (1 + r)5(1 + r)4 = $20,000 / $10,000 = 21 + r = 1.18921r = 0.18921 = 18.921%4.7 PV of Joneses’ offer = $150,000 / (1.1)3 = $112,697.22Since the PV of Joneses’ offer is less than Smiths’ offer, $115,000, you should chooseSmiths’ offer.4.8 a. P0 = $1,000 / 1.0820 = $214.55b. P10 = P0 (1.08)10 = $463.20c. P15 = P0 (1.08)15 = $680.594.9 The $1,000 that you place in the account at the end of the first year will earn interest for sixyears. The $1,000 that you place in the account at the end of the second year will earninterest for five years, etc. Thus, the account will have a balance of$1,000 (1.12)6 + $1,000 (1.12)5 + $1,000 (1.12)4 + $1,000 (1.12)3= $6,714.614.10 PV = $5,000,000 / 1.1210 = $1,609,866.184.11 a. The cost of investment is $900,000.PV of cash inflows = $120,000 / 1.12 + $250,000 / 1.122 + $800,000 / 1.123= $875,865.52Since the PV of cash inflows is less than the cost of investment, you should notmake the investment.b. NPV = -$900,000 + $875,865.52= -$24,134.48c. NPV = -$900,000 + $120,000 / 1.11 + $250,000 / 1.112 + $800,000 / 1.113= $-4,033.18Since the NPV is still negative, you should not make the investment.4.12 NPV = -($340,000 + $10,000) + ($100,000 - $10,000) / 1.1+ $90,000 / 1.12 + $90,000 / 1.13 + $90,000 / 1.14 + $100,000 / 1.15= -$2,619.98Since the NPV is negative, you should not buy it.If the relevant cost of capital is 9 percent,NPV = -$350,000 + $90,000 / 1.09 + $90,000 / 1.092 + $90,000 / 1.093+ $90,000 / 1.094 + $100,000 / 1.095= $6,567.93Since the NPV is positive, you should buy it.4.13 a. Profit = PV of revenue - Cost = NPVNPV = $90,000 / 1.15 - $60,000 = -$4,117.08No, the firm will not make a profit.b. Find r that makes zero NPV.$90,000 / (1+r)5 - $60,000 = $0(1+r)5 = 1.5r = 0.08447 = 8.447%4.14 The future value of the decision to own your car for one year is the sum of the trade-invalue and the benefit from owning the car. Therefore, the PV of the decision to own thecar for one year is$3,000 / 1.12 + $1,000 / 1.12 = $3,571.43Since the PV of the roommate’s offer, $3,500, is lower than the aunt’s offer, you shouldaccept aunt’s offer.4.15 a. $1.000 (1.08)3 = $1,259.71b. $1,000 [1 + (0.08 / 2)]2 ⨯ 3 = $1,000 (1.04)6 = $1,265.32c. $1,000 [1 + (0.08 / 12)]12 ⨯ 3 = $1,000 (1.00667)36 = $1,270.24d. $1,000 e0.08 ⨯ 3 = $1,271.25公司理财习题答案第四章e. The future value increases because of the compounding. The account is earninginterest on interest. Essentially, the interest is added to the account balance at theend of every compounding period. During the next period, the account earnsinterest on the new balance. When the compounding period shortens, the balancethat earns interest is rising faster.4.16 a. $1,000 e0.12 ⨯ 5 = $1,822.12b. $1,000 e0.1 ⨯ 3 = $1,349.86c. $1,000 e0.05 ⨯ 10 = $1,648.72d. $1,000 e0.07 ⨯ 8 = $1,750.674.17 PV = $5,000 / [1+ (0.1 / 4)]4 ⨯ 12 = $1,528.364.18 Effective annual interest rate of Bank America= [1 + (0.041 / 4)]4 - 1 = 0.0416 = 4.16%Effective annual interest rate of Bank USA= [1 + (0.0405 / 12)]12 - 1 = 0.0413 = 4.13%You should deposit your money in Bank America.4.19 The price of the consol bond is the present value of the coupon payments. Apply theperpetuity formula to find the present value. PV = $120 / 0.15 = $8004.20 Quarterly interest rate = 12% / 4 = 3% = 0.03Therefore, the price of the security = $10 / 0.03 = $333.334.21 The price at the end of 19 quarters (or 4.75 years) from today = $1 / (0.15 ÷ 4) = $26.67The current price = $26.67 / [1+ (.15 / 4)]19 = $13.254.22 a. $1,000 / 0.1 = $10,000b. $500 / 0.1 = $5,000 is the value one year from now of the perpetual stream. Thus,the value of the perpetuity is $5,000 / 1.1 = $4,545.45.c. $2,420 / 0.1 = $24,200 is the value two years from now of the perpetual stream.Thus, the value of the perpetuity is $24,200 / 1.12 = $20,000.4.23 The value at t = 8 is $120 / 0.1 = $1,200.Thus, the value at t = 5 is $1,200 / 1.13 = $901.58.4.24 P = $3 (1.05) / (0.12 - 0.05) = $45.004.25 P = $1 / (0.1 - 0.04) = $16.674.26 The first cash flow will be generated 2 years from today.The value at the end of 1 year from today = $200,000 / (0.1 - 0.05) = $4,000,000.Thus, PV = $4,000,000 / 1.1 = $3,636,363.64.4.27 A zero NPV-$100,000 + $50,000 / r = 0-r = 0.54.28 Apply the NPV technique. Since the inflows are an annuity you can use the present valueof an annuity factor.NPV = -$6,200 + $1,200 8A1.0= -$6,200 + $1,200 (5.3349)= $201.88Yes, you should buy the asset.4.29 Use an annuity factor to compute the value two years from today of the twenty payments.Remember, the annuity formula gives you the value of the stream one year before the first payment. Hence, the annuity factor will give you the value at the end of year two of the stream of payments. Value at the end of year two = $2,000 20A08.0= $2,000 (9.8181)= $19,636.20The present value is simply that amount discounted back two years.PV = $19,636.20 / 1.082 = $16,834.884.30 The value of annuity at the end of year five= $500 15A = $500 (5.84737) = $2,923.6915.0The present value = $2,923.69 / 1.125 = $1,658.984.31 The easiest way to do this problem is to use the annuity factor. The annuity factor must beequal to $12,800 / $2,000 = 6.4; remember PV =C A t r. The annuity factors are in theappendix to the text. To use the factor table to solve this problem, scan across the rowlabeled 10 years until you find 6.4. It is close to the factor for 9%, 6.4177. Thus, the rate you will receive on this note is slightly more than 9%.You can find a more precise answer by interpolating between nine and ten percent.10% ⎤ 6.1446 ⎤a ⎡ r ⎥bc ⎡ 6.4 ⎪ d⎣ 9% ⎦⎣ 6.4177 ⎦By interpolating, you are presuming that the ratio of a to b is equal to the ratio of c to d.(9 - r ) / (9 - 10) = (6.4177 - 6.4 ) / (6.4177 - 6.1446)r = 9.0648%The exact value could be obtained by solving the annuity formula for the interest rate.Sophisticated calculators can compute the rate directly as 9.0626%.公司理财习题答案第四章4.32 a. The annuity amount can be computed by first calculating the PV of the $25,000which you need in five years. That amount is $17,824.65 [= $25,000 / 1.075].Next compute the annuity which has the same present value.$17,824.65 = C 5A.007$17,824.65 = C (4.1002)C = $4,347.26Thus, putting $4,347.26 into the 7% account each year will provide $25,000 fiveyears from today.b. The lump sum payment must be the present value of the $25,000, i.e., $25,000 /1.075 = $17,824.65The formula for future value of any annuity can be used to solve the problem (seefootnote 14 of the text).4.33The amount of loan is $120,000 ⨯ 0.85 = $102,000.20C A= $102,000.010The amount of equal installments isC = $102,000 / 20A = $102,000 / 8.513564 = $11,980.8810.04.34 The present value of salary is $5,000 36A = $150,537.53.001The present value of bonus is $10,000 3A = $23,740.42 (EAR = 12.68% is used since.01268bonuses are paid annually.)The present value of the contract = $150,537.53 + $23,740.42 = $174,277.944.35 The amount of loan is $15,000 ⨯ 0.8 = $12,000.C 48A = $12,0000067.0The amount of monthly installments isC = $12,000 / 48A = $12,000 / 40.96191 = $292.960067.04.36 Option one: This cash flow is an annuity due. To value it, you must use the after-taxamounts. The after-tax payment is $160,000 (1 - 0.28) = $115,200. Value all except the first payment using the standard annuity formula, then add back the first payment of$115,200 to obtain the value of this option.Value = $115,200 + $115,200 30A10.0= $115,200 + $115,200 (9.4269)= $1,201,178.88Option two: This option