公司理财罗斯习题集

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(完整版)公司理财-罗斯课后习题答案

第一章1.在所有权形式的公司中,股东是公司的所有者。

股东选举公司的董事会,董事会任命该公司的管理层。

企业的所有权和控制权分离的组织形式是导致的代理关系存在的主要原因。

管理者可能追求自身或别人的利益最大化,而不是股东的利益最大化。

在这种环境下,他们可能因为目标不一致而存在代理问题。

2.非营利公司经常追求社会或政治任务等各种目标。

非营利公司财务管理的目标是获取并有效使用资金以最大限度地实现组织的社会使命。

3.这句话是不正确的。

管理者实施财务管理的目标就是最大化现有股票的每股价值，当前的股票价值反映了短期和长期的风险、时间以及未来现金流量。

4.有两种结论。

一种极端,在市场经济中所有的东西都被定价。

因此所有目标都有一个最优水平，包括避免不道德或非法的行为，股票价值最大化。

另一种极端,我们可以认为这是非经济现象,最好的处理方式是通过政治手段。

一个经典的思考问题给出了这种争论的答案:公司估计提高某种产品安全性的成本是30美元万。

然而,该公司认为提高产品的安全性只会节省20美元万。

请问公司应该怎么做呢?”5.财务管理的目标都是相同的,但实现目标的最好方式可能是不同的,因为不同的国家有不同的社会、政治环境和经济制度。

6.管理层的目标是最大化股东现有股票的每股价值。

如果管理层认为能提高公司利润，使股价超过35美元,那么他们应该展开对恶意收购的斗争。

如果管理层认为该投标人或其它未知的投标人将支付超过每股35美元的价格收购公司,那么他们也应该展开斗争。

然而,如果管理层不能增加企业的价值,并且没有其他更高的投标价格,那么管理层不是在为股东的最大化权益行事。

现在的管理层经常在公司面临这些恶意收购的情况时迷失自己的方向。

7.其他国家的代理问题并不严重,主要取决于其他国家的私人投资者占比重较小。

较少的私人投资者能减少不同的企业目标。

高比重的机构所有权导致高学历的股东和管理层讨论决策风险项目。

此外,机构投资者比私人投资者可以根据自己的资源和经验更好地对管理层实施有效的监督机制。

罗斯公司理财题库全集

Chapter 30Financial Distress Multiple Choice Questions1. Financial distress can be best described by which of the following situations in which the firm is forced to take corrective action?A. Cash payments are delayed to creditors.B. The market value of the stock declines by 10%.C. The firm's operating cash flow is insufficient to pay current obligations.D. Cash distributions are eliminated because the board of directors considers the surplus account to be low.E. None of the above.2. Insolvency can be defined as:A. not having cash.B. being illiquid.C. an inability to pay one's debts.D. an inability to increase one's debts.E. the present value of payments being less than assets.3. Stock-based insolvency is a:A. income statement measurement.B. balance sheet measurement.C. a book value measurement only.D. Both A and C.E. Both B and C.4. Flow-based insolvency is:A. a balance sheet measurement.B. a negative equity position.C. when operating cash flow is insufficient to meet current obligations.D. inability to pay one's debts.E. Both C and D.5. Financial restructuring can occur as:A. a private workout.B. an employee buy-out.C. a bankruptcy reorganization.D. Both A and C.E. Both B and C.6. Financial distress can involve which of the following:A. asset restructuring.B. financial restructuring.C. liquidation.D. All of the above.E. None of the above.7. APR, as it relates to financial distress, means the rules of:A. absolute profitability.B. arbitration priority.C. absolute priority.D. arbitration profitability.E. automatic profitability.8. The difference between liquidation and reorganization is:A. reorganization terminates all operations of the firm and liquidation only terminatesnon-profitable operations.B. liquidation terminates only profitable operations and reorganization terminates onlynon-profitable operations.C. liquidation terminates all operations and reorganization maintains the option of the firm as a going concern.D. liquidation only deals with current assets and reorganization only consolidates debt.E. None of the above.9. A firm that has a series of negative earnings, sales declines and workforce reductions is likely headed to:A. acquisition of another firm.B. a merger.C. financial distress.D. new financing.E. None of the above.10. Some of the various events which typically occur around the period of financial distress fora firm are:A. continued increase in earnings.B. steady growth.C. dividend reductions.D. Both A and B.E. Both A and C.11. Bankruptcy reorganizations are used by management to:A. forestall the inevitable liquidation in all cases.B. provide time to turn the business around.C. allow the courts time to set up an administrative structure.D. All of the above.E. None of the above.12. A firm has several options available to it in times of financial distress. The firm may:A. reduce capital and R & D spending.B. raise new funds by selling securities or major assets.C. file for bankruptcy.D. negotiate with lenders.E. All of the above statements are true.13. Most firms in financial distress do not fail and cease to exist. Many firms can actually benefit from distress by:A. forcing a firm to reevaluate their core operations.B. realigning their capital structure to reduce interest costs.C. entering Chapter 11 and liquidating the firm.D. Both A and B.E. Both A and C.14. Whether bankruptcy is entered voluntarily or involuntarily the major difference between Chapter 7 and Chapter 11 is:A. that liquidation occurs in Chapter 11 but reorganization is the objective under Chapter 7.B. that there is no priority of claims under Chapter 11.C. that liquidation occurs in Chapter 7 but reorganization is the objective under chapter 11.D. no lawyers fees are necessary under Chapter 7.E. None of the above.15. If a firm has a stock based insolvency in both book and market value terms and liquidates:A. the payoff will not be 100% to all investors.B. the unsecured creditors are likely to get less than full value.C. the equityholders typically should receive nothing.D. All of the above.E. None of the above.16. A firm in financial distress that reorganizes:A. continues to run the business as a going concern.B. must have acceptance of the plan by the creditors.C. may distribute new securities to creditors and shareholders.D. All of the above.E. None of the above.17. A corporation is adjudged bankrupt under Chapter 7. When do the shareholders receive any payment?A. After the trustee liquidates the assets and pays the administrative expenses, the shareholders are paid before the creditors.B. After the trustee liquidates the assets, the administrative expenses and secured creditors are paid, then the unsecured creditors, and then the shareholders divide any remainder.C. After the trustee liquidates the assets, the shareholders are paid, next the administrative expenses, the secured creditors, and then the unsecured creditors divide any remainder.D. After the trustee liquidates the assets the shareholders are paid first because they are the owners of the firm and have the principal stake.E. None of the above.18. What is the absolute priority rule of the following claims once a corporation is determined to be bankrupt?A. administrative expenses, wages claims, government tax claims, debtholder and then equityholder claimsB. administrative expenses, wages claims, government tax claims, equityholder and then debtholder claimsC. wage claims, administrative expenses, debtholder claims, government tax claims and equityholder claimsD. wage claims, administrative expenses, debtholder claims, equityholder claims and government tax claimsE. None of the above19. The absolute priority rule:A. is set to ensure senior claims are paid first.B. is the priority rule in liquidations.C. distributes proceeds of secured assets sales to the secured creditors first and the remainder to the unsecured.D. All of the above.E. None of the above.20. Many corporations choose Chapter 11 bankruptcy proceedings voluntarily because the management can:A. take up to 120 days to file a reorganization plan.B. continue to run the business.C. reorganize if the required fractions of creditors approve of the plan and it is confirmed when the reorganization takes place.D. All of the above.E. None of the above.21. Which of the following statements about private workouts of financial distress is NOT true?A. Senior debt is usually replaced with junior debt.B. Debt is usually replaced with equity.C. Private workouts account for about three quarters of all reorganizations.D. Top management is often dismissed or takes pay reductions.E. None of the above.22. Successful private workouts are better for firms than formal bankruptcy because:A. direct costs are considerably lower in private workouts.B. private workout firms can issue new debt senior to all prior debt.C. stock price increases are greater for private workouts than for firms emerging from formal bankruptcy.D. Both A and B.E. Both A and C.23. Equityholders may prefer a formal bankruptcy filing because:A. the firm can issue debtor in possession debt.B. the firm can delay pre-bankruptcy interest payments.C. the lack of information about the length and magnitude of the cash flow problem favors equityholders.D. All of the above.E. None of the above.24. Prepackaged bankruptcies are:A. described as a combination of a private workout and a liquidation.B. the easiest way to transfer wealth to the shareholders.C. described as a combination of a completed private workout and the formal bankruptcy filing.D. All of the above.E. None of the above.25. In a prepackaged bankruptcy the firm:A. and creditors agree to a private reorganization outside formal bankruptcy.B. must reach agreement privately with most of the creditors.C. will have difficulty when there are thousands of reluctant trade creditors.D. All of the above.E. None of the above.26. Financial distress may be more expensive if the:A. information about the permanency of the shortfall is limited.B. firm has many different types of creditors and other investors.C. firm has never entered into bankruptcy before.D. Both A and B.E. Both B and C.27. The net payoff to creditors in formal bankruptcy may be low in present value terms because:A. the financial structure may be complicated with several groups and types of creditors.B. indirect costs of bankruptcy may have been costly in lost revenues and poor maintenance.C. administrative costs are high and increase with the complexity and length of time in the formal bankruptcy process.D. All of the above.E. None of the above.28. Firms deal with financial distress by:A. selling major assets.B. merging with another firm.C. issuing new securities.D. exchanging debt for equity.E. All of the above.29. Perhaps equally, if not more damaging are the indirect costs of financial distress. Some examples of indirect costs are:A. loss of current customers.B. loss of business reputation.C. management consumed in survival and not on a strategic direction.D. All of the above.E. Both A and B.30. Credit scoring models are used by lenders to:A. determine the borrowers capacity to pay.B. aid in the prediction of default or bankruptcy.C. determine the optimal debt equity ratio.D. Both A and B.E. Both A and C.31. Altman develop the Z-score model for publicly traded manufacturing firms. Using financial statement data and multiple discriminant analysis, he found that:A. in actual use, a Z-score greater than 2.99 meant bankruptcy within one year.B. in actual use, a Z-score greater than 1.81 implied a 90% chance of bankruptcy within one year.C. in actual use, a Z-score of less than 1.81 would predict bankruptcy within one year.D. in actual use, a Z-score less than 2.99 meant non-bankruptcy within one year.E. None of the above.32. The key intuition of a Z-score model like Altman's is that:A. only publicly traded firms can be evaluated.B. one will be just as well off by guessing on default rates.C. all corporations will default at least once.D. financial profiles of bankrupt and non-bankrupt firms are very different one year before bankruptcy.E. privately traded firms have better financial information which are disclosed to lenders and need not rely on any efficient market notions.33. Approximately ____ of all firms going through a Chapter 11 bankruptcy successfully reorganize.A. 0%B. 15%C. 25%D. 50%E. 85%34. Altman's Z-score predicts the:A. percentage of payout to equityholders in liquidations.B. percentage of payout to equityholders in reorganization.C. likelihood of a private workout.D. likelihood of bankruptcy of a firm within one year.E. None of the above.35. Very small firms (i.e. firms with assets less than $100,000) are more likely to:A. file for strategic bankruptcy.B. file for bankruptcy protection earlier than large firms.C. reorganize than liquidate compared to large firms.D. liquidate than reorganize compared to large firms.E. None of the above.36. A large negative equity position will lead a firm to be more likely to try to:A. not file bankruptcy.B. liquidate.C. reorganize.D. consolidate.E. None of the above.Magic Mobile Homes is to be liquidated. All creditors, both secured and unsecured, are owed $2 million. Administrative costs of liquidation and wage payments are expected to be $500,000.A sale of assets is expected to bring $1.8 million after taxes. Secured creditors have a mortgage lien for $1,200,000 on the factory which will be liquidated for $900,000 out of the sale proceeds. The corporate tax rate is 34%.37. How much and what percentage of their claim will the unsecured creditors receive, in total?A. $100,000; 12.50%.B. $290,909; 36.36%.C. $300,000; 37.50%.D. $600,000; 75.00%.E. Not enough information to answer38. How much and what percentage of their claim will the secured creditors receive, in total?A. $900,000; 75%B. $981,818; 81.82%C. $1,009,091; 84.1%D. $1,200,000; 100%E. Not enough information to answer.The management of Magic Mobile Homes has proposed to reorganize the firm. The proposal is based on a going-concern value of $2 million. The proposed financial structure is $750,000 in new mortgage debt, $250,000 in subordinated debt and $1,000,000 in new equity. All creditors, both secured and unsecured, are owed $2.5 million dollars. Secured creditors have a mortgage lien for $1,500,000 on the factory. The corporate tax rate is 34%.39. How much should the secured creditors receive?A. $1,000,000B. $1,250,000C. $1,333,333D. $1,500,000E. None of the above.40. How much should the unsecured