ACC498 Module 4 FIN Quiz 2017

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Question 1

Working capital is:

Question 1 options:

cash on hand.

current assets minus current liabilities.

property, plant, and equipment.

money invested in short-term projects.

Question 2

In theory, the capital structure should be set to:

Question 2 options:

minimize risk.

minimize the weighted average cost of capital.

the industry standard.

minimize the cost of equity.

Question 3

The ability of a firm to pay its short-term debts is measured by:

Question 3 options:

liquidity ratios.

times-interest-earned.

profitability ratios .

ROE.

Question 4

How does an increase in the risk-free rate affect the required rate of return of common stocks?

Question 4 options:

Decreases

No effect

Increases

Undetermined effect

Question 5

The future value of $100 today earning 6% for three years is:

Question 5 options:

$129.

$119.

$98.

$108.

Question 6

In the U.S., what form of business organization generates a substantial majority of revenue and profits?

Question 6 options:

Partnerships

Corporations

Sole proprietorships

Limited partnerships

Question 7

The amount of time it takes from the cash outlay for a purchase of raw materials to the cash inflow for the sale of a finished product is called the:

Question 7 options:

cash conversion cycle.

accounts receivable.

liquidity ratio.

days inventory outstanding.

Question 8

A compensating balance:

Question 8 options:

raises the nominal interest rate.

raises the effective interest rate.

lowers the nominal interest rate.

lowers the effective interest rate.

Question 9

According to the constant growth valuation (Gordon) model, the value of a share of common stock is equal to the:

Question 9 options:

future stock price discounted at the cost of equity.

assets minus debts.

present value of all expected future dividends.

present value of all future cash flows.

Question 10

The portfolio that maximizes return for a given level of risk or minimizes risk for a given level of return is called the __________ portfolio.

Question 10 options:

frontier

efficient

risk-free

investment banker

Question 11

The __________ provides a snapshot of a firm's financial position.

Question 11 options:

statement of cash flows

retained earnings statement

income statement

balance sheet

Question 12

What impact will an increase in risk usually have on the required rate of return on an investment?

Question 12 options:

No impact

A decrease

An increase

An increase and then a decrease

Question 13

Which of these is true?

Question 13 options:

The future value of a 10-year, $100 annuity due is always greater than the future value of a 10-year, $100 ordinary annuity with identical risk.

The future value of a 10-year, $100 annuity due is always less than the future value of a 10-year, $100 ordinary annuity with identical risk.

There is not enough information to compare these two annuities.

The main difference between a 10-year, $100 annuity due and a 10-year, $100 ordinary annuity is the level of risk.

Question 14

The __________ summarizes a firm's revenues, expenses, and profit during a specific period.

Question 14 options:

balance sheet

statement of cash flows

retained earnings statement

income statement

Question 15

If the exchange rate between the U.S. dollar and the Euro is $1.40 per Euro, how many Euros will be needed to purchase a $10,000 asset?

Question 15 options:

0.0001

10,000

14,000

7,143

Question 16

The beta of the market portfolio is:

Question 16 options:

changes yearly.

1.

greater than 1.

0.

Question 17

What is the market value of a financial asset?

Question 17 options:

The present value of all future cash flows

The present value of all future profits

The future value of all future profits

The future value of all future cash flows

Question 18

Using the economic order quantity (EOQ):

Question 18 options:

minimizes total inventory costs.

minimizes inventory carrying costs.

minimizes inventory order quantities.

minimizes inventory ordering costs.

Question 19

According to the DuPont analysis, return on assets (ROA) consists of:

Question 19 options:

profit margin x asset turnover.

ROE x debt ratio.

ROE / (1 - Debt/Assets).

gross profits x equity margin.

Question 20

What is a characteristic of an efficient market?

Question 20 options:

Prices are unaffected by new information.

Prices slowly adjust to reflect new information.

Prices quickly adjust to reflect new information.

Prices are unrelated to true value.

 

 

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    ACC498 Module 4 FIN Quiz 2017
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