is valued similarly. You are able to have $446,000 now; this is already on an after-tax basis. You will receive an annuity of $101,055 for each of the next thirty years. Those payments are taxable when you receive them, so your after-taxpayment is $72,759.60 [= $101,055 (1 - 0.28)].Value = $446,000 + $72,759.60 30A.010= $446,000 + $72,759.60 (9.4269)= $1,131,897.47Since option one has a higher PV, you should choose it.4.37 The amount of loan is $9,000. The monthly payment C is given by solving the equation: C 60008.0A = $9,000 C = $9,000 / 47.5042 = $189.46In October 2000, Susan Chao has 35 (= 12 ⨯ 5 - 25) monthly payments left, including the one due in October 2000.Therefore, the balance of the loan on November 1, 2000 = $189.46 + $189.46 34008.0A = $189.46 + $189.46 (29.6651) = $5,809.81Thus, the total amount of payoff = 1.01 ($5,809.81) = $5,867.91 4.38 Let r be the rate of interest you must earn. $10,000(1 + r)12 = $80,000 (1 + r)12 = 8 r = 0.18921 = 18.921%4.39 First compute the present value of all the payments you must make for your children’s education. The value as of one year before matriculation of one child’s education is$21,000 415.0A= $21,000 (2.8550) = $59,955. This is the value of the elder child’s education fourteen years from now. It is the value of the younger child’s education sixteen years from today. The present value of these is PV = $59,955 / 1.1514 + $59,955 / 1.1516 = $14,880.44You want to make fifteen equal payments into an account that yields 15% so that the present value of the equal payments is $14,880.44. Payment = $14,880.44 / 1515.0A = $14,880.44 / 5.8474 = $2,544.804.40 The NPV of the policy isNPV = -$750 306.0A - $800306.0A / 1.063 + $250,000 / [(1.066) (1.0759)] = -$2,004.76 - $1,795.45 + $3,254.33= -$545.88 Therefore, you should not buy the policy.4.41 The NPV of the lease offer isNPV = $120,000 - $15,000 - $15,000 908.0A - $25,000 / 1.0810= $105,000 - $93,703.32 - $11,579.84 = -$283.16 Therefore, you should not accept the offer.4.42 This problem applies the growing annuity formula. The first payment is $50,000(1.04)2(0.02) = $1,081.60. PV = $1,081.60 [1 / (0.08 - 0.04) - {1 / (0.08 - 0.04)}{1.04 / 1.08}40]= $21,064.28 This is the present value of the payments, so the value forty years from today is $21,064.28 (1.0840) = $457,611.46公司理财习题答案第四章4.43 Use the discount factors to discount the individual cash flows. Then compute the NPV ofthe project. Notice that the four $1,000 cash flows form an annuity. You can still use the factor tables to compute their PV. Essentially, they form cash flows that are a six year annuity less a two year annuity. Thus, the appropriate annuity factor to use with them is 2.6198 (= 4.3553 - 1.7355).Year Cash Flow Factor PV 1 $700 0.9091 $636.37 2 900 0.8264 743.76 3 1,000 ⎤ 4 1,000 ⎥ 2.6198 2,619.80 5 1,000 ⎥ 6 1,000 ⎦ 7 1,250 0.5132 641.50 8 1,375 0.4665 641.44 Total $5,282.87NPV = -$5,000 + $5,282.87 = $282.87 Purchase the machine.4.44 Weekly inflation rate = 0.039 / 52 = 0.00075 Weekly interest rate = 0.104 / 52 = 0.002 PV = $5 [1 / (0.002 - 0.00075)] {1 – [(1 + 0.00075) / (1 + 0.002)]52 ⨯ 30} = $3,429.384.45 Engineer:NPV = -$12,000 405.0A + $20,000 / 1.055 + $25,000 / 1.056 - $15,000 / 1.057- $15,000 / 1.058 + $40,000 2505.0A / 1.058= $352,533.35 Accountant:NPV = -$13,000 405.0A + $31,000 3005.0A / 1.054= $345,958.81 Become an engineer.After your brother announces that the appropriate discount rate is 6%, you can recalculate the NPVs. Calculate them the same way as above except using the 6% discount rate. Engineer NPV = $292,419.47 Accountant NPV = $292,947.04Your brother made a poor decision. At a 6% rate, he should study accounting.4.46 Since Goose receives his first payment on July 1 and all payments in one year intervalsfrom July 1, the easiest approach to this problem is to discount the cash flows to July 1 then use the six month discount rate (0.044) to discount them the additional six months. PV = $875,000 / (1.044) + $650,000 / (1.044)(1.09) + $800,000 / (1.044)(1.092) + $1,000,000 / (1.044)(1.093) + $1,000,000/(1.044)(1.094) + $300,000 / (1.044)(1.095)+ $240,000 1709.0A / (1.044)(1.095) + $125,000 1009.0A / (1.044)(1.0922) = $5,051,150Remember that the use of annuity factors to discount the deferred payments yields the value of the annuity stream one period prior to the first payment. Thus, the annuity factor applied to the first set of deferred payments gives the value of those payments on July 1 of 1989. Discounting by 9% for five years brings the value to July 1, 1984. The use of the six month discount rate (4.4%) brings the value of the payments to January 1, 1984. Similarly, the annuity factor applied to the second set of deferred payments yields the value of those payments in 2006. Discounting for 22 years at 9% and for six months at 4.4% provides the value at January 1, 1984.The equivalent five-year, annual salary is the annuity that solves: $5,051,150 = C 509.0A C = $5,051,150/3.8897C = $1,298,596The student must be aware of possible rounding errors in this problem. The differencebetween 4.4% semiannual and 9.0% and for six months at 4.4% provides the value at January 1, 1984. 4.47 PV = $10,000 + ($35,000 + $3,500) [1 / (0.12 - 0.04)] [1 - (1.04 / 1.12) 25 ]= $415,783.604.48 NPV = -$40,000 + $10,000 [1 / (0.10 - 0.07)] [1 - (1.07 / 1.10)5 ] = $3,041.91 Revise the textbook.4.49The amount of the loan is $400,000 (0.8) = $320,000 The monthly payment is C = $320,000 / 3600067.0.0A = $ 2,348.10 Thirty years of payments $ 2,348.10 (360) = $ 845,316.00 Eight years of payments $2,348.10 (96) = $225,417.60 The difference is the balloon payment of $619,898.404.50 The lease payment is an annuity in advanceC + C 2301.0A = $4,000 C (1 + 20.4558) = $4,000 C = $186.424.51 The effective annual interest rate is[ 1 + (0.08 / 4) ] 4 – 1 = 0.0824The present value of the ten-year annuity is PV = 900 100824.0A = $5,974.24 Four remaining discount periodsPV = $5,974.24 / (1.0824) 4 = $4,352.43公司理财习题答案第四章4.52The present value of Ernie’s retirement incomePV = $300,000 20A / (1.07) 30 = $417,511.5407.0The present value of the cabinPV = $350,000 / (1.07) 10 = $177,922.25The present value of his savingsPV = $40,000 10A = $280,943.26.007In present value terms he must save an additional $313,490.53 In future value termsFV = $313,490.53 (1.07) 10 = $616,683.32He must saveC = $616.683.32 / 20A = $58,210.5407.0。
国际财务管理作业Chapter 4 - Test Bank