creditors receive?A. $500,000B. $667,000C. $750,000D. $1,000,000E. None of the above.41. What will the equityholders receive if they had 5 million shares with a par value of $0.50 each?A. $0B. $35,714C. $583,333D. $1,000,000E. None of the above.The management of Schroeder Books has proposed to reorganize the company. The proposal is based on a going-concern value of $2.3 million. The proposed financial structure is $500,000 in new mortgage debt, $300,000 in subordinated debt and $1,500,000 in new equity. All creditors, both secured and unsecured, are owed $3 million dollars. Secured creditors have a mortgage lien for $2,000,000 on the book bindery. The corporate tax rate is 34%.42. How much should the secured creditors receive?A. $1,500,000B. $2,000,000C. $2,300,000D. $3,000,000E. None of the above.43. How much should the unsecured creditors receive?A. $300,000B. $500,000C. $1,000,000D. $2,300,000E. None of the above.44. What will the equityholders receive if they had 5 million shares with a par value of $0.50 each?A. $0B. $35,714C. $583,333D. $1,000,000E. None of the above.Essay Questions45. The Steel Pony Company, a maker of all-terrain recreational vehicles, is having financial difficulties due to high interest payments. The estimated "going concern" value of Steel Pony is $4.0 million. The senior debt claim is on all fixed assets. The balance sheet of the firm is as shown:If Steel Pony decides to file for formal bankruptcy and expects to sell the firm for the "going concern" value and pay administrative fees which amount to 5% of the total going concern value, determine the distribution of the proceeds under the rules of absolute priority.46. The Here Today Corporation has applied to your bank for a loan. You have their financial statements and the revised Z-score model of:Z = 6.56 (Net Working Capital/Total Assets) + 3.26 (Accumulated Retained Earnings/Total Assets) + 1.05 (EBIT/Total Assets) + 6.72 (Book Value of Equity/Total Liabilities) where:Z < 1.23 predicts bankruptcy. A Z score between 1.23 and 2.90 indicates gray area. A Z score greater than 2.90 indicates no bankruptcy. From the financial statements you gathered net working capital of $237,500; accumulated retained earnings of $120,000; book value of equity of $950,000; total assets of $4,750,000; EBIT of $261,250; and total liabilities of $3,800,000. Should the bank lend to Here Today?47. When choosing between liquidation and reorganization, what are some of the empirical factors that lead a firm toward one choice or the other?Chapter 30 Financial Distress Answer KeyMultiple Choice Questions1. Financial distress can be best described by which of the following situations in which the firm is forced to take corrective action?A. Cash payments are delayed to creditors.B. The market value of the stock declines by 10%.C. The firm's operating cash flow is insufficient to pay current obligations.D. Cash distributions are eliminated because the board of directors considers the surplus account to be low.E. None of the above.Difficulty level: EasyTopic: FINANCIAL DISTRESSType: DEFINITIONS2. Insolvency can be defined as:A. not having cash.B. being illiquid.C. an inability to pay one's debts.D. an inability to increase one's debts.E. the present value of payments being less than assets.Difficulty level: EasyTopic: INSOLVENCYType: DEFINITIONS3. Stock-based insolvency is a:A. income statement measurement.B. balance sheet measurement.C. a book value measurement only.D. Both A and C.E. Both B and C.Difficulty level: EasyTopic: STOCK-BASED INSOLVENCYType: DEFINITIONS4. Flow-based insolvency is:A. a balance sheet measurement.B. a negative equity position.C. when operating cash flow is insufficient to meet current obligations.D. inability to pay one's debts.E. Both C and D.Difficulty level: EasyTopic: FLOW-BASED INSOLVENCYType: DEFINITIONS5. Financial restructuring can occur as:A. a private workout.B. an employee buy-out.C. a bankruptcy reorganization.D. Both A and C.E. Both B and C.Difficulty level: MediumTopic: FINANCIAL RESTRUCTURINGType: DEFINITIONS6. Financial distress can involve which of the following:A. asset restructuring.B. financial restructuring.C. liquidation.D. All of the above.E. None of the above.Difficulty level: EasyTopic: FINANCIAL DISTRESSType: DEFINITIONS7. APR, as it relates to financial distress, means the rules of:A. absolute profitability.B. arbitration priority.C. absolute priority.D. arbitration profitability.E. automatic profitability.Difficulty level: MediumTopic: RULES OF ABSOLUTE PRIORITYType: DEFINITIONS8. The difference between liquidation and reorganization is:A. reorganization terminates all operations of the firm and liquidation only terminatesnon-profitable operations.B. liquidation terminates only profitable operations and reorganization terminates onlynon-profitable operations.C. liquidation terminates all operations and reorganization maintains the option of the firm as a going concern.D. liquidation only deals with current assets and reorganization only consolidates debt.E. None of the above.Difficulty level: MediumTopic: REORGANIZATION AND LIQUIDATIONType: DEFINITIONS9. A firm that has a series of negative earnings, sales declines and workforce reductions is likely headed to:A. acquisition of another firm.B. a merger.C. financial distress.D. new financing.E. None of the above.Difficulty level: MediumTopic: FINANCIAL DISTRESSType: CONCEPTS10. Some of the various events which typically occur around the period of financial distress fora firm are:A. continued increase in earnings.B. steady growth.C. dividend reductions.D. Both A and B.E. Both A and C.Difficulty level: EasyTopic: FINANCIAL DISTRESSType: CONCEPTS11. Bankruptcy reorganizations are used by management to:A. forestall the inevitable liquidation in all cases.B. provide time to turn the business around.C. allow the courts time to set up an administrative structure.D. All of the above.E. None of the above.Difficulty level: EasyTopic: REORGANIZATIONType: CONCEPTS12. A firm has several options available to it in times of financial distress. The firm may:A. reduce capital and R & D spending.B. raise new funds by selling securities or major assets.C. file for bankruptcy.D. negotiate with lenders.E. All of the above statements are true.Difficulty level: MediumTopic: FINANCIAL DISTRESSType: CONCEPTS13. Most firms in financial distress do not fail and cease to exist. Many firms can actually benefit from distress by:A. forcing a firm to reevaluate their core operations.B. realigning their capital structure to reduce interest costs.C. entering Chapter 11 and liquidating the firm.D. Both A and B.E. Both A and C.Difficulty level: EasyTopic: FINANCIAL DISTRESSType: CONCEPTS14. Whether bankruptcy is entered voluntarily or involuntarily the major difference between Chapter 7 and Chapter 11 is:A. that liquidation occurs in Chapter 11 but reorganization is the objective under Chapter 7.B. that there is no priority of claims under Chapter 11.C. that liquidation occurs in Chapter 7 but reorganization is the objective under chapter 11.D. no lawyers fees are necessary under Chapter 7.E. None of the above.Difficulty level: EasyTopic: LIQUIDATION OR REORGANIZATIONType: CONCEPTS15. If a firm has a stock based insolvency in both book and market value terms and liquidates:A. the payoff will not be 100% to all investors.B. the unsecured creditors are likely to get less than full value.C. the equityholders typically should receive nothing.D. All of the above.E. None of the above.Difficulty level: EasyTopic: STOCK BASED INSOLENCYType: CONCEPTS16. A firm in financial distress that reorganizes:A. continues to run the business as a going concern.B. must have acceptance of the plan by the creditors.C. may distribute new securities to creditors and shareholders.D. All of the above.E. None of the above.Difficulty level: EasyTopic: REORGANIZATIONType: CONCEPTS17. A corporation is adjudged bankrupt under Chapter 7. When do the shareholders receive any payment?A. After the trustee liquidates the assets and pays the administrative expenses, the shareholders are paid before the creditors.B. After the trustee liquidates the assets, the administrative expenses and secured creditors are paid, then the unsecured creditors, and then the shareholders divide any remainder.C. After the trustee liquidates the assets, the shareholders are paid, next the administrative expenses, the secured creditors, and then the unsecured creditors divide any remainder.D. After the trustee liquidates the assets the shareholders are paid first because they are the owners of the firm and have the principal stake.E. None of the above.Difficulty level: EasyTopic: LIQUIDATIONType: CONCEPTS18. What is the absolute priority rule of the following claims once a corporation is determined to be bankrupt?A. administrative expenses, wages claims, government tax claims, debtholder and then equityholder claimsB. administrative expenses, wages claims, government tax claims, equityholder and then debtholder claimsC. wage claims, administrative expenses, debtholder claims, government tax claims and equityholder claimsD. wage claims, administrative expenses, debtholder claims, equityholder claims and government tax claimsE. None of the aboveDifficulty level: MediumTopic: RULES OF ABSOLUTE PRIORITYType: CONCEPTS19. The absolute priority rule:A. is set to ensure senior claims are paid first.B. is the priority rule in liquidations.C. distributes proceeds of secured assets sales to the secured creditors first and the remainder to the unsecured.D. All of the above.E. None of the above.Difficulty level: EasyTopic: RULES OF ABSOLUTE PRIORITYType: CONCEPTS20. Many corporations choose Chapter 11 bankruptcy proceedings voluntarily because the management can:A. take up to 120 days to file a reorganization plan.B. continue to run the business.C. reorganize if the required fractions of creditors approve of the plan and it is confirmed when the reorganization takes place.D. All of the above.E. None of the above.Difficulty level: EasyTopic: REORGANIZATIONType: CONCEPTS21. Which of the following statements about private workouts of financial distress is NOT true?A. Senior debt is usually replaced with junior debt.B. Debt is usually replaced with equity.C. Private workouts account for about three quarters of all reorganizations.D. Top management is often dismissed or takes pay reductions.E. None of the above.Difficulty level: MediumTopic: PRIVATE WORKOUTSType: CONCEPTS22. Successful private workouts are better for firms than formal bankruptcy because:A. direct costs are considerably lower in private workouts.B. private workout firms can issue new debt senior to all prior debt.C. stock price increases are greater for private workouts than for firms emerging from formal bankruptcy.D. Both A and B.E. Both A and C.Difficulty level: MediumTopic: PRIVATE WORKOUTSType: CONCEPTS23. Equityholders may prefer a formal bankruptcy filing because:A. the firm can issue debtor in possession debt.B. the firm can delay pre-bankruptcy interest payments.C. the lack of information about the length and magnitude of the cash flow problem favors equityholders.D. All of the above.E. None of the above.Difficulty level: MediumTopic: FINANCIAL DISTRESS- EQUITY HOLDER PREFERENCESType: CONCEPTS24. Prepackaged bankruptcies are:A. described as a combination of a private workout and a liquidation.B. the easiest way to transfer wealth to the shareholders.C. described as a combination of a completed private workout and the formal bankruptcy filing.D. All of the above.E. None of the above.Difficulty level: EasyTopic: PREPACKAGED BANKRUPTCIESType: CONCEPTS25. In a prepackaged bankruptcy the firm:A. and creditors agree to a private reorganization outside formal bankruptcy.B. must reach agreement privately with most of the creditors.C. will have difficulty when there are thousands of reluctant trade creditors.D. All of the above.E. None of the above.Difficulty level: MediumTopic: PREPACKAGED BANKRUPTCIESType: CONCEPTS26. Financial distress may be more expensive if the:A. information about the permanency of the shortfall is limited.B. firm has many different types of creditors and other investors.C. firm has never entered into bankruptcy before.D. Both A and B.E. Both B and C.Difficulty level: MediumTopic: COSTS OF FINANCIAL DISTRESSType: CONCEPTS27. The net payoff to creditors in formal bankruptcy may be low in present value terms because:A. the financial structure may be complicated with several groups and types of creditors.B. indirect costs of bankruptcy may have been costly in lost revenues and poor maintenance.C. administrative costs are high and increase with the complexity and length of time in the formal bankruptcy process.D. All of the above.E. None of the above.Difficulty level: MediumTopic: PAYOFF TO CREDITORSType: CONCEPTS28. Firms deal with financial distress by:A. selling major assets.B. merging with another firm.C. issuing new securities.D. exchanging debt for equity.E. All of the above.Difficulty level: MediumTopic: FINANCIAL DISTRESSType: CONCEPTS29. Perhaps equally, if not more damaging are the indirect costs of financial distress. Some examples of indirect costs are:A. loss of current customers.B. loss of business reputation.C. management consumed in survival and not on a strategic direction.D. All of the above.E. Both A and B.Difficulty level: EasyTopic: INDIRECT COSTS FO FINANCIAL DISTRESSType: CONCEPTS。