Chapter 4—Exchange Rate Determination1. The value of the Australian dollar (A$) today is $0.73. Yesterday, the value of the Australian dollarwas $0.69. The Australian dollar ____ by ____%.a. depreciated; 5.80b. depreciated; 4.00c. appreciated; 5.80d. appreciated; 4.00SOLUTION: ($0.73 − $0.69)/$0.69 = 5.80%2. If a currency's spot rate market is ____, its exchange rate is likely to be ____ to a single large purchaseor sale transaction.a. liquid; highly sensitiveb. illiquid; insensitivec. illiquid; highly sensitived. none of the above.3. ____ is not a factor that causes currency supply and demand schedules to change.a. Relative inflation ratesb. Relative interest ratesc. Relative income levelsd. Expectationse. All of the above are factors that cause currency supply and demand schedules to change.4. A large increase in the income level in Mexico along with no growth in the U.S. income level isnormally expected to cause (assuming no change in interest rates or other factors) a(n) ____ inMexican demand for U.S. goods, and the Mexican peso should ____.a. increase; appreciateb. increase; depreciatec. decrease; depreciated. decrease; appreciate5. An increase in U.S. interest rates relative to German interest rates would likely ____ the U.S. demandfor euros and ____ the supply of euros for sale.a. reduce; increaseb. increase; reducec. reduce; reduced. increase; increase6. Investors from Germany, the United States, and the U.K. frequently invest in each other basedon prevailing interest rates. If British interest rates increase, German investors are likely to buy ____ dollar-denominated securities, and the euro is likely to ____ relative to the dollar.a. fewer; depreciateb. fewer; appreciatec. more; depreciated. more; appreciate7. When the "real" interest rate is relatively low in a given country, then the currency of that country istypically expected to be:a. weak, since the country's quoted interest rate would be high relative to the inflation rate.b. strong, since the country's quoted interest rate would be low relative to the inflation rate.c. strong, since the country's quoted interest rate would be high relative to the inflation rate.d. weak, since the country's quoted interest rate would be low relative to the inflation rate.8. Assume that the inflation rate becomes much higher in the U.K. relative to the U.S. This will place____ pressure on the value of the British pound. Also, assume that interest rates in the U.K. begin to rise relative to interest rates in the U.S. The change in interest rates will place ____ pressure on the value of the British pound.a. upward; downwardb. upward; upwardc. downward; upwardd. downward; downward9. In general, when speculating on exchange rate movements, the speculator will borrow the currencythat is expected to appreciate and invest in the country whose currency is expected to depreciate.a. Trueb. False10. Baylor Bank believes the New Zealand dollar will appreciate over the next five days from $.48 to$.50. The following annual interest rates apply:Currency Lending Rate Borrowing RateDollars 7.10% 7.50%New Zealand dollar (NZ$) 6.80% 7.25%Baylor Bank has the capacity to borrow either NZ$10 million or $5 million. If Baylor Bank's forecast is correct, what will its dollar profit be from speculation over the five-day period (assuming it does not use any of its existing consumer deposits to capitalize on its expectations)?a. $521,325.b. $500,520.c. $104,262.d. $413,419.e. $208,044.SOLUTION:1. Borrow $5 million.2. Convert to NZ$: $5,000,000/$.48 = NZ$10,416,667.3. Invest the NZ$ at an annualized rate of 6.80% over five days.NZ$10,416,667 × [1 + 6.80% (5/360)]= NZ$10,426,5054. Convert the NZ$ back to dollars:NZ$10,426,505 × $.50 = $5,213,2525. Repay the dollars borrowed. The repayment amount is:$5,000,000 × [1 + 7.5% (5/360)]= $5,000,000 × [1.00104]= $5,005,2086. After repaying the loan, the remaining dollar profit is:$5,213,252 − $5,005,208 = $208,04411. Assume the following information regarding U.S. and European annualized interest rates:Currency Lending Rate Borrowing RateU.S. Dollar ($) 6.73% 7.20%Euro (€) 6.80% 7.28%Trensor Bank can borrow either $20 million or €20 million. The current spot rate of the euro is $1.13.Furthermore, Trensor Bank expects the spot rate of the euro to be $1.10 in 90 days. What is Trensor Bank's dollar profit from speculating if the spot rate of the euro is indeed $1.10 in 90 days?a. $579,845.b. $583,800.c. $588,200.d. $584,245.e. $980,245.SOLUTION:1. Borrow €20 million.2. Convert the €20 million to €20,000,000 × $1.13 = $22,600,000.3. Invest the $22,600,000 at an annualized rate of 6.73% for 90 days.$22,600,000 × [1 + 6.73% (90/360)]= $22,980,2454. Determine euros owed: €20,000,000 × [1 + 7.28% (90/360)] = €20,364,000.5. Determine dollars needed to repay euro loan: €20,364,000 × $1.10 = $22,400,400.6. The dollar profit is $22,980,245 − $22,400,400 = $579,845.12. The equilibrium exchange rate of pounds is $1.70. At an exchange rate of $1.72 per pound:a. U.S. demand for pounds would exceed the supply of pounds for sale and there would be ashortage of pounds in the foreign exchange market.b. U.S. demand for pounds would be less than the supply of pounds for sale and there wouldbe a shortage of pounds in the foreign exchange market.c. U.S. demand for pounds would exceed the supply of pounds for sale and there would be asurplus of pounds in the foreign exchange market.d. U.S. demand for pounds would be less than the supply of pounds for sale and there wouldbe a surplus of pounds in the foreign exchange market.e. U.S. demand for pounds would be equal to the supply of pounds for sale and there wouldbe a shortage of pounds in the foreign exchange market.13. Assume that Swiss investors have francs available to invest in securities, and they initially view U.S.and British interest rates as equally attractive. Now assume that U.S. interest rates increase while British interest rates stay the same. This would likely cause:a. the Swiss demand for dollars to decrease and the dollar will depreciate against the pound.b. the Swiss demand for dollars to increase and the dollar will depreciate against the Swissfranc.c. the Swiss demand for dollars to increase and the dollar will appreciate against the Swissfranc.d. the Swiss demand for dollars to decrease and the dollar will appreciate against the pound.14. The real interest rate adjusts the nominal interest rate for:a. exchange rate movements.b. income growth.c. inflation.d. government controls.e. none of the above15. If U.S. inflation suddenly increased while European inflation stayed the same, there would be:a. an increased U.S. demand for euros and an increased supply of euros for sale.b. a decreased U.S. demand for euros and an increased supply of euros for sale.c. a decreased U.S. demand for euros and a decreased supply of euros for sale.d. an increased U.S. demand for euros and a decreased supply of euros for sale.16. If inflation in New Zealand suddenly increased while U.S. inflation stayed the same, there would be:a. an inward shift in the demand schedule for NZ$ and an outward shift in the supplyschedule for NZ$.b. an outward shift in the demand schedule for NZ$ and an inward shift in the supplyschedule for NZ$.c. an outward shift in the demand schedule for NZ$ and an outward shift in the supplyschedule for NZ$.d. an inward shift in the demand schedule for NZ$ and an inward shift in the supply schedulefor NZ$.17. If the U.S. and Japan engage in substantial financial flows but little trade, ____ directly influencestheir exchange rate the most. If the U.S. and Switzerland engage in much trade but little financial flows, ____ directly influences their exchange rate the most.a. interest rate differentials; interest rate differentialsb. inflation and interest rate differentials; interest rate differentialsc. income and interest rate differentials; inflation differentialsd. interest rate differentials; inflation and income differentialse. inflation and income differentials; interest rate differentials18. If inflation increases substantially in Australia while U.S. inflation remains unchanged, this is expectedto place ____ pressure on the value of the Australian dollar with respect to the U.S. dollar.a. upwardb. downwardc. either upward or downward (depending on the degree of the increase in Australianinflation)d. none of the above; there will be no impact19. Assume that British corporations begin to purchase more supplies from the U.S. as a result of severallabor strikes by British suppliers. This action reflects:a. an increased demand for British pounds.b. a decrease in the demand for British pounds.c. an increase in the supply of British pounds for sale.d. a decrease in the supply of British pounds for sale.20. The exchange rates of smaller countries are very stable because the market for their currency is veryliquid.a. Trueb. False21. The phrase "the dollar was mixed in trading" means that:a. the dollar was strong in some periods and weak in other periods over the last month.b. the volume of trading was very high in some periods and low in other periods.c. the dollar was involved in some currency transactions, but not others.d. the dollar strengthened against some currencies and weakened against others.22. Assume that the U.S. places a strict quota on goods imported from Chile and that Chile does notretaliate. Holding other factors constant, this event should immediately cause the U.S. demand for Chilean pesos to ____ and the value of the peso to ____.a. increase; increaseb. increase; declinec. decline; declined. decline; increase23. Any event that increases the U.S. demand for euros should result in a(n) ____ in the value of the eurowith respect to ____, other things being equal.a. increase; U.S. dollarb. increase; nondollar currenciesc. decrease; nondollar currenciesd. decrease; U.S. dollar24. Any event that reduces the U.S. demand for Japanese yen should result in a(n) ____ in the value of theJapanese yen with respect to ____, other things being equal.a. increase; U.S. dollarb. increase; nondollar currenciesc. decrease; nondollar currenciesd. decrease; U.S. dollar25. Any event that increases the supply of British pounds to be exchanged for U.S. dollars should result ina(n) ____ in the value of the British pound with respect to ____, other things being equal.a. increase; U.S. dollarb. increase; nondollar currenciesc. decrease; nondollar currenciesd. decrease; U.S. dollar26. Any event that reduces the supply of Swiss francs to be exchanged for U.S. dollars should result in a(n)____ in the value of the Swiss franc with respect to ____, other things being equal.a. increase; U.S. dollarb. increase; nondollar currenciesc. decrease; nondollar currenciesd. decrease; U.S. dollar27. Assume that the U.S. experiences a significant decline in income, while Japan's income remains steady.This event should place ____ pressure on the value of the Japanese yen, other things being equal.(Assume that interest rates and other factors are not affected.)a. upwardb. downwardc. nod. upward and downward (offsetting)28. News of a potential surge in U.S. inflation and zero Chilean inflation places ____ pressure on the valueof the Chilean peso. The pressure will occur ____.a. upward; only after the U.S. inflation surgesb. downward; only after the U.S. inflation surgesc. upward; immediatelyd. downward; immediately29. Assume that Canada places a strict quota on goods imported from the U.S. and that the U.S. does notretaliate. Holding other factors constant, this event should immediately cause the supply of Canadian dollars to be exchanged for U.S. dollars to ____ and the value of the Canadian dollar to ____.a. increase; increaseb. increase; declinec. decline; declined. decline; increase30. Assume that Japan places a strict quota on goods imported from the U.S. and the U.S. places a strictquota on goods imported from Japan. This event should immediately cause the U.S. demand forJapanese yen to ____, and the supply of Japanese yen to be exchanged for U.S. dollars to ____.a. increase; increaseb. increase; declinec. decline; declined. decline; increase31. Which of the following is not mentioned in the text as a factor affecting exchange rates?a. relative interest rates.b. relative inflation rates.c. government controls.d. expectations.e. all of the above are mentioned in the text as factors affecting exchange rates.32. If a country experiences high inflation relative to the U.S., its exports to the U.S. should ____, itsimports should ____, and there is ____ pressure on its currency's equilibrium value.a. decrease; increase; upwardb. decrease; decrease; upwardc. increase; decrease; downwardd. decrease; increase; downwarde. increase; decrease; upward33. If a country experiences an increase in interest rates relative to U.S. interest rates, the inflow of U.S.funds to purchase its securities should ____, the outflow of its funds to purchase U.S. securities should ____, and there is ____ pressure on its currency's equilibrium value.a. increase; decrease; downwardb. decrease; increase; upwardc. increase; decrease; upwardd. decrease; increase; downwarde. increase; increase; upward34. An increase in U.S. inflation relative to Singapore inflation places upward pressure on the Singaporedollar.a. Trueb. False35. When expecting a foreign currency to depreciate, a possible way to speculate on this movement is toborrow dollars, convert the proceeds to the foreign currency, lend in the foreign country, and use the proceeds from this investment to repay the dollar loan.a. Trueb. False36. Since supply and demand for a currency are constant (primarily due to government intervention),currency values seldom fluctuate.a. Trueb. False37. Relatively high Japanese inflation may result in an increase in the supply of yen for sale and areduction in the demand for yen.a. Trueb. False38. The main effect of interest rate movements on exchange rates is through their effect on internationaltrade.a. Trueb. False39. Country X frequently engages in trade flows with the U.S. (such as imports and exports). Country Yfrequently engages in capital flows with the U.S. (such as financial investments). Everything else held constant, an increase in U.S. interest rates would affect the exchange rate of Country X's currency more than the exchange rate of Country Y's currency.a. Trueb. False40. Increases in relative income in one country vs. another result in an increase in the first country'scurrency value.a. Trueb. False41. Trade-related foreign exchange transactions are more responsive to news than financial flowtransactions.a. Trueb. False42. Signals regarding future actions of market participants in the foreign exchange market sometimesresult in overreactions.a. Trueb. False43. The markets that have a smaller amount of foreign exchange trading for speculatory purposes than fortrade purposes will likely experience more volatility than those where trade flows play a larger role.a. Trueb. False44. Liquidity of a currency can affect the extent to which speculation can impact the currency's value.a. Trueb. False45. Forecasting a currency's future value is difficult, because it is difficult to identify how the factorsaffecting the currency value will change, and how they will interact to impact the currency's value.a. Trueb. False46. The standard deviation should be applied to values rather than percentage movements when comparingvolatility among currencies.a. Trueb. False47. Movements of foreign currencies tend to be more volatile for shorter time horizons.a. Trueb. False48. If a currency's spot market is ____, its exchange rate is likely to be ____ to a single large purchase orsale transaction.a. liquid; highly sensitiveb. illiquid; insensitivec. liquid; insensitived. none of the above49. The value of euro was $1.30 last week. During last week the euro depreciated by 5%. What is thevalue of euro