公司理财罗斯习题集

衡量企业股东权益的增长情况，计算公式为（本期股东权益-上期股东权益）除以上期股东权益。
财务综合分析
通过分析净资产收益率、总资产周转率和权益乘数等指标，评估企业的财务状况和经营绩效。
杜邦分析法
通过对流动比率、存货周转率、应收账款周转率等指标进行加权平均，评估企业的财务状况和经营绩效。
沃尔评分法
通过计算税后净营业利润减去资本成本后的剩余经济价值，评估企业的价值创造能力。
有效市场假说
有效市场假说认为市场是有效的，即市场价格反映了所有可获得的信息，因此无法通过分析信息获资金管理
现金管理
交易动机、预防动机、投机动机。持有现金的动机现金管理的目标现金管理的方法安全性、流动性、收益性。建立最佳现金余额、加速收款、延迟付款。
财务趋势分析
衡量企业营业收入的增长情况，计算公式为（本期营业收入-上期营业收入）除以上期营业收入。
营业收入增长率
净利润增长率
总资产增长率
股东权益增长率
衡量企业净利润的增长情况，计算公式为（本期净利润-上期净利润）除以上期净利润。
衡量企业资产规模的增长情况，计算公式为（本期总资产-上期总资产）除以析
财务比率分析
流动比率速动比率资产负债率利息保障倍数衡量企业短期偿债能力，计算公式为流动资产除以流动负债。衡量企业长期偿债能力，计算公式为负债总额除以资产总额。衡量企业快速偿债能力，计算公式为（流动资产-存货）除以流动负债。衡量企业支付利息的能力，计算公式为息税前利润除配与股利政策
利润分配的原则与程序
依法分配原则、弥补亏损原则、先提取法定公积金原则、提取任意公积金原则、股东平等原则。
利润分配原则
弥补亏损提取法定公积金、提取任意公积金、支付股利。

【实用资料】罗斯公司理财题库全集.doc

Chapter 13 Risk, Cost of Capital, and Capital Budgeting Answer KeyMultiple Choice Questions1. The weighted average of the firm's costs of equity, preferred stock, and after tax debt is the:A. reward to risk ratio for the firm.B. expected capital gains yield for the stock.C. expected capital gains yield for the firm.D. portfolio beta for the firm.E. weighted average cost of capital (WACC).Difficulty level: EasyTopic: WACCType: DEFINITIONS2. If the CAPM is used to estimate the cost of equity capital, the expected excess market return is equal to the:A. return on the stock minus the risk-free rate.B. difference between the return on the market and the risk-free rate.C. beta times the market risk premium.D. beta times the risk-free rate.E. market rate of return.Difficulty level: EasyTopic: CAPMType: DEFINITIONS3. The best fit line of a pairwise plot of the returns of the security against the market index returns is called the:A. Security Market Line.B. Capital Market Line.C. characteristic line.D. risk line.E. None of the above.Difficulty level: MediumTopic: CHARACTERISTIC LINEType: DEFINITIONS4. The use of debt is called:A. operating leverage.B. production leverage.C. financial leverage.D. total asset turnover risk.E. business risk.Difficulty level: MediumTopic: USE OF DEBTType: DEFINITIONS5. The weighted average cost of capital for a firm is the:A. discount rate which the firm should apply to all of the projects it undertakes.B. overall rate which the firm must earn on its existing assets to maintain the value of its stock.C. rate the firm should expect to pay on its next bond issue.D. maximum rate which the firm should require on any projects it undertakes.E. rate of return that the firm's preferred stockholders should expect to earn over the long term. Difficulty level: MediumTopic: WEIGHTED AVERAGE COST OF CAPITALType: DEFINITIONS6. The WACC is used to _______ the expected cash flows when the firm has ____________.A. discount; debt and equity in the capital structureB. discount; short term financing on the balance sheetC. increase; debt and equity in the capital structureD. decrease; short term financing on the balance sheetE. None of the above.Difficulty level: MediumTopic: WACCType: CONCEPTS7. Using the CAPM to calculate the cost of capital for a risky project assumes that:A. using the firm's beta is the same measure of risk as the project.B. the firm is all-equity financed.C. the financial risk is equal to business risk.D. Both A and B.E. Both A and C.Difficulty level: MediumTopic: CAPMType: CONCEPTS8. The use of WACC to select investments is acceptable when the:A. correlation of all new projects are equal.B. NPV is positive when discounted by the WACC.C. risk of the projects are equal to the risk of the firm.D. firm is well diversified and the unsystematic risk is negligible.E. None of the above.Difficulty level: EasyTopic: WACCType: CONCEPTS9. If the risk of an investment project is different than the firm's risk then:A. you must adjust the discount rate for the project based on the firm's risk.B. you must adjust the discount rate for the project based on the project risk.C. you must exercise risk aversion and use the market rate.D. an average rate across prior projects is acceptable because estimates contain errors.E. one must have the actual data to determine any differences in the calculations. Difficulty level: EasyTopic: DISCOUNT RATEType: CONCEPTS10. If the project beta and IRR coordinates plot above the SML the project should be:A. accepted.B. rejected.C. It is impossible to tell.D. It will depend on the NPV.E. None of the above.Difficulty level: MediumTopic: SECURITY MARKET LINEType: CONCEPTS11. The beta of 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.Difficulty level: EasyTopic: BETAType: CONCEPTS12. Regression analysis can be used to estimate:A. beta.B. the risk-free rate.C. standard deviation.D. variance.E. expected return.Difficulty level: EasyTopic: BETA ESTIMATIONType: CONCEPTS13. Beta measures depend highly on the:A. direction of the market variance.B. overall cycle of the market.C. variance of the market and asset, but not their co-movement.D. covariance of the security with the market and how they are correlated.E. All of the above.Difficulty level: MediumTopic: BETAType: CONCEPTS14. The formula for calculating beta is given by the dividing the ___________ of the stock with the market portfolio by the ___________ of the market portfolio.A. variance; covarianceB. covariance; varianceC. standard deviation; varianceD. expected return; varianceE. expected return; covarianceDifficulty level: MediumTopic: BETAType: CONCEPTS15. The slope of the characteristic line is the estimated:A. intercept.B. beta.C. unsystematic risk.D. market variance.E. market risk premium.Difficulty level: MediumTopic: BETA AND CHARACTERISTIC LINEType: CONCEPTS16. Companies that have highly cyclical sales will have a:A. low beta if sales are highly dependent on the market cycle.B. high beta if sales are highly dependent on the market cycle.C. high beta if sales are independent of the market cycle.D. All of the above.E. None of the above.Difficulty level: MediumTopic: CYCLICAL BUSINESS AND BETAType: CONCEPTS17. Betas may vary substantially across an industry. The decision to use the industry or firm beta to estimate the cost of capital depends on:A. how small the estimation errors are of all betas across industries.B. how similar the firm's operations are to the operations of all other firms in the industry.C. whether the company is a leader or follower.D. the size of the company's public float.E. None of the above.Difficulty level: MediumTopic: INDUSTRY OR FIRM BETAType: CONCEPTS18. 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.Difficulty level: MediumTopic: BETAType: CONCEPTS19. For a multi-product firm, if a project's beta is different from that of the overall firm, then the:A. CAPM can no longer be used.B. project should be discounted using the overall firm's beta.C. project should be discounted at a rate commensurate with its own beta.D. project should be discounted at the market rate.E. project should be discounted at the T-bill rate.Difficulty level: MediumTopic: PROJECT AND FIRM BETAType: CONCEPTS20. The problem of using the overall firm's beta in discounting projects of different risk is the:A. firm would accept too many high-risk projects.B. firm would reject too many low risk projects.C. firm would reject too many high-risk projects.D. firm would accept too many low risk projects.E. Both A and B.Difficulty level: MediumTopic: FIRM'S BETAType: CONCEPTS21. The asset beta of a levered firm is generally:A. equal to the equity beta.B. different from the equity beta.C. different from the debt beta.D. the simple average of the equity beta and debt beta.E. Both B and C.Difficulty level: MediumTopic: ASSET BETAType: CONCEPTS22. Comparing two otherwise equal firms, the beta of the common stock of a levered firm is ____________ than the beta of the common stock of an unlevered firm.A. equal toB. significantly lessC. slightly lessD. greaterE. None of the above.Difficulty level: MediumTopic: LEVERED VS. UNLEVERED BETAType: CONCEPTS23. The beta of a firm is determined by which of the following firm characteristics?A. Cycles in revenuesB. Operating leverageC. Financial leverageD. All of the above.E. None of the above.Difficulty level: MediumTopic: DETERMINANTS OF BETAType: CONCEPTS24. The beta of a firm is more likely to be high under what two conditions?A. High cyclical business activity and low operating leverageB. High cyclical business activity and high operating leverageC. Low cyclical business activity and low financial leverageD. Low cyclical business activity and low operating leverageE. None of the above.Difficulty level: MediumTopic: FACTORS AFFECTING BETAType: CONCEPTS25. A firm with cyclical earnings is characterized by:A. revenue patterns that vary with the business cycle.B. high levels of debt in its capital structure.C. high fixed costs.D. high price per unit.E. low contribution margins.Difficulty level: MediumTopic: CYCLICAL EARNINGSType: CONCEPTS26. A firm with high operating leverage has:A. low fixed costs in its production process.B. high variable costs in its production process.C. high fixed costs in its production process.D. high price per unit.E. low price per unit.Difficulty level: MediumTopic: OPERATING LEVERAGEType: CONCEPTS27. If a firm has low fixed costs relative to all other firms in the same industry, a large change in sales volume (either up or down) would have:A. a smaller change in EBIT for the firm versus the other firms.B. no effect in any way on the firms as volume does not effect fixed costs.C. a decreasing effect on the cyclical nature of the business.D. a larger change in EBIT for the firm versus the other firms.E. None of the above.Difficulty level: MediumTopic: OPERATING LEVERAGEType: CONCEPTS28. A firm with high operating leverage is characterized by __________ while one with high financial leverage is characterized by __________.A. low fixed cost of production; low fixed financial costsB. high variable cost of production; high variable financial costsC. high fixed costs of production; high fixed financial costsD. low costs of production; high fixed financial costsE. high fixed costs of production; low variable financial costsDifficulty level: MediumTopic: OPERATING AND FINANCIAL LEVERAGEType: CONCEPTS29. Firms whose revenues are strongly cyclical and whose operating leverage is high are likely to have:A. low betas.B. high betas.C. zero betas.D. negative betas.E. None of the above.Difficulty level: MediumTopic: DETERMINANTS OF BETAType: CONCEPTS30. An industry is likely to have a low beta if the:A. stream of revenues is stable and less volatile than the market.B. economy is in a recession.C. market for its goods is unaffected by the market cycle.D. Both A and B.E. Both A and C.Difficulty level: MediumTopic: DETERMINANTS OF BETAType: CONCEPTS31. For the levered firm the equity beta is __________ the asset beta.A. greater thanB. less thanC. equal toD. sometimes greater than and sometimes less thanE. None of the above.Difficulty level: MediumTopic: ASSET AND EQUITY BETASType: CONCEPTS32. All else equal, a more liquid stock will have a lower ________.A. betaB. market premiumC. cost of capitalD. Both A and B.E. Both A and C.Difficulty level: ChallengeTopic: LIQUIDITYType: CONCEPTS33. Two stock market based costs of liquidity that affects the cost of capital are the:A. bid-ask spread and the specialist spread.B. market impact cost and the brokerage costs.C. investor opportunity cost and the brokerage costs.D. bid-ask spread and the market impact costs.E. None of the above.Difficulty level: MediumTopic: LIQUIDITYType: CONCEPTS34. When a specialist is caught in the middle of a trade between informed and uniformed traders, which effectively eliminates the spread or causes a loss, is subject to:A. market impact costs.B. adverse selection.C. broker's quotation bias.D. increasing the number of uninformed traders.E. None of the above.Difficulty level: ChallengeTopic: ADVERSE SELECTIONType: CONCEPTS35. All else equal, new shareholders will ____ the capital gains of existing shareholders.A. diluteB. hold constantC. increaseD. All of the aboveE. It is impossible to tell.Difficulty level: MediumTopic: CAPITAL GAINSType: CONCEPTS36. The following are methods to estimate the market risk premium:A. use historical data to estimate future risk premium.B. use the dividend discount model to estimate risk premium.C. use the bond valuation model to estimate growth in bond prices with different costs of capital.D. A and B.E. A and C.Difficulty level: MediumTopic: MARKET RISK PREMIUMType: CONCEPTS37. Beta is the slope of the:A. efficient frontier.B. market portfolio.C. security market line.D. characteristic line.E. None of the above.Difficulty level: MediumTopic: BETAType: CONCEPTS38. Two stocks that have the same beta ____ have the same correlation because _______:A. may; because correlation measures the sensitivity of the S&P to the market portfolio.B. will; because correlation measures the tightness of fit around the regression line.C. may not; because correlation measures the tightness of fit around the regression line.D. may not; because correlation measures the sensitivity to change.E. None of the above.Difficulty level: MediumTopic: BETA AND CORRELATIONType: CONCEPTS39. When using the cost of debt, the relevant number is the:A. pre-tax cost of debt since most corporations pay taxes at the same tax rate.B. pre-tax cost of debt since it is the actual rate the firm is paying bondholders.C. post-tax cost of debt since dividends are tax deductible.D. post-tax cost of debt since interest is tax deductible.E. None of the above.Difficulty level: MediumTopic: COST OF DEBTType: CONCEPTS40. Jack's Construction Co. has 80,000 bonds outstanding that are selling at par value. Bonds with similar characteristics are yielding 8.5%. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1.1 and sells for $40 a share. The U.S. Treasury bill is yielding 4% and the market risk premium is 8%. Jack's tax rate is 35%. What is Jack's weighted average cost of capital?A. 7.10%B. 7.39%C. 10.38%D. 10.65%E. 11.37%R e = .04 + (1.1 ⨯ .08) = .128Debt: 80,000 ⨯ $1,000 = $80mCommon: 4m ⨯ $40 = $160mTotal = $80m + $160m = $240mDifficulty level: MediumTopic: WEIGHTED AVERAGE COST OF CAPITALType: PROBLEMS41. Peter's Audio Shop has a cost of debt of 7%, a cost of equity of 11%, and a cost of preferred stock of 8%. The firm has 104,000 shares of common stock outstanding at a market price of $20 a share. There are 40,000 shares of preferred stock outstanding at a market price of $34 a share. The bond issue has a total face value of $500,000 and sells at 102% of face value. The tax rate is 34%. What is the weighted average cost of capital for Peter's Audio Shop?A. 6.14%B. 6.54%C. 8.60%D. 9.14%E. 9.45%Debt: $500,000 ⨯ 1.02 = $.51mPreferred: 40,000 ⨯ $34 = $1.36mCommon: 104,000 ⨯ $20 = $2.08mTotal = $.51m + $1.36m + $2.08m = $3.95mDifficulty level: MediumTopic: WEIGHTED AVERAGE COST OF CAPITALType: PROBLEMS42. Phil's Carvings, Inc. wants to have a weighted average cost of capital of 9%. The firm has an after-tax cost of debt of 5% and a cost of equity of 11%. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?A. .33B. .40C. .50D. .60E. .67.09 = [W e⨯ .11] + [(1 - W e) ⨯ .05) = .11W e + .05 - .05W e; .04 = .06W e; W e = 66.67%; W d = 1 - W e = 100% - 66.67% = 33.33%; Debt - equity ratio = 33.33% ÷ 66.67% = .50Difficulty level: MediumTopic: WEIGHTED AVERAGE COST OF CAPITALType: PROBLEMS43. Jake's Sound Systems has 210,000 shares of common stock outstanding at a market price of $36 a share. Last month, Jake's paid an annual dividend in the amount of $1.593 per share. The dividend growth rate is 4%. Jake's also has 6,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry a 7% coupon, pay interest annually, and mature in 4.89 years. The bonds are selling at 99% of face value. The company's tax rate is 34%. What is Jake's weighted average cost of capital?A. 5.3%B. 5.8%C. 6.3%D. 6.9%E. 7.2%Debt: 6,000 ⨯ $1,000 ⨯ .99 = $5.94mCommon: 210,000 ⨯ $36 = $7.56mTotal = $5.94m + $7.56m = $13.50mR e = [($1.593 ⨯ 1.04) ÷ $36] + .04 = .08602Difficulty level: MediumTopic: WEIGHTED AVERAGE COST OF CAPITALType: PROBLEMS44. The Consolidated Transfer Co. is an all-equity financed firm. The beta is .75, the market risk premium is 8% and the risk-free rate is 4%. What is the expected return of Consolidated?A. 7%B. 8%C. 9%D. 10%E. 13%.04 + 0.75(.08) = .10 = 10%Difficulty level: EasyTopic: CAPMType: PROBLEMS45. Assuming the CAPM or one-factor model holds, what is the cost of equity for a firm if the firm's equity has a beta of 1.2, the risk-free rate of return is 2%, the expected return on the market is 9%, and the return to the company's debt is 7%?A. 10.4%B. 10.8%C. 12.8%D. 14.4%E. None of the above.Rs = Rf + β(Rm - Rf) = .02 + 1.2(.09 - .02) = .104 = 10.4%Difficulty level: MediumTopic: CAPMType: PROBLEMS46. The cost of equity for Ryan Corporation is 8.4%. If the expected return on the market is 10% and the risk-free rate is 5%, then the equity beta is ___.A. 0.48B. 0.68C. 1.25D. 1.68E. Impossible to calculate with information given.Rs = Rf + β (Rm - Rf); .084 = .05 + β (.10 - .05); β = .68Difficulty level: MediumTopic: EQUITY BETAType: PROBLEMS47. Suppose that the Simmons Corporation's common stock has a beta of 1.6. If the risk-free rate is 5% and the market risk premium is 4%, the expected return on Simmons' common stock is:A. 4.0%.B. 5.0%.C. 5.6%.D. 10.6%.E. 11.4%.Rs = Rf + β(Rm - Rf) = .05 + 1.6(.04) = .114 = 11.4%Difficulty level: EasyTopic: CAPMType: PROBLEMS48. Suppose the Barges Corporation's common stock has an expected return of 12%. Assume that the risk-free rate is 5%, and the market risk premium is 6%. If no unsystematic influence affected Barges' return, the beta for Barges is ______.A. 1.00B. 1.17C. 1.20D. 2.50E. It is impossible to calculate with the information given.Rs = Rf + β(Rm - Rf); .12 = .05 + β(.06); β = .07/.06 = 1.17Difficulty level: MediumTopic: CALCULATING BETAType: PROBLEMS49. Slippery Slope Roof Contracting has an equity beta of 1.2, capital structure with 2/3 debt, and a zero tax rate. What is its asset beta?A. 0.40B. 0.72C. 1.20D. 1.80E. None of the aboveβA = (E/(D + E.) βE = (1/3)(1.2) = .40Difficulty level: MediumTopic: ASSET BETAType: PROBLEMS50. The Template Corporation has an equity beta of 1.2 and a debt beta of .8. The firm's market value debt to equity ratio is .6. Template has a zero tax rate. What is the asset beta?A. 0.70B. 0.72C. 0.96D. 1.04E. 1.05.8(.6/1.6) + 1.2(1/1.6) = 1.05Difficulty level: MediumTopic: ASSET BETAType: PROBLEMS51. The NuPress Valet Co. has an improved version of its hotel stand. The investment cost is expected to be $72 million and will return $13.5 million for 5 years in net cash flows. The ratio of debt to equity is 1 to 1. The cost of equity is 13%, the cost of debt is 9%, and the tax rate is 34%. The appropriate discount rate, assuming average risk, is:A. 8.65%B. 9%C. 9.47%D. 10.5%E. 13%WACC = .09(1 - .34)(.5) + .13(.5) = .0297 + .065 = .0947 = 9.47%Difficulty level: EasyTopic: WACCType: PROBLEMSEssay Questions。