today?a. $1.365b. $1.235c. $1.330d. $1.30SOLUTION: $1.3 × (1 − .05) = $1.23550. Government controls can only affect the supply of a given currency for sale and not the demand.a. Trueb. False51. If one foreign currency will appreciate against the dollar, then all foreign currencies will appreciateagainst the dollar but by different degrees.a. Trueb. False52. Assume that the income levels in U.K. start to rise, while U.S. income levels remain unchanged. Thiswill place ____ pressure on the value of British pound. Also, assume that U.S. interest rates rise, while the British pound remains unchanged. This will place ____ pressure on the value of British pound.a. downward; downwardb. upward; downwardc. upward; upwardd. downward; upward53. If the Fed announces that it will decrease the U.S. interest rates, and European Central Bank takes noaction, then the value of euro will ____ against the value of U.S. dollar. The Fed's action is called ____ intervention.a. appreciate; directb. depreciate; directc. appreciate; indirectd. depreciate; indirect54. Assume that the total value of investment transactions between U.S. and Mexico is minimal. Alsoassume that total dollar value of trade transactions between these two countries is very large. Now assume that Mexico's inflation has suddenly increased, and Mexican interest rates have suddenlyincreased. Overall, this would put ____ pressure on the value of Mexican peso. The inflation effect should be ____ pronounced than the interest rate effect.a. downward; moreb. upward; morec. downward; lessd. upward; less55. If U.S. experiences a sudden surge in inflation and surge in interest rates while Japanese inflation andinterest rates remain unchanged, the value of Japanese yen will ____ against the U.S. dollar.a. appreciateb. depreciatec. remain unchangedd. cannot be determined from the information provided.56. If the Japanese yen is expected to appreciate against the U.S. dollar and interest rates in the U.S. andJapan are similar, banks may try speculating on this anticipated exchange rate movement by borrowing ____ and investing in ____.a. yen; dollarsb. yen; yenc. dollars; yend. dollars; dollars57. British investors frequently invest in the U.S. or Italy, depending on the prevailing interest rates. IfItalian interest rates suddenly rise high above U.S. rates, the investors will ____ the supply of pounds to be exchanged for dollars and thus put ____ pressure on the value of the pound against the U.S.dollar.a. increase; downwardb. decrease; upwardc. increase; upwardd. decrease; downward58. The equilibrium exchange rate of the Swiss franc is $0.90. At an exchange rate $.83:a. U.S. demand for Swiss francs would exceed the supply of francs for sale and there wouldbe a shortage of francs in the foreign exchange market.b. U.S. demand for Swiss francs would be less than the supply of francs for sale and therewould be a shortage of francs in the foreign exchange market.c. U.S. demand for Swiss francs would exceed the supply of francs for sale and there wouldbe a surplus of francs in the foreign exchange market.d. U.S. demand for Swiss francs would be less than the supply of francs for sale and therewould be a surplus of Swiss francs in the foreign exchange market.59. Financial flow foreign exchange transactions are more responsive to news than trade-relatedtransactions.a. Trueb. False60. Assume that the British government eliminates all controls on imports by British companies. Otherthings being equal, the U.S. demand for pounds would ____, the supply of pounds for sale would ____, and the equilibrium value of the pound would ____.a. increase; increase; increaseb. decrease; increase; decreasec. remain unchanged; increase; decreased. remain unchanged; increase; increase61. Country X frequently engages in trade flows with the U.S. (such as imports and exports). Country Yfrequently engages in capital flows with the U.S. (such as financial investments). Everything else held constant, an increase in U.S. inflation would affect the exchange rate of Country Y's currency more than the exchange rate of Country X's currency.a. Trueb. False62. Assume that U.S. inflation is expected to surge in the near future. The expectation of surge in inflationwill most likely place ____ pressure on U.S. dollar immediately.a. upwardb. downwardc. nod. cannot be determined63. When the Japanese yen appreciates against the U.S. dollar, this means that the U.S. dollar isstrengthening relative to the yen.a. Trueb. False64. Illiquid currencies tend to exhibit less volatile exchange rate movements than liquid currencies.a. Trueb. False65. The supply curve for a currency is downward sloping since U.S. corporations would be encouraged topurchase more foreign goods when the foreign currency is worth less.a. Trueb. False66. Relatively high Japanese inflation may result in an increase in the supply of yen for sale and areduction in the demand for yen, other things being equal.a. Trueb. False67. If the British government desires an appreciation in its currency with respect to the U.S. dollar, itwould consider intervening in the foreign exchange market by buying dollars with pounds.a. Trueb. False68. Country X frequently engages in trade flows with the U.S. (such as imports and exports). Country Yfrequently engages in financial flows with the U.S. (such as financial investments). Everything else held constant, an increase in U.S. interest rates would affect the exchange rate of Country X's currency more than the exchange rate of Country Y's currency.a. Trueb. False69. Illiquid currencies tend to exhibit ____ volatile exchange rate movements, as the equilibrium prices oftheir currencies adjust to ____ changes in supply and demand conditions.a. less; even minorb. less; only largec. more; even minord. more; only largee. none of the above70. Which of the following is not mentioned in the text as a factor affecting exchange rates?a. Relative interest ratesb. Relative inflation ratesc. Government controlsd. Expectationse. All of the above are mentioned in the text as factors affecting exchange rates.71. Which of the following events would most likely result in an appreciation of the U.S. dollar?a. U.S. inflation is very high.b. The Fed indicates that it will raise U.S. interest rates.c. Future U.S. interest rates are expected to decline.d. Japan is expected to increase interest rates in the near future.72. Which of the following interactions will likely have the least effect on the dollar's value? Assumeeverything else is held constant.a. A reduction in U.S. inflation accompanied by an increase in real U.S. interest ratesb. A reduction in U.S. inflation accompanied by an increase in nominal U.S. interest ratesc. An increase in U.S. inflation accompanied by an increase in nominal, but not real, U.S.interest ratesd. An increase in Singapore's inflation accompanied by an increase in real U.S. interest ratese. An increase in Singapore's interest rates accompanied by an increase in U.S. inflation.73. If a country experiences high inflation relative to the U.S., its exports to the U.S. should ____, itsimports should ____, and there is ____ pressure on its currency's equilibrium value.a. decrease; increase; upwardb. decrease; decrease; upwardc. increase; decrease; downwardd. decrease; increase; downwarde. increase; decrease; upward74. If a country experiences an increase in interest rates relative to U.S. interest rates, the inflow of U.S.funds to purchase its securities should ____, the outflow of its funds to purchase U.S. securities should ____, and there is ____ pressure on its currency's equilibrium value.a. increase; decrease; downwardb. decrease; increase; upwardc. increase; decrease; upwardd. decrease; increase; downwarde. increase; increase; upward。
ContemporaryFinancialManagement10th现代财务管理英文版全套习题
ContemporaryFinancialManagement10th现代财务管理英文版全套习题Contemporary Financial Management 10th现代财务管理英文版全套习题ContentsChapter 1 The Role and Objective of Financial Management 1 Chapter 2 The Domestic and International Financial Marketplace 13 Appendix 2A Taxes 26Chapter 3 Evaluation of Financial Performance 31Chapter 4 Financial Planning and Forecasting 51Chapter 5 The Time Value of Money 66Appendix 5A Continuous Compounding and Discounting 95 Chapter 6 Analysis of Risk and Return 99Chapter 7 Fixed Income Securities: Characteristics and Valuation 127 Chapter 8 Common Stock: Characteristics, Valuation, and Issuance 153 Chapter 9 Capital Budgeting and Cash Flow Analysis 179 Chapter 10 Capital Budgeting: Decision Criteria and Real Option Considerations 202 Appendix 10A Mutually Exclusive Investments Having Unequal Lives 221 Chapter 11 Capital Budgeting and Risk 228Chapter 12 The Cost of Capital 246Chapter 13 Capital Structure Concepts 270Chapter 14 Capital Structure Management in Practice 285 Chapter 15 Dividend Policy 306Chapter 16 Working Capital Policy and Short-Term Financing 327 Chapter 17 The Management of Cash and Marketable Securities 344 Chapter18 Management of Accounts Receivable and Inventories 360 Chapter 19 Lease and Intermediate-Term Financing 376 Chapter20 Financing with Derivatives 388Appendix 20B Bond Refunding Analysis 404Chapter 21 Risk Management 408Chapter 22 International Financial Management 415Chapter 23 Corporate Restructuring 425Chapter 1The Role and Objective of Financial ManagementMULTIPLE CHOICE1. The primary objective of the firm is:a. Shareholder wealth maximizationb. Social responsibilityc. Long run survivald. Profit maximizationANS: A OBJ: TYPE: Fact TOP: A Foundation Concept2. The limitations of the profit maximization goal include:a. It lacks a time dimension (i.e., it is static)b. It fails to consider riskc. The definition of profit is ambiguousd. All the above are limitationsANS: D OBJ: TYPE: FactTOP: Maximization of shareholder wealth: Managerial strategies3. The shareholder wealth maximization goal states that management should seek tomaximize the _______ of the expected future returns to the owners of the firm.a. Future valueb. Compound valuec. Percentage valued. Present valueANS: D OBJ: TYPE: Fact TOP: A Foundation Concept4. Shareholder returns can take the form ofa. Periodic dividend paymentsb. Proceeds from the sale of the stockc. Periodic interest paymentsd. Periodic dividend payments and proceeds from the sale of the stockANS: D OBJ: TYPE: Fact TOP: A Foundation Concept5. Shareholder wealth is measured by the ________ of the shareholders' common stockholdings.a. Book valueb. Market valuec. Historic valued. Compound valueANS: B OBJ: TYPE: Fact TOP: A Foundation Concept6. The objective of maximizing shareholder wealth, as measured by the market value of thefirm's stocka. does not consider the timing of the benefits receivedb. provides a way to consider the risk of the returns being offeredc. benefits only certain stockholdersd. neither considers the timing of the benefits received norbenefits only certainstockholdersANS: B OBJ: TYPE: Fact TOP: A Foundation Concept7. The two most important disciplines on which financial management relies area. accounting and productionb. accounting and marketingc. economics and marketingd. accounting and economicsANS: D OBJ: TYPE: Fact TOP: Financial management and other disciplines8. The most widely accepted objective of the firm is toa. minimize riskb. maximize profitsc. maximize shareholder wealthd. maximize earnings per shareANS: C OBJ: TYPE: Fact TOP: A Foundation Concept9. The ______ the risk of receiving future cash flows, the ______ will be the present valueof those cash flows.a. greater, greaterb. greater, lowerc. lower, lowerd. lower, greaterANS: B OBJ: TYPE: Fact TOP: Risk10. A major advantage of using the maximization of shareholder wealth as the primary goalof the firm is that this goal considersa. the timing and the risk of the expected benefits to be receivedb. the investor's consumption utilityc. the value of closely held partnershipsd. all the aboveANS: A OBJ: TYPE: Fact TOP: A Foundation Concept11. The primary reason for the divergence between the shareholder wealth maximization goaland the actual goals pursued by management has been attributed toa. separation of social responsibility and stakeholders' concernsb. separation of ownership and controlc. separation of personal welfare and long-run profit goalsd. the granting of "golden parachute" contractsANS: B OBJ: TYPE: Fact TOP: Divergent objectives12. Giving top management _______ is one method that ensures managers will act in theinterest of shareholders in merger decisions.a. "golden parachute" contractsb. excellent payc. executive perksd. job securityANS: A OBJ: TYPE: Fact TOP: Divergent objectives13. _____ arise from the divergent objectives between owners and managers.a. Shareholder relationshipsb. Stakeholder problemsc. Creditor problemsd. Agency problemsANS: D OBJ: TYPE: Fact TOP: Agency problems14. Agency costs include all of the following except:a. expenditures to monitor management's actionsb. providing stock as part of management's compensationc. flotation costsd. bonding expendituresANS: C OBJ: TYPE: Fact TOP: Stockholders and managers15. A potential agency conflict can arise betweenstockholders and creditors because ownersmaya. increase the risk of a firm's investmentsb. decrease the amount of debt outstandingc. decrease the risk of a firm's investmentsd. increase the firm's net worthANS: A OBJ: TYPE: Fact TOP: Stockholders and creditors16. When KKR acquired RJR Nabisco, the ______ in the debt ratio, resulted in a(n) ______in the value of the firm's outstanding bonds.a. decrease, increaseb. increase, increasec. decrease, declined. increase, declineANS: D OBJ: TYPE: Fact TOP: Stockholders and creditors17. Agency problems may give rise to costs that ______ the market value of firms.a. increaseb. decreasec. do not affectd. are not important toANS: B OBJ: TYPE: Fact TOP: Stockholders and managers18. All of the following are problems with the microeconomic profit maximization modelexcept:a. the absence of a time dimensionb. offers financial managers insights to a wide range of problemsc. does not consider the risk of alternative decisionsd. the problem of defining profitsANS: B OBJ: TYPE: FactTOP: Maximization of shareholder wealth: Managerial strategies19. ________ are largely outside of the direct control of managers.a. investment strategiesb. economic environment factorsc. major policy decisionsd. dividend policiesANS: B OBJ: TYPE: Fact TOP: Managerial actions to influence value20. The success of a firm is linked to its stakeholders. This group includes:a. community neighborsb. suppliersc. employeesd. all the aboveANS: D OBJ: TYPE: Fact TOP: Social responsibility concerns21. Techniques identified by John Casey that managers could keep in mind when addressingthe ethical dimensions of a business problem include all of the following except:a. collect all the facts bearing on the problemb. clarify the parameters of the problemc. involve all parties with a financial interest in the outcomed. seek equity for those who may be affectedANS: C OBJ: TYPE: FactTOP: Ethical issues: the practice of financial management22. Many small business owners are _________ diversified with respect to their personalwealth.a. poorlyb. highlyc. welld. 