公司理财罗斯习题集

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公司理财罗斯习题集
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(完整word版)罗斯公司理财题库全集(word文档良心出品)

Chapter 21Leasing Multiple Choice Questions1. In a lease arrangement, the owner of the asset is:A. the lesser.B. the lessee.C. the lessor.D. the leaser.E. None of the above.2. In a lease arrangement, the user of the asset is:A. the lesser.B. the lessee.C. the lessor.D. the leaser.E. None of the above.3. Which of the following would not be a characteristic of a financial lease?A. They are not usually fully amortized.B. They usually do not have maintenance necessary for the leased assets.C. They usually do not include a cancellation option.D. The lessee usually has the right to renew the lease at expiration.E. All of the above are characteristics of financial leases.4. An independent leasing company supplies ___________ leases versus the manufacturer who supplies ________________ leases.A. leveraged; directB. sales and leaseback; sales-typeC. capital; sales-typeD. direct; sales-typeE. None of the above5. Which of the following is not a financial lease?A. A leveraged leaseB. An operating leaseC. A sale-and-leasebackD. Both A and B.E. None of the above.6. If the lessor borrows much of the purchase price of a leased asset, the lease is called:A. a leveraged lease.B. a sale-and-leaseback.C. a capital lease.D. a nonrecourse lease.E. None of the above.7. An operating lease's primary characteristics are:A. fully amortized, lessee maintains equipment and there is no cancellation clause.B. not fully amortized, lessor maintains equipment and there is a cancellation clause.C. fully amortized, lessor maintains equipment and there is a cancellation clause.D. not fully amortized, lessor maintains equipment and there is not cancellation clause.E. fully amortized, lessee maintains equipment and lessee can acquire assets at end of lease for fair market value.8. If a lease is for 35 years, it is regarded as a:A. financial lease.B. operating lease.C. capital lease.D. conditional sale.E. sale and leaseback.9. The city of Oakland sold some buildings and used the proceeds to improve its financial position. The city then leased the buildings back in order to continue to use these facilities. This is an example of:A. an operating lease.B. a short-term lease.C. a sale and leaseback.D. a fully amortized lease.E. None of the above.10. A financial lease has the following as its primary characteristics:A. is fully amortized, lessee maintains equipment and there is no renewal clause and no cancellation clause.B. is not fully amortized, lessor maintains equipment and there is a renewal clause but no cancellation clause.C. is fully amortized, lessor maintains equipment and there is a renewal clause and a no cancellation clause.D. is not fully amortized, lessor maintains equipment and there is a renewal clause.E. is fully amortized, lessee maintains equipment and there is a renewal clause and a no cancellation clause.11. An advantage of leasing is that the lessor does not own the asset and can cancel:A. only financial leases.B. only operating leases.C. only capital leases.D. any kind of leases anytime.E. None of the above.12. A leveraged lease typically involves a non-recourse loan in which:A. the lessee's payments go directly to the lender in case of default.B. the lessor is not obligated in case of default.C. the third party lenders have a first lien on the assets.D. All of the above.E. None of the above.13. For accounting purposes, which of the following conditions would automatically cause a lease to be a capital lease?A. The lessee can purchase the asset below fair market value at the end of the lease.B. The lease transfers ownership of the asset to the lessee by the end of the lease.C. The lease term is more than 75% of the asset's economic life.D. The present value of the lease payments is more than 90% of the asset's market value at lease inception.E. All of the above would lead to the lease being considered a capital lease.14. Capital leases would show up on the balance sheet of the firm in which manner for a six year machinery lease worth $700,000?A. Capital leases do not have to be put on the balance sheet; only financial leases do.B. Asset - Machinery $700,000; Liabilities - Long Term debt $700,000 because of debt displacement.C. Asset - Assets under Capital Lease $700,000; Liabilities - Obligations under Capital Lease $700,000.D. Assets - Assets under Capital Lease $700,000; Liabilities - Long Term Debt $700,000 because of debt displacement.E. None of the above.15. Prior to FASB 13, "Accounting for Leases", lease activity was only reported in financial footnotes. This off-balance-sheet-financing made firms with:A. capital leases appear financially stronger than firms that used debt to purchase the asset.B. operating leases appear financially stronger than firms that used debt to purchase the asset.C. leases of any type appear financially stronger than firms that used debt to purchase the asset.D. All of the above.E. None of the above.16. Which of the following is not an implication of FASB 13, Accounting for Leases?A. FASB 13 requires that the PV of the lease payments appear on the right hand side of the balance sheet.B. FASB 13 requires that the present value of the asset appear on the left hand side of the balance sheet.C. FASB 13 allows for off-balance-sheet financing for operating leases.D. All of the above.E. None of the above.17. The reason the IRS is most concerned about lease contracts is:A. firms that lease generally pay no taxes.B. that leasing usually leads to bankruptcy.C. that leases can be set up solely to avoid taxes.D. because leasing leads to off-balance-sheet-financing.E. All of the above.18. A lease with high payments early in its life which then decline to termination would:A. provide greater cash flow to the lessee in the beginning years.B. be evidence of tax avoidance and not acceptable to the IRS.C. be qualified as a capital lease under FASB 13.D. provide a lower residual value and thus ensure a bargain-purchase price option.E. All of the above.19. In valuing the lease versus purchase option, the relevant cash flows are the:A. tax shield from depreciation.B. investment outlay for the equipment.C. a decrease in the firm's operating costs that are not affected by leasing.D. All of the above are relevant.E. None of the above are relevant.20. The appropriate discount rate for valuing a financial lease is:A. the firm's after-tax weighted average cost of capital.B. the after-tax required return on assets of risks similar to the leased asset.C. the after-tax cost of secured borrowing.D. Either A or B.E. All of the above.21. The WACC is not used in the lease versus purchase decision because:A. the WACC was used in the decision to acquire the asset, this is only a financing decision.B. the WACC is used only when a lease alone is considered and not a lease versus purchase.C. the WACC does not include the lease cost of capital and therefore should not be used.D. tax rates of the lessor may be different than the lessee and therefore the WACC is incorrect.E. when a bank arranges a lease they do not consider the lessee's cost of capital.22. Firms that use financial leases must consider their debt-to-equity ratios as inadequate measures of financial leverage because:A. lenders are concerned about the firm's total liabilities and related cash flow.B. debt displacement occurs with leasing.C. less future debt can be raised for a growing firm when a lease is used.D. All of the above.E. None of the above.23. ______ would be evidence the lease is being used to avoid taxes and not a legitimate business purpose.A. Early balloon paymentsB. Late balloon paymentsC. Capitalizing a leaseD. Transfer of lease payments to a second ownerE. None of the above24. Debt displacement is associated with leases because:A. all assets not purchased with equity use debt financing.B. debt is always a cheaper source of financing and preferred to equity financing.C. FASB 13 and the IRS mandate debt displacement.D. lease financing is all debt and causes an imbalance in the optimal debt to equity ratio which reduces future debt financing.E. None of the above.25. A lease is likely to be most beneficial to both parties when:A. the lessor's tax rate is lower than the lessee's.B. the lessor's tax rate is higher than the lessee's.C. the lessor's tax rate is equal to the lessee's.D. a lease cannot be beneficial to both parties.E. a lease always has zero NPV, so both parties always break even.26. The price or lease payment that the lessee sets as their bound is known as:A. the present value of the tax shields.B. the reservation payment, L MIN.C. the present value of operating savings.D. the reservation payment, L MAX.E. None of the above.27. Which of the following is probably not a good reason for leasing instead of buying?A. Taxes may be reduced by leasing.B. Leasing may reduce transactions costs.C. Leasing may provide a beneficial reduction of uncertainty.D. All of the above are good reasons.E. All of the above are not good reasons.28. Which of the following is probably a good reason for leasing instead of buying?A. Leasing provides 100% financing.B. Leasing is not considered a form of debt financing.C. Leasing may increase EPS relative to buying.D. All of the above are good reasons.E. None of the above is a good reason.29. Some assets are leased more than others because:A. the value of the asset under a lease is not highly affected by term of use or maintenance decisions.B. a lease may be used to fool clients into "buying" high priced assets above market value.C. leasing allows sellers to attract clients with low prices as the basis for setting the contract.D. Both A and B.E. Both A and C.30. To meet IRS guidelines for leasing, the lease should:A. limit the lessee's right to issue debt or pay dividends while the lease is operative.B. not limit the lessee's right to issue debt or pay dividends while the lease is operative.C. pay a very high return to the lessor.D. transfer ownership of the asset at the end of the lease at below fair market value.E. be over 30 years.Your firm is considering leasing a new computer. The lease lasts for 9 years. The lease calls for 10 payments of $1,000 per year with the first payment occurring immediately. The computer would cost $7,650 to buy and would be straight-line depreciated to a zero salvage value over 9 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 8%. The corporate tax rate is 30%.31. What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in years 1-9?A. $-255B. $-955C. $-1,295D. $-1,850E. None of the above32. What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in year 0?A. $-4,865B. $-700C. $6,950D. $7,650E. None of the above33. What is the NPV of the lease relative to the purchase?A. $-1,039.78B. $339.78C. $360.22D. $6,610.22E. None of the above34. What would the after-tax cash flow in year 9 be if the asset had a residual value of $500 (ignoring any possible risk differences)?A. $-605B. $-955C. $-1,455D. $-1,305E. None of the above35. This lease would be classified as a(n):A. operating lease because the asset will be obsolete.B. operating lease because there is no amortization.C. leveraged lease because it is being financed.D. capital lease because the lease life is greater than 75% of the economic life.E. sale and leaseback because the company gets full use of the asset.Your firm is considering leasing a new robotic milling control system. The lease lasts for 5 years. The lease calls for 6 payments of $300,000 per year with the first payment occurring at lease inception. The system would cost $1,050,000 to buy and would be straight-line depreciated to a zero salvage value. The actual salvage value is zero. The firm can borrow at 8%, and the corporate tax rate is 34%.36. What is the appropriate discount rate for valuing the lease?A. 2.72%B. 5.28%C. 8.00%D. 12.12%E. None of the above.37. What is the after-tax cash flow from leasing in year 0?A. $300,000B. $495,000C. $852,000D. $948,000E. None of the above38. What is the after-tax cash flow in years 1 through 5?A. $-126,600B. $-198,000C. $-269,400D. $-287,250E. None of the above39. What is the NPV of the lease?A. $-111,690B. $-295,040C. $-305,388D. $-309,690E. None of the above40. What is the maximum lease payment that you would be willing to make?A. $170,655B. $175,000C. $187,842D. $210,307E. None of the above41. What is the minimum lease payment that the lessor would be willing to accept?A. $161,000B. $176,995C. $217,645D. $237,083E. None of the aboveYour firm is considering leasing a new laser light. The lease lasts for 3 years. The lease calls for 4 payments of $10,000 per year with the first payment occurring immediately. The computer would cost $45,000 to buy and would be straight-line depreciated to a zero salvage value over 3 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 10%. The corporate tax rate is 35%.42. What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in years 1-3?A. $-32,775B. $-11,750C. $-1,750D. $-1,850E. None of the above43. What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in year 0?A. $-35,000B. $-38,500C. $35,000D. $38,500E. None of the above44. What is the NPV of the lease relative to the purchase?A. $-6,500B. $7,380C. $4,678D. $12,400E. None of the above45. What would the after-tax cash flow in year 3 be if the asset had a residual value of $1,000 (ignoring any possible risk differences)?A. $-11,750B. $11,750C. $12,400D. $-12,400E. None of the above46. This lease would be classified as a(n):A. operating lease because the asset will be obsolete.B. operating lease because there is no amortization.C. leveraged lease because it is being financed.D. capital lease because the lease life is greater than 75% of the economic life.E. sale and leaseback because the company gets full use of the asset.Essay Questions47. Sardinas Sardines has assets valued at $10 million and equity of $10 million. The firm recently leased new equipment worth $1 million. Present the balance sheet under two conditions; the lease is judged to be an operating lease, and the lease is judged to be a capital lease.48. The Blank Button Company is considering the purchase of a new machine for $30,000. The machine is expected to save the firm $12,500 per year in operating costs over a 5 year period, and can be depreciated on a straight-line basis to a zero salvage value over its life. Alternatively, the firm can lease the machine for $6,500 per year for 5 years, with the first payment due in 1 year. The firm's tax rate is 34%, and its cost of debt is 10%. Calculate the NPV of the lease versus the purchase decision. Calculate the reservation payment of the lessee.49. The Plastic Iron Company has decided to acquire a new electronic milling machine. Plastic Iron can purchase the machine for $87,000 which has an expected life of 8 years and will be depreciated using 7 class MACRS rates of .1428, .2449, .1749, .125, .0892, .0892, .0892 and any remainder in year 8. Miller Leasing has offered to lease the machine to Plastic Iron for $14,000 a year for 8 years. Plastic Iron has an 18.64% cost of equity, 12% cost of debt, a 1:1 D/E ratio and faces a 34% marginal tax rate. Should they lease or buy? Show all work.50. What are some of the advantages and disadvantages of leasing?Chapter 21 Leasing Answer KeyMultiple Choice Questions1. In a lease arrangement, the owner of the asset is:A. the lesser.B. the lessee.C. the lessor.D. the leaser.E. None of the above.Difficulty level: EasyTopic: LESSORType: DEFINITIONS2. In a lease arrangement, the user of the asset is:A. the lesser.B. the lessee.C. the lessor.D. the leaser.E. None of the above.Difficulty level: EasyTopic: LESSEEType: DEFINITIONS3. Which of the following would not be a characteristic of a financial lease?A. They are not usually fully amortized.B. They usually do not have maintenance necessary for the leased assets.C. They usually do not include a cancellation option.D. The lessee usually has the right to renew the lease at expiration.E. All of the above are characteristics of financial leases.Difficulty level: MediumTopic: FINANCIAL LEASEType: DEFINITIONS4. An independent leasing company supplies ___________ leases versus the manufacturer who supplies ________________ leases.A. leveraged; directB. sales and leaseback; sales-typeC. capital; sales-typeD. direct; sales-typeE. None of the aboveDifficulty level: EasyTopic: TYPES OF LEASESType: DEFINITIONS5. Which of the following is not a financial lease?A. A leveraged leaseB. An operating leaseC. A sale-and-leasebackD. Both A and B.E. None of the above.Difficulty level: EasyTopic: TYPES OF LEASESType: DEFINITIONS6. If the lessor borrows much of the purchase price of a leased asset, the lease is called:A. a leveraged lease.B. a sale-and-leaseback.C. a capital lease.D. a nonrecourse lease.E. None of the above.Difficulty level: EasyTopic: TYPES OF LEASESType: DEFINITIONS7. An operating lease's primary characteristics are:A. fully amortized, lessee maintains equipment and there is no cancellation clause.B. not fully amortized, lessor maintains equipment and there is a cancellation clause.C. fully amortized, lessor maintains equipment and there is a cancellation clause.D. not fully amortized, lessor maintains equipment and there is not cancellation clause.E. fully amortized, lessee maintains equipment and lessee can acquire assets at end of lease for fair market value.Difficulty level: MediumTopic: OPERATING LEASEType: DEFINITIONS8. If a lease is for 35 years, it is regarded as a:A. financial lease.B. operating lease.C. capital lease.D. conditional sale.E. sale and leaseback.Difficulty level: MediumTopic: TYPES OF LEASESType: DEFINITIONS9. The city of Oakland sold some buildings and used the proceeds to improve its financial position. The city then leased the buildings back in order to continue to use these facilities. This is an example of:A. an operating lease.B. a short-term lease.C. a sale and leaseback.D. a fully amortized lease.E. None of the above.Difficulty level: EasyTopic: TYPES OF LEASEType: CONCEPTS10. A financial lease has the following as its primary characteristics:A. is fully amortized, lessee maintains equipment and there is no renewal clause and no cancellation clause.B. is not fully amortized, lessor maintains equipment and there is a renewal clause but no cancellation clause.C. is fully amortized, lessor maintains equipment and there is a renewal clause and a no cancellation clause.D. is not fully amortized, lessor maintains equipment and there is a renewal clause.E. is fully amortized, lessee maintains equipment and there is a renewal clause and a no cancellation clause.Difficulty level: EasyTopic: FINANCIAL LEASEType: CONCEPTS11. An advantage of leasing is that the lessor does not own the asset and can cancel:A. only financial leases.B. only operating leases.C. only capital leases.D. any kind of leases anytime.E. None of the above.Difficulty level: EasyTopic: ADVANTAGE TO LEASINGType: CONCEPTS12. A leveraged lease typically involves a non-recourse loan in which:A. the lessee's payments go directly to the lender in case of default.B. the lessor is not obligated in case of default.C. the third party lenders have a first lien on the assets.D. All of the above.E. None of the above.Difficulty level: MediumTopic: LEVERAGED LEASEType: CONCEPTS13. For accounting purposes, which of the following conditions would automatically cause a lease to be a capital lease?A. The lessee can purchase the asset below fair market value at the end of the lease.B. The lease transfers ownership of the asset to the lessee by the end of the lease.C. The lease term is more than 75% of the asset's economic life.D. The present value of the lease payments is more than 90% of the asset's market value at lease inception.E. All of the above would lead to the lease being considered a capital lease.Difficulty level: MediumTopic: CAPITAL LEASEType: CONCEPTS14. Capital leases would show up on the balance sheet of the firm in which manner for a six year machinery lease worth $700,000?A. Capital leases do not have to be put on the balance sheet; only financial leases do.B. Asset - Machinery $700,000; Liabilities - Long Term debt $700,000 because of debt displacement.C. Asset - Assets under Capital Lease $700,000; Liabilities - Obligations under Capital Lease $700,000.D. Assets - Assets under Capital Lease $700,000; Liabilities - Long Term Debt $700,000 because of debt displacement.E. None of the above.Difficulty level: EasyTopic: CAPITAL LEASEType: CONCEPTS15. Prior to FASB 13, "Accounting for Leases", lease activity was only reported in financial footnotes. This off-balance-sheet-financing made firms with:A. capital leases appear financially stronger than firms that used debt to purchase the asset.B. operating leases appear financially stronger than firms that used debt to purchase the asset.C. leases of any type appear financially stronger than firms that used debt to purchase the asset.D. All of the above.E. None of the above.Difficulty level: ChallengeTopic: FASB 13Type: CONCEPTS16. Which of the following is not an implication of FASB 13, Accounting for Leases?A. FASB 13 requires that the PV of the lease payments appear on the right hand side of the balance sheet.B. FASB 13 requires that the present value of the asset appear on the left hand side of the balance sheet.C. FASB 13 allows for off-balance-sheet financing for operating leases.D. All of the above.E. None of the above.Difficulty level: MediumTopic: FASB 13Type: CONCEPTS17. The reason the IRS is most concerned about lease contracts is:A. firms that lease generally pay no taxes.B. that leasing usually leads to bankruptcy.C. that leases can be set up solely to avoid taxes.D. because leasing leads to off-balance-sheet-financing.E. All of the above.Difficulty level: EasyTopic: TAX IMPLICATIONSType: CONCEPTS18. A lease with high payments early in its life which then decline to termination would:A. provide greater cash flow to the lessee in the beginning years.B. be evidence of tax avoidance and not acceptable to the IRS.C. be qualified as a capital lease under FASB 13.D. provide a lower residual value and thus ensure a bargain-purchase price option.E. All of the above.Difficulty level: MediumTopic: TAX IMPLICATIONSType: CONCEPTS19. In valuing the lease versus purchase option, the relevant cash flows are the:A. tax shield from depreciation.B. investment outlay for the equipment.C. a decrease in the firm's operating costs that are not affected by leasing.D. All of the above are relevant.E. None of the above are relevant.Difficulty level: MediumTopic: LEASE VS. BUYType: CONCEPTS20. The appropriate discount rate for valuing a financial lease is:A. the firm's after-tax weighted average cost of capital.B. the after-tax required return on assets of risks similar to the leased asset.C. the after-tax cost of secured borrowing.D. Either A or B.E. All of the above.Difficulty level: EasyTopic: APPROPRIATE DISCOUNT RATEType: CONCEPTS21. The WACC is not used in the lease versus purchase decision because:A. the WACC was used in the decision to acquire the asset, this is only a financing decision.B. the WACC is used only when a lease alone is considered and not a lease versus purchase.C. the WACC does not include the lease cost of capital and therefore should not be used.D. tax rates of the lessor may be different than the lessee and therefore the WACC is incorrect.E. when a bank arranges a lease they do not consider the lessee's cost of capital.Difficulty level: ChallengeTopic: APPROPRIATE DISCOUNT RATEType: CONCEPTS22. Firms that use financial leases must consider their debt-to-equity ratios as inadequate measures of financial leverage because:A. lenders are concerned about the firm's total liabilities and related cash flow.B. debt displacement occurs with leasing.C. less future debt can be raised for a growing firm when a lease is used.D. All of the above.E. None of the above.Difficulty level: MediumTopic: FINANCIAL LEASEType: CONCEPTS23. ______ would be evidence the lease is being used to avoid taxes and not a legitimate business purpose.A. Early balloon paymentsB. Late balloon paymentsC. Capitalizing a leaseD. Transfer of lease payments to a second ownerE. None of the aboveDifficulty level: MediumTopic: TAX IMPLICATIONSType: CONCEPTS24. Debt displacement is associated with leases because:A. all assets not purchased with equity use debt financing.B. debt is always a cheaper source of financing and preferred to equity financing.C. FASB 13 and the IRS mandate debt displacement.D. lease financing is all debt and causes an imbalance in the optimal debt to equity ratio which reduces future debt financing.E. None of the above.Difficulty level: ChallengeTopic: LEASES AND DEBTType: CONCEPTS25. A lease is likely to be most beneficial to both parties when:A. the lessor's tax rate is lower than the lessee's.B. the lessor's tax rate is higher than the lessee's.C. the lessor's tax rate is equal to the lessee's.D. a lease cannot be beneficial to both parties.E. a lease always has zero NPV, so both parties always break even.Difficulty level: ChallengeTopic: TAX IMPLICATIONSType: CONCEPTS26. The price or lease payment that the lessee sets as their bound is known as:A. the present value of the tax shields.B. the reservation payment, L MIN.C. the present value of operating savings.D. the reservation payment, L MAX.E. None of the above.Difficulty level: MediumTopic: RESERVATION PAYMENTType: CONCEPTS27. Which of the following is probably not a good reason for leasing instead of buying?A. Taxes may be reduced by leasing.B. Leasing may reduce transactions costs.C. Leasing may provide a beneficial reduction of uncertainty.D. All of the above are good reasons.E. All of the above are not good reasons.Difficulty level: MediumTopic: REASON FOR LEASINGType: CONCEPTS。

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Chapter 23 Options and Corporate Finance: Extensions and Applications Answer KeyMultiple Choice Questions1. The option to abandon is:A. a real option.ually of little value because of the cost associated with abandonment.C.irrelevant in capital budgeting analysis.D.nearly always less relevant the option to expand.E.All of the above.Difficulty level: MediumTopic: OPTION TO ABANDONType: DEFINITIONS2. An example of a special option is:A.an executive stock option.B.the embedded option in a start-up company.C.the option in simple business contracts.D.the option to shut down and reopen a project.E.All of the above.Difficulty level: MediumTopic: SPECIAL OPTIONType: DEFINITIONS3. Executives can not exercise their options for a fixed period of time. This is the:A.investing period.B.freeze-out period.C.valuation period.D.guaranteed growth period.E.strike period.Difficulty level: MediumTopic: FREEZE-OUT PERIODType: DEFINITIONS4. The NPV approach must be:A.augmented by added analysis if there are a few embedded options.B.augmented by added analysis if a decision has significant embedded options.C.jettisoned if there are any embedded options.puted carefully to identify the options.E.None of the above.Difficulty level: MediumTopic: EMBEDDED OPTIONSType: CONCEPTS5. Options are granted to top corporate executives because:A.executives will make better business decisions in line with benefiting the shareholders.B.executive pay is at risk and linked to firm performance.C.options are tax-efficient and taxed only when they are exercised.D.All of the above.E.None of the above.Difficulty level: MediumTopic: EXECUTIVE OPTIONSType: CONCEPTS6. The call option on a dividend paying stock compared to a non-dividend paying stock is:A.more valuable because of the extra dividend payment.B.equal in value because cash dividends are paid on stock only.C.less valuable because cash dividends are paid on stock only.D.less valuable if the dividend paying stock is in-the-money while the non-dividend paying stock if out-of-the-money.E.None of the above.Difficulty level: ChallengeTopic: CALL OPTION ON DIVIDEND PAYING STOCKType: CONCEPTS7. The value of the options awarded executives is much less than face value to the executives because:A.the value to the executive depends on the stock price being greater than the exercise price.B.the options must be held beyond the freeze-out period.C. a highly undiversified portfolio can have a large drop in value with high variance stocks.D.All of the above.E.None of the above.Difficulty level: MediumTopic: EXECUTIVE OPTIONSType: CONCEPTS8. By rewarding executives with large option positions, corporations:A.cause the executives to hold highly undiversified portfolios.B.put the firm in a risky position to pay off the options.C.cause the value of the stock to fall because the options are theft.D.are really valueless because most options are never exercised.E.None of the above.Difficulty level: ChallengeTopic: EXECUTIVE OPTIONSType: CONCEPTS9. Investing in a negative NPV project today is a feasible choice if:A.there are future option alternatives.B.investing is sequentially limited.C.the discount rate is low.D.Both A and B.E.Both A and C.Difficulty level: MediumTopic: NEGATIVE NPV PROJECTS AND REAL OPTIONSType: CONCEPTS10. The opportunity to defer investing to a later date may have value because:A.the cost of capital may decline in the near future.B.certainty may be reduced in the future.C.investment costs fluctuate in time.D.All of the above.E.None of the above.Difficulty level: EasyTopic: OPTION TO DEFERType: CONCEPTS11. Rejecting an investment today forever may not be a good choice because:A.the size of the firm will decline.B.there are always errors in the estimation of NPVs.C.the option value is negative.D.the company's foregoing the future rights or option to the investment.E.None of the above.Difficulty level: MediumTopic: REAL OPTIONSType: CONCEPTS12. A financial manager who does not follow the general constraints of the NPV rule may:A.accept a negative NPV project for fear of losing an investment opportunity.B.accept a marginally acceptable NPV project limiting the corporation's ability to choose a competing project.C.not consider all options available in a capital budgeting decision.D.not take a positive NPV project even if the NPV is adequate reward to forego the option.E.All of the above.Difficulty level: MediumTopic: REAL OPTIONSType: CONCEPTS13. The volatility of interest rates can affect the value of the project by:A.increasing the value as volatility increases.B.increasing the value as volatility decreases.C.decreasing the value as volatility increases.D.interest rate volatility does not affect value.E.None of the above.Difficulty level: MediumTopic: INTEREST RATE VOLATILITYType: CONCEPTS14. Which of the following statements is true?A.The Black Scholes model is the simplest to use and best used for complex situations.B.The binomial model does not handle options with dividend payments prior to expiration date.C.The Black Scholes model adequately handles the valuation of an American put.D.The binomal model is better for complex situations and is the simplest tool to use.E.The Black Scholes model is simpler to use, but for complex situations, the binomial model is the necessary tool.Difficulty level: MediumTopic: OPTION PRICING TOOLSType: CONCEPTS15. If a project has optionality:A.the shorter the available life of the project the less valuable the project is.B.the longer the available life of the project the less valuable the project is.C.the shorter the available life of the project the more valuable the project is.D.available project life does not change optionality.E.None of the above.Difficulty level: EasyTopic: OPTIONALITYType: CONCEPTS16. The equal rate of price change from each subsequent up state and fixed rate price change from each subsequent down state are reasonable if:A.there is a constant variability.B.any new information impacting prices is similar period to period.C.interest or discount rates are constant.D.Both A and C.E.Both A and B.Difficulty level: MediumTopic: VARIABILITY AND INFORMATIONType: CONCEPTS17. The most correct method to determine the current value of future payoffs would be to:A.take the discounted expected value at the risk-free rate.B.take the expected value using the probabilities.C.take the discounted expected value using the risk-neutral probabilities and the risk free rate.D.sum the payoffs discounted at the risk free rate.E.None of the above.Difficulty level: MediumTopic: VALUATION OF FUTURE PAYOFFSType: CONCEPTS18. The risk-neutral probabilities for an asset, with a current value equal to the present value of future payoffs are:A.given by the probability of each state occurring.B.given by the value of the underlying asset under good news and the risk free rate.C.given by the value of the underlying asset under good news and bad news.D.given by the value of the underlying asset under good news, bad news, and the risk free rate.E.None of the above.Difficulty level: ChallengeTopic: VALUATION OF FUTURE PAYOFFSType: CONCEPTS19. A branching tree for the binomial model:A.should capture all possible futures paths for the asset.B.has a move down followed by a move up on a subsequent branch to end at the same value as the reverse path.C.has a move down followed by a move up on a subsequent branch to end at a lower value than a move up then a move down.D.Both A and C.E.Both A and B.Difficulty level: ChallengeTopic: BINOMIAL MODELType: CONCEPTS20. Increasing the number of intervals in the binomial model causes the price shift parameters to change. New estimates are related to:A.the standard deviation of the underlying asset.B.the up state multiplier equals the standard deviation divided by root n.C.the number of intervals in a year.D.All of the above.E.None of the above.Difficulty level: MediumTopic: BINOMIAL MODELType: CONCEPTS21. Which of the following is not part of the Black Scholes option pricing model?A.Standard deviationB.Time to maturityC.Exercise priceD.Par value of the company's stockE.Interest rateDifficulty level: MediumTopic: BLACK SCHOLES OPTION PRICING MODELType: CONCEPTS22. What are the u, the up state multiplier, and d, the down state multiplier, if there are monthly intervals and the standard deviation is .38?A. 1.1159; .8961B..0317; 31.5789C..0317; .9683D..2193; .7807E.None of the aboveDifficulty level: MediumTopic: BLACK SCHOLES OPTION PRICING MODELType: CONCEPTS23. On the notion of embedded options, which of the following is/are true?A.If virtually all projects have embedded options, ignoring options is likely to lead to serious undervaluation.B.There are at least two possible outcomes for virtually every business idea.C.Virtually every business has both the option to abandon and the option to expand.D.All of the above.E.Both B and C.Difficulty level: MediumTopic: EMBEDDED OPTIONSType: CONCEPTS24. A firm in the extraction industry whose major assets are cash, equipment and a closed facility may appear to have extraordinary value. This value can be primarily attributed to:A.the potential sale of the company.B.the low exercise price held by the shareholders.C.the option to open the facility when prices rise dramatically.D.All of the above.E.None of the above.Difficulty level: MediumTopic: REAL OPTIONSType: CONCEPTSNote: Correct answers to later questions are dependent on correct answers to earlier questions.Ima Greedy, the CFO of Financial Saving Techniques has been granted options on 200,000 shares. The stock is currently trading at $22 a share and the options are at the money. The variance of the stock has been about .07 on an annual basis over the last several years. The options mature in 3 years and the risk free rate is 4%.25. What is d?1A..1842B..4102C..4583D..4909E..5412= [ln(22/22) + [.04 + (.50x.07)(3)]/ (.07)3 d1= .225/.4583 = .4909d1Difficulty level: MediumTopic: BLACK SCHOLES OPTION PRICING MODELType: PROBLEMS26. What is d2?A..0121B..0252C..0326D..0452E..0525d 2 = d1- √σ2t = .4909 - √(.07)(3) = .4909 - .4583 = .0326Difficulty level: MediumTopic: BLACK SCHOLES OPTION PRICING MODEL Type: PROBLEMS27. What is e-rt?A..6087B..7087C..7952D..8476E..8869e-.04(3) = .8869Difficulty level: MediumTopic: BLACK SCHOLES OPTION PRICING MODEL Type: PROBLEMS28. Calculate N(d).1A..5054B..6508C..6882D..7047E..8096) = .50 + .1882 = .6882 N(d1Difficulty level: MediumTopic: BLACK SCHOLES OPTION PRICING MODEL Type: PROBLEMS29. Calculate N(d).2A..5130B..5578C..6085D..7085E..7142) = .50 + .0130 = .5130N(d2Difficulty level: MediumTopic: BLACK SCHOLES OPTION PRICING MODELType: PROBLEMS30. What is the value of a call option?A.$4.14B.$4.86C.$5.13D.$5.62E.$6.16。

罗斯公司理财题库全集精编版

罗斯公司理财题库全集公司内部编号：（GOOD-TMMT-MMUT-UUPTY-UUYY-DTTI-Chapter 24Warrants and Convertibles Multiple Choice Questions1.A warrant gives the owner:A.the obligation to sell securities directly to the firm at a fixed price for a specified time.B.the right to purchase securities directly from the firm at a fixed price for a specified time.C.the obligation to purchase securities directly from the firm at a fixed price for a specified time.D.the right to sell securities directly to the firm at a fixed price for a specified time.E.None of the above.2.Warrants are most often issued in combination with:A.new publicly placed common stock.B.new privately placed common stock.C.new publicly placed debt.D.new privately placed debt.E.preferred stock.3.An "equity kicker" most often refers to a:A.bond with conversion privileges.B.preferred stock offering with conversion privileges.C.warrant.D.lettered common stock.E.None of the above.4.Warrants are similar to traded options except:A.only warrants have exercise prices.B.only warrants depend on changes in the underlying stock to determine value.C.warrants affect the number of shares outstanding.D.Both A and C.E.Both A and B.5.BrightView Windows issued warrants with an exercise price of $17. BrightView's common stock currently sells for $20 per share. The warrants are:A.in the money.B.out of the money.C.valuable.D.not very valuable.E.Both A and C.6.Warrants are similar to options, in that the value of the warrant is limited by:A.expiring worthless if the stock price is below the total warrant exercise price.B.the trading capabilities of the exchange used.C.the price of the underlying stock divided by the number of warrants needed to purchase a share.D.Both A and C.E.Both B and C.7.Which of the following would not describe the difference between warrants and call optionsA.Warrants are issued by firms whereas call options are issued by individuals.B.Call options have an exercise price whereas warrants do not.C.Exercising of warrants creates dilution whereas exercising call options does not.D.When call options are exercised existing shares trade hands whereas if warrants are exercised new stock must be issued.E.None of the above.8.Two major differences between a warrant and a call option are:A.warrants are contracts outside of the firm while options are within the firm.B.warrants have long maturities while options are usually short maturities.C.warrant exercise dilutes the value of equity while option exercise does not.D.Both A and C.E.Both B and C.9.Concerning warrants and call options, which of the following statements generally is correctA.The issue procedures for both are quite similar.B.When a call option is exercised, the firm must issue new stock.C.When a warrant is exercised, existing stock changes hands.D.Exercise of a call option does not affect share value, but warrant exercise does.E.None of the above is correct.10.Which of the following would harm the position of a warrant holderA.a 3 for 1 stock splitB.a large stock dividend of 20%C.a large cash dividendD.listing of the warrants on the NYSEE.None of the above would harm the warrant holders.11.The gain from exercising a warrant is similar to the gain from exercising a call option except:A.the gain on a warrant is greater by the fraction of warrant shares divided by total shares.B.the gain on a warrant is limited by the firm's value after being reduced by the debt of the firm.C.the gain on a warrant is decreased by the fraction of original shares divided by total post exercise shares.D.Both A and B.E.Both B and C.12.The exercise of warrants creates new shares which:A.increases the total number of shares but does not affect share value.B.increases the total number of shares which can reduce an individual share value.C.does not change the number of shares outstanding, similar to options.D.increases share value because cash is paid into the firm at the time of warrant exercise.E.None of the above.13.If a corporate security can be exchanged for a fixed number of shares of stock, the security is said to be:A.callable.B.convertible.C.protected.D.putable.E.None of the above.14.A convertible preferred stock is similar to a convertible bond except:A.the conversion ratio is fixed (given).B.the conversion price is fixed (given).C.the time to maturity is infinite.D.All of the above.E.None of the above.15.The holder of a $1,000 face value bond has the right to exchange the bond anytime before maturity for shares of stock priced at $50 per share. The $50 is called the:A.conversion price.B.stated price.C.exercise price.D.striking price.E.None of the above.16.Concerning convertible bonds, which of the following statements is not correctA.The value of a convertible bond will generally be greater than its straight bond value.B.The value of a convertible bond will generally be greater than its conversion value.C.The difference between the conversion value and the straight bond value is the conversion or option premium.D.The coupon rate on a nonconvertible bond will generally exceed the coupon rate on an otherwise identical convertible bond.E.All of the above are correct.17.Concerning convertible bonds, which of the following statements is not correctA.A convertible bond issue would generally have fewer restrictive covenants than an otherwise identical nonconvertible bond.B.Convertible bonds can be issued at a lower coupon compared with otherwise non-convertible bonds.C.If the value of a convertible bond exceeds the maximum of its straight bond value or its conversion value, the difference would be referred to as the option value.D.Since convertible bonds will be exchanged for common stock, convertible bonds are generally not callable.E.More than one of the above is incorrect.18.Concerning convertible bonds, which of the following statements is not correctA.With regard to security, most convertible bonds are secured by common stock ., they are collateral trust bonds).B.For most convertible bonds, the issuing firm can, under certain circumstances, effectively force bondholders to convert to common stock.C.When a convertible bond is called, the owner has the option of receiving cash or stock for the bond.D.All of the above are incorrect.E.All of the above are correct.19.A convertible bond has an option value which is equal to:A.the market value of the convertible bond minus the straight bond value.B.The market value of the convertible bond minus the conversion value.C.the market value of the convertible bond minus the conversion premium.D.the market value of the convertible bond minus the maximum of the straight bond value or conversion value.E.None of the above.20.A firm has experienced a significant increase in share value. In retrospect, which of the following securities would have been best to have been issued prior to the change in share valuemon stockB.Bond/warrant packageC.Convertible preferred stockD.Straight bondsE.Convertible bonds21.A firm has experienced a significant decrease in share value. In retrospect, which of the following securities would have been best to have been issued prior to the change in share valueA.Convertible bondsB.Convertible preferred stockC.Straight debtD.Indifferent between A and B.E.Indifferent between A, B, and C.22.Issuing convertible bonds or bonds with warrants is useful for a company of unknown risk because:A.the effects of risk are opposite on the two value components and tend to cancel each other out.B.if the firm is high risk, the option premium will be higher while the straight bond value is fixed.C.only risky companies issue these instruments.D.the equity value is dependent on current risks only, not the future risk at conversion.E.None of the above.23.Transfer or expropriation of wealth from bondholders to stockholders is less likely to occur when:A.subordinated straight debt is issued because there are other senior bondholders to protect them.B.convertible debt is issued because the equity component will reduce these agency costs when value is shared.C.convertible debt is issued because the holders can more readily sue when a high-risk project is undertaken.D.subordinated debt is issued because monitoring is much easier when subordinated straight debt is issued.E.None of the above.24.From the shareholder's point of view, the optimum time to call a convertible bond is when the bond's conversion value is:A.less than the call price, but greater than the face value.B.greater than the call price, but less than straight debt's value.C.equal to the face value.D.less than straight debt's value, but greater than the call price.E.None of the above.25.Based on empirical studies, firms tend to call convertible bonds when the conversion value is:A.less than the conversion price.B.greater than the straight bond value.C.greater than the call price.D.less than the face value.E.None of the above.26.Which of the following would not be a sensible explanation of why convertibles and warrants are issued if markets are efficientA.Cash flow from these securities best match cash flow of the firm.B.If the firm does well, convertible bonds will turn out to have been the better alternative versus issuing common stock.C.The securities are useful when it is costly to assess the risk of the issuing firm.D.The securities may resolve agency problems associated with raising money.E.All of the above are sensible explanations.27.BrightView Windows issued warrants with an exercise price of $17for one share per warrant. On May 1, BrightView's common stock is at $20 per share. The lower and upper limits on the warrant value on May 1 are:A.$0 and $3B.$0 and $17C.$3 and $17D.$3 and $20E.$17 and $20Diamond Drill Inc. has 150,000 shares and 15,000 warrants outstanding.A warrant holder can purchase a new share of stock for five warrants and $ per warrant. The stock is currently selling for $27 per share.28.The holder of a $1,000 face value bond can exchange the bond any time for 25 shares of stock. The conversion ratio is:A.25.B.40.C.100.D.Depends on the current market price of the bond.E.None of the above.29.The holder of a $1,000 face value bond can exchange the bond any time for 25 shares of stock. The conversion price is:A.$25.B.$40.C.$100.D.Depends on the current market price of the bond.E.None of the above.30.If all warrants are exercised, what will your fraction of ownership be if you owned 20,000 shares originallyA.%B.%C.%D.%E.Without knowing the exercise price the percent can not be determined.31.If the warrants are all exercised immediately, what would be the market price of the stockA.$B.$C.$D.$E.$32.What would your gain per share be from exercising the warrants, assuming all are exercisedA.$ per shareB.$ per shareC.$ per shareD.$ per shareE.$ per share33.A firm has 100 shares of stock and 40 warrants outstanding. The warrants are about to expire, and all of them will be exercised. The market value of the firm's assets is $2,000, and the firm has no debt. Each warrant gives the owner the right to buy 2 shares at $15 per share. What is the price per share of the stockA.$B.$C.$D.$E.None of the above.The holders of Xenron Corporation's bond with a face value of $1,000 can exchange that bond for 35 shares of stock. The stock is selling for $.34.What is the conversion priceA.$B.$C.$D.$1,E.No conversion premium is given.35.What is the conversion premiumA.%B.%C.%D.%E.None of the above.36.What would the conversion price and conversion ratio be if Xenron had a 3 for 1 stock splitA.$; 75B.$; 105C.$; 25D.$; 35E.None of the above.37.What is the conversion value of the bondA.$25B.$40C.$770D.$1,000E.No conversion premium is given.The holders of Mikayla Corporation's bond with a face value of $1,000 can exchange that bond for 30 shares of stock. The stock is selling for $.38.What is the conversion priceA.$B.$C.$D.$1,E.No conversion premium is given.39.What is the conversion premiumA.%B.%C.%D.%E.None of the above.40.What would the conversion price and conversion ratio be if Mikayla had a 4 for 1 stock splitA.$; 75B.$; 120C.$; 125D.$; 135E.None of the above.41.What is the conversion value of the bondA.$25B.$40C.$750D.$1,000E.No conversion premium is given.42.A convertible bond has an 8% annual coupon and 15 years to maturity. The face value is $1,000 and the conversion ratio is 40. The stock currently sells for $ per share. Similar nonconvertible bonds arepriced to yield 9%. The value of the convertible bond is at least:A.$.B.$.C.$1,.D.$1,.E.None of the above.43.A convertible bond is selling for $800. It has 10 years to maturity,a $1,000 face value, and a 10% coupon. Similar nonconvertible bondsare priced to yield 14%. The conversion price is $50 per share. The stock currently sells for $ per share. The conversion premium is:A.%.B.%.C.%.D.%.E.None of the above.Essay Questions44.A firm has 500 shares of stock and 100 warrants outstanding. The warrants are about to expire, and all of them will be exercised. The market value of the firm's assets is $25,000, and the market value of the debt is $8,000. Each warrant gives the owner the right to buy 5 shares at $25 per share. What is the value of a warrant45.A firm has 2,000 shares of stock and 200 warrants outstanding. The warrants are about to expire, and all of them will be exercised. The market value of the firm's assets is $14,000, and the firm has no debt. Each warrant gives the owner the right to buy 1 share at $5. What isthe warrant's effective exercise price46.Kida Consultants has 100,000 shares of stock outstanding. Thefirm's value net of debt is $2 million. Kida has 1,000 warrants outstanding with an exercise price of $18, where each warrant entitles the holder to purchase one share of stock. Calculate the gain from exercising a single warrant.47.Kida Consultants currently has 300,000 shares of common outstanding. Firm value net of debt is $3,900,000. Kida has warrants outstandingwith an exercise price of $10. How many warrants must the firm have issued if the gain from exercising a single warrant is $a $1,000 face value, and an 8% coupon paid semi-annually. Similar non-convertible bonds are priced to yield %. The conversion ratio is 20. The stock currently sells for $ per share. Calculate the convertible bond's option value.49.A convertible bond is selling for $1,. It has 10 years to maturity,a $1,000 face value, and a 10% coupon paid semi-annually. Similar non-convertible bonds are priced to yield 8%. The conversion ratio is 40. The stock currently sells for $ per share. Calculate the convertible bond's option value.50.A bond/warrant package is priced to sell at a face value of $1,000. Each bond comes with 50 detachable warrants. A warrant gives the owner the right to buy 1 share of stock at $20 per share. The value of a warrant has been estimated at $2. The bonds mature in 20 years.Similar bonds without warrants yield 10%. What is the bond's annual coupona $1000 face value, and a 10% coupon paid semi-annually. Similar nonconvertible bonds are priced to yield 14%. The conversion price is $50 per share. The stock currently sells for $ per share. Determine the bond's option premium.52.Explain why there is neither a "Free" nor "Expensive Lunch" when convertible bonds are issued53.Illustrate and explain how a convertible bond value is based on both debt and equity value. What is the option value54.Why are warrants and convertibles issuedChapter 24 Warrants and Convertibles Answer KeyMultiple Choice Questions1.A warrant gives the owner:A.the obligation to sell securities directly to the firm at a fixed price for a specified time.B.the right to purchase securities directly from the firm at a fixed price for a specified time.C.the obligation to purchase securities directly from the firm at a fixed price for a specified time.D.the right to sell securities directly to the firm at a fixed price for a specified time.E.None of the above.Difficulty level: EasyTopic: WARRANTType: DEFINITIONS2.Warrants are most often issued in combination with:A.new publicly placed common stock.B.new privately placed common stock.C.new publicly placed debt.D.new privately placed debt.E.preferred stock.Difficulty level: EasyTopic: WARRANTType: DEFINITIONS3.An "equity kicker" most often refers to a:A.bond with conversion privileges.B.preferred stock offering with conversion privileges.C.warrant.D.lettered common stock.E.None of the above.Difficulty level: EasyTopic: WARRANTType: DEFINITIONS4.Warrants are similar to traded options except:A.only warrants have exercise prices.B.only warrants depend on changes in the underlying stock to determine value.C.warrants affect the number of shares outstanding.D.Both A and C.E.Both A and B.Difficulty level: MediumTopic: WARRANTType: DEFINITIONS5.BrightView Windows issued warrants with an exercise price of $17. BrightView's common stock currently sells for $20 per share. The warrants are:A.in the money.B.out of the money.C.valuable.D.not very valuable.E.Both A and C.Difficulty level: MediumTopic: VALUE OF WARRANTSType: DEFINITIONS6.Warrants are similar to options, in that the value of the warrant is limited by:A.expiring worthless if the stock price is below the total warrant exercise price.B.the trading capabilities of the exchange used.C.the price of the underlying stock divided by the number of warrants needed to purchase a share.D.Both A and C.E.Both B and C.Difficulty level: MediumTopic: VALUE OF WARRANTType: CONCEPTS7.Which of the following would not describe the difference between warrants and call optionsA.Warrants are issued by firms whereas call options are issued by individuals.B.Call options have an exercise price whereas warrants do not.C.Exercising of warrants creates dilution whereas exercising call options does not.D.When call options are exercised existing shares trade hands whereas if warrants are exercised new stock must be issued.E.None of the above.Difficulty level: EasyTopic: WARRANTS AND CALL OPTIONSType: CONCEPTS8.Two major differences between a warrant and a call option are:A.warrants are contracts outside of the firm while options are within the firm.B.warrants have long maturities while options are usually short maturities.C.warrant exercise dilutes the value of equity while option exercise does not.D.Both A and C.E.Both B and C.Difficulty level: MediumTopic: WARRANTS AND CALL OPTIONSType: CONCEPTS9.Concerning warrants and call options, which of the following statements generally is correctA.The issue procedures for both are quite similar.B.When a call option is exercised, the firm must issue new stock.C.When a warrant is exercised, existing stock changes hands.D.Exercise of a call option does not affect share value, but warrant exercise does.E.None of the above is correct.Difficulty level: MediumTopic: WARRANTS AND CALL OPTIONSType: CONCEPTS10.Which of the following would harm the position of a warrant holderA.a 3 for 1 stock splitB.a large stock dividend of 20%C.a large cash dividendD.listing of the warrants on the NYSEE.None of the above would harm the warrant holders.Difficulty level: ChallengeTopic: WARRANTS AND DIVIDENDSType: CONCEPTS11.The gain from exercising a warrant is similar to the gain from exercising a call option except:A.the gain on a warrant is greater by the fraction of warrant shares divided by total shares.B.the gain on a warrant is limited by the firm's value after being reduced by the debt of the firm.C.the gain on a warrant is decreased by the fraction of original shares divided by total post exercise shares.D.Both A and B.E.Both B and C.Difficulty level: ChallengeTopic: WARRANTS AND CALL OPTIONSType: CONCEPTS12.The exercise of warrants creates new shares which:A.increases the total number of shares but does not affect share value.B.increases the total number of shares which can reduce an individual share value.C.does not change the number of shares outstanding, similar to options.D.increases share value because cash is paid into the firm at the time of warrant exercise.E.None of the above.Difficulty level: EasyTopic: EXERCISE OF WARRANTSType: CONCEPTS13.If a corporate security can be exchanged for a fixed number of shares of stock, the security is said to be:A.callable.B.convertible.C.protected.D.putable.E.None of the above.Difficulty level: EasyTopic: CONVERTIBLESType: CONCEPTS14.A convertible preferred stock is similar to a convertible bond except:A.the conversion ratio is fixed (given).B.the conversion price is fixed (given).C.the time to maturity is infinite.D.All of the above.E.None of the above.Difficulty level: EasyTopic: CONVERTIBLESType: CONCEPTS15.The holder of a $1,000 face value bond has the right to exchange the bond anytime before maturity for shares of stock priced at $50 per share. The $50 is called the:A.conversion price.B.stated price.C.exercise price.D.striking price.E.None of the above.Difficulty level: EasyTopic: CONVERSION PRICEType: CONCEPTS16.Concerning convertible bonds, which of the following statements is not correctA.The value of a convertible bond will generally be greater than its straight bond value.B.The value of a convertible bond will generally be greater than its conversion value.C.The difference between the conversion value and the straight bond value is the conversion or option premium.D.The coupon rate on a nonconvertible bond will generally exceed the coupon rate on an otherwise identical convertible bond.E.All of the above are correct.Difficulty level: MediumTopic: CONVERTIBLE BONDSType: CONCEPTS17.Concerning convertible bonds, which of the following statements is not correctA.A convertible bond issue would generally have fewer restrictive covenants than an otherwise identical nonconvertible bond.B.Convertible bonds can be issued at a lower coupon compared with otherwise non-convertible bonds.C.If the value of a convertible bond exceeds the maximum of its straight bond value or its conversion value, the difference would be referred to as the option value.D.Since convertible bonds will be exchanged for common stock, convertible bonds are generally not callable.E.More than one of the above is incorrect.Difficulty level: MediumTopic: CONVERTIBLE BONDSType: CONCEPTS18.Concerning convertible bonds, which of the following statements is not correctA.With regard to security, most convertible bonds are secured by common stock ., they are collateral trust bonds).B.For most convertible bonds, the issuing firm can, under certain circumstances, effectively force bondholders to convert to common stock.C.When a convertible bond is called, the owner has the option of receiving cash or stock for the bond.D.All of the above are incorrect.E.All of the above are correct.Difficulty level: MediumTopic: CONVERTIBLE BONDSType: CONCEPTS19.A convertible bond has an option value which is equal to:A.the market value of the convertible bond minus the straight bond value.B.The market value of the convertible bond minus the conversion value.C.the market value of the convertible bond minus the conversion premium.D.the market value of the convertible bond minus the maximum of the straight bond value or conversion value.E.None of the above.Difficulty level: MediumTopic: CONVERTIBLE BONDSType: CONCEPTS20.A firm has experienced a significant increase in share value. In retrospect, which of the following securities would have been best to have been issued prior to the change in share valuemon stockB.Bond/warrant packageC.Convertible preferred stockD.Straight bondsE.Convertible bondsDifficulty level: MediumTopic: STRAIGHT BONDS AND SHARE VALUEType: CONCEPTS21.A firm has experienced a significant decrease in share value. In retrospect, which of the following securities would have been best to have been issued prior to the change in share valueA.Convertible bondsB.Convertible preferred stockC.Straight debtD.Indifferent between A and B.E.Indifferent between A, B, and C.Difficulty level: MediumTopic: CONVERTIBLE BONDS AND SHARE VALUEType: CONCEPTS22.Issuing convertible bonds or bonds with warrants is useful for a company of unknown risk because:A.the effects of risk are opposite on the two value components and tend to cancel each other out.B.if the firm is high risk, the option premium will be higher while the straight bond value is fixed.C.only risky companies issue these instruments.D.the equity value is dependent on current risks only, not the future risk at conversion.E.None of the above.Difficulty level: ChallengeTopic: CONVERTIBLES AND RISKType: CONCEPTS23.Transfer or expropriation of wealth from bondholders to stockholders is less likely to occur when:A.subordinated straight debt is issued because there are other senior bondholders to protect them.B.convertible debt is issued because the equity component will reduce these agency costs when value is shared.C.convertible debt is issued because the holders can more readily sue when a high-risk project is undertaken.D.subordinated debt is issued because monitoring is much easier when subordinated straight debt is issued.E.None of the above.Difficulty level: ChallengeTopic: CONVERTIBLE DEBTType: CONCEPTS24.From the shareholder's point of view, the optimum time to call a convertible bond is when the bond's conversion value is:A.less than the call price, but greater than the face value.B.greater than the call price, but less than straight debt's value.C.equal to the face value.D.less than straight debt's value, but greater than the call price.E.None of the above.Difficulty level: MediumTopic: TIMING OF CONVERSIONType: CONCEPTS25.Based on empirical studies, firms tend to call convertible bonds when