90%ANS: A OBJ: TYPE: FactTOP: Entrepreneurial finance issues: Shareholder wealth maximizat23. __________ deals with economic decisions of individuals, households, and firms.a. Economic accountingb. Microeconomicsc. Blue Chip econometricsd. MacroeconomicsANS: B OBJ: TYPE: Fact TOP: Economics24. Financial management draws heavily on the following related disciplines:a. accountingb. macroeconomicsc. microeconomicsd. all of the aboveANS: D OBJ: TYPE: Fact TOP: Financial management and other disciplines25. The chief financial officer (CFO) normally has responsibilityfor all the following except:a. advertising strategyb. managing interest rate riskc. trading foreign currenciesd. accounting functionsANS: A OBJ: TYPE: Fact TOP: Organization of the financial management function26. The controller normally has responsibility for all _______ related activities, while thetreasurer is normally concerned with ________.a. acquisition, data processingb. tax, cost accountingc. tax, financial accountingd. accounting, expenditure of fundsANS: D OBJ: TYPE: Fact TOP: Organization of the financial management function27. According to the shareholder wealth maximization goal, management should seek tomaximize the __________ of the __________ to owners.a. present value; expected pretax cash flowsb. future value; expected pretax cash flowsc. present value; expected future returnsd. future value; expected future returnsANS: C OBJ: TYPE: Fact TOP: A foundation concept28. Shareholder wealth is measured by the __________.a. book value of the shareholders' common stock holdingsb. market value of the shareholders' common stock holdingsc. book value of the company's assetsd. market value of the company's assetsANS: B OBJ: TYPE: Fact TOP: Determinants of value29. Among the most important agency relationships in the context of finance is (are) therelationship(s) between __________.a. stockholders and creditorsb. management and workersc. stockholders and creditors, and management and workersd. management and creditorsANS: A OBJ: TYPE: Fact TOP: Agency problems30. Protective covenants in a company's bond indentures are used in agency relationshipsinvolving __________.a. stockholders and managersb. stockholders and creditorsc. management and workersd. management and creditorsANS: B OBJ: TYPE: Fact TOP: Stockholders and creditors31. The chief financial officer (CFO) of a corporation normally reports to the_______________________ of the company.a. chairman of the board of directorsb. chief operating officerc. controllerd. chief executive officerANS: D OBJ: TYPE: Fact TOP: Organization of the financial management function32. The ___________ has a goal of serving as a bridge between academic study of financeand the application of financial principles by financial managers.a. Financial Executives Instituteb. Financial Management Associationc. American Finance Associationd. Institution of Financial AnalystsANS: B OBJ: TYPE: Fact TOP: Professional finance affiliation33. All of the following economic environment factors affectstock prices except:a. investment strategiesb. competitionc. tax ratesd. currency exchange ratesANS: A OBJ: TYPE: Fact TOP: Managerial actions to influence value34. The major factors that determine the market value of a company's shares of stock includethe __________ .a. risk of its cash flowsb. timing of its cash flowsc. book value of its assetsd. risk of its cash flows and the timing of its cash flowsANS: D OBJ: TYPE: Fact TOP: Determinants of value35. There is often a divergence between the shareholder wealth maximization goal and theactual goals pursued by management. The primary reason for this is __________.a. geographical dispersion of shareholdersb. separation of ownership and controlc. age differences between managers and shareholdersd. that both have their own agendasANS: B OBJ: TYPE: Fact TOP: Divergent objectives36. The existence of divergent objectives between owners and managers is one example of aclass of problems arising from __________.a. social responsibility concernsb. age differences between managers and ownersc. agency relationshipsd. union-management relationsANS: C OBJ: TYPE: Fact TOP: Agency problems37. The activities of the treasurer include all of the following except:a. financial planningb. tax preparationc. credit analysisd. pension fund managementANS: B OBJ: TYPE: Fact TOP: Organization of the financial management function38. The most important managerial objective is to:a. make MC=MRb. maximize profitsc. minimize agency costsd. none of the aboveANS: D OBJ: TYPE: Fact TOP: A foundation concept39. _______ are important because the financial health of a firm depends on the firm beingable to generate sufficient cash to pay its creditors, employees, suppliers, and owners.a. cash salesb. cash flowsc. cash profitsd. net profitsANS: B OBJ: TYPE: Fact TOP: A foundation concept40. One method of decreasing the cash outflows of a firm is toa. decrease depreciationb. increase capital expendituresc. decrease dividendsd. increase debt repaymentANS: C OBJ: TYPE: Fact TOP: Cash flow41. If a firm shows an accounting net income, thena. it will not have a cash flow problemb. it will not have a problem obtaining a bank loanc. it will be able to repay all current liabilities on timed. none of the aboveANS: D OBJ: TYPE: Fact TOP: Cash flow42. Cash flow concepts are _____ but generally accepted accounting principles are ______ inthe determination of a firm's net income.a. unambiguous, ambiguousb. ambiguous, unambiguousc. ambiguous, also ambiguousd. unambiguous, straightforwardANS: A OBJ: TYPE: Fact TOP: Importance of cash flow43. Accounting-based measures of performance include all the following excepta. return on equityb. cash flowc. return on assetsd. market shareANS: B OBJ: TYPE: Fact TOP: Cash flows and shareholder wealth44. Accounting-based measures of performance _____ subject to short-term manipulation bymanagers; cash flows ______ subject to short-term manipulation.a. are, are notb. are not, arec. are, are alsod. are not, also are notANS: A OBJ: TYPE: Fact TOP: Cash flows and shareholder wealth45. The net present value rule provides appropriate guidance for financial decision makerswhen costs are incurred immediately buta. future cash flows are not known with certaintyb. marginal costs are equal to marginal revenuec. result in a stream of benefits over several future time periodsd. marginal costs are greater then marginal revenueANS: C OBJ: TYPE: Fact TOP: Net present value rule46. Corporate officers normally include all the following except:a. Secretaryb. Chief operating officerc. Treasurerd. Financial analystANS: D OBJ: TYPE: Fact TOP: Corporate organization47. The difference between a firm's annual after-tax operating profit and its total annual costof capital is known as:a. earned incomeb. Economic Value Addedc. Managerial Value Addedd. operating incomeANS: B OBJ: TYPE: Fact TOP: Divergent objectives48. ____ equals the number of shares outstanding times the market price per share.a. Book valueb. Stakeholders wealthc. Total shareholder wealthd. Economic valueANS: C OBJ: TYPE: Fact TOP: A Foundation Concept49. Which of the following companies requires that its top officers own common stock in thecompany that is at least equal to their annual salary.a. Ford Motor Companyb. Tucson Electric Power Companyc. Panhandle Easternd. Anheuser-BuschANS: A OBJ: TYPE: Fact TOP: Divergent Objectives50. The net present value of an investment made by a firm represents the contribution of thatinvestment to the ____ of the firm.a. book valueb. profitc. valued. cash flowANS: C OBJ: TYPE: Fact TOP: Net present value rule51. A major advantage of the corporate form of business over both sole proprietorships andpartnerships is thea. limited liabilityb. reduction in taxesc. ease of formationd. ability to maintain ownershipANS: A OBJ: TYPE: Fact TOP: Corporation52. Which of the following is not an advantage that thecorporate form of business has overeither the sole proprietorship or partnership?a. ability to raise capitalb. ease of changing ownershipc. limited liabilityd. elimination of double taxesANS: D OBJ: TYPE: Fact TOP: Corporation53. A major disadvantage of a sole proprietorship is the fact thata. it is expensive to establishb. the owner has unlimited personal liabilityc. it is easy to finance growthd. the owner pays taxes on all the incomeANS: B OBJ: TYPE: Fact TOP: Sole proprietorship54. In a limited partnership, the limited partners may limit their:a. tax liabilityb. liabilityc. tax write-offd. ability to attract new productsANS: B OBJ: TYPE: Fact TOP: Partnership55. Corporate securities represent claims against thea. corporate officers of the firmb. agents of the corporationc. liabilities and net worth of the firmd. assets and future earnings of the firmANS: D OBJ: TYPE: Fact TOP: Corporate securities56. _________ is (are) referred to as a residual form of ownershipin a corporation.。
财务管理专业英语 -Bond and Stock
2. Basic elements of bond
Bond(债券) Par value (面值) Coupon rate(券面利率) Coupon payment(利息支付) Maturity date(到期日) Time to maturity(到期时间) Yield to maturity(到期收益率)
– Dividends are not a liability of the firm and stockholders have no legal recourse if dividends are not paid
– An all equity firm can not go bankrupt
The Bond Indenture(债券契约)
2020/3/21
Equity
– Ownership interest
– Common stockholders vote for the board of directors and other issues
– Dividends are not considered a cost of doing business and are not tax deductible
If YTM > coupon rate, then par value > bond price
– Why? – Selling at a discount, called a discount bond
If YTM < coupon rate, then par value < bond price
Present value = 1000/(1+0.10)10 = 385.5 Second, the ﹩100 coupons continue for ten years;
财务管理专业英语unite+4
Wisdom
If you cannot measure it, you cannot improve it.
——Lord Kelvin(1824-1907)
无法衡量就无法改善。
Core Financial Ratio
Liquidity Ratios:
Liquidity Ratios measure the company’s ability to meet
Window dressing is an unfair way of attracting customers. 粉饰帐目不是吸引客户的公正方式。
Text study
4.1 Financial Ratio Analysis 4.2 Liquidity Ratios 4.3 Debt Management Ratios 4.4 Asset Management Ratios 4.5 Profitability Ratios 4.6 Market Value Ratios 4.7 Uses and Limitations of Financial Ratio Analysis
valuation, may affect its current ratio. In an inflationary environment , firms that use last-in,
first-out (LIFO) inventory valuation will likely have lower current ratios than firms that use first-in, first-out (FIFO).
Debt ratio
资产负债比率
Debt –to –equity ratio 产权比率
4章 Bonds and Their Valuation 学习课件,财务管理英文版
What’s “yield to maturity”?
YTM is the rate of return earned on a bond held to maturity. Also called “promised yield.”
What’s the YTM on a 10-year, 9% annual coupon, $1,000 par value bond
Assuming that interest rates remain constant at 5 percent for the next 14 years,what would happen to the value of an MicroDrive bond?
Bonds value at year 1 and year 2 after they were issued:
The value of a premium bond would decrease to $1,000.
The value of a discount bond would increase to $1,000.
A par bond stays at $1,000 if kd remains constant.
+
1+ kd 10
+
1 +
k 10 d
INPUTS 10 N
OUTPUT
-887 I/YR PV 10.91
90 PMT
1000 FV
If coupon rate < kd, bond sells at a discount.
If coupon rate = kd, bond sells at its par value.
Forensic and Investigative Accounting (4)
Court-Appointed Trustee
Forensic accountants are being used by the court – appointed trustees (Irving Picard and Securities Investor Protection Corporation) to reconstruct the books of Bernard L. Madoff Investment Securities (BLMIS). According to Picard, there were paper records, microfilm, and microfiche. But there was nothing that was electronic. Every customer statement was fiction, so the first task is to reconstruct the books and records of BLMIS. One of the early projects was to digitize the records so they are easier to compare, including customer statements, incoming letters, faxes, and bank records. The forensic accountant will use records from third parties and customers. Every customer account must be reconstructed from the ground up. Stephen Harbeck, President of Securities Investor Protection Corporation, stated that the forensic accountants “are working as quickly as possible to catalog all the farreaching aspects of the Madoff scheme and to recover money for investors to the extent possible by law.” The cost of the Ponzi scheme may be as high as $65 billion.
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Chapter 4 Time Value of Money: Valuing Cash Flow Streams
14. Perpetuities The British government has a consol bond outstanding paying £1,000 per year forever. Assume the current interest rate is 8% per year.
a. What is the value of the bond immediately after a payment is made?
Answer: p = C/r = 1000 / 8% = £ 12500
b. What is the value of the bond immediately before a payment is made?
Answer: p = 1000/8%+1000 = £ 13500
*18. Annuities When you purchased your car, you took out a five-year
annual-payment loan with an interest rate of 6% per year. The annual payment on the car is $5000. You have just made a payment and have now decided to pay off the loan by repaying the outstanding balance. What is the payoff amount for the following scenarios?
You have owned the car for one year (so there are four years left on the loan)? Answer: Present value of an annuity:
PV=C*(1/r)(1-1/(1+r)^n)=$5000*(1/0.06)(1-(1/1.06)^4)=17325.53
b. You have owned the car for four years (so there is one year left on the loan)? Answer: PV=$5000*(1/0.06)(0.06/1.06)=$4716.98
26. Growing Cash Flows You work for a pharmaceutical company that has developed
a new drug. The patent on the drug will last 17 years. You expect that the drug’s profits will be $2 million in its first year and that this amount will grow at a rate of 5% per year for the next 17 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero.What is the present value of the new drug if the interest rate is 10% per year?
Answer: Present value of a growing annuity:
pv=c*(1/r-g)(1-(1+g/1+r)^n)=2*(1/0.05)(1-(1.05/1.10)^17)=$21.861million *35. You are saving for retirement. To live comfortably, you decide you will need to save $2 million by the time you are 65. Today is your 22nd birthday, and you decide, starting today and continuing on every birthday up to and including your 65th birthday, that you will put the same amount into a savings account. If the interest rate is 5%, how much must you set aside each year to ensure that you will have $2 million in the account on your 65th birthday?
Answer: $2 billion=FV(annuity)=c*(1/0.05)(1.05^44-1)=c*(7.56/0.05) Therefore, C=$13233 Thus, I need to save $13233 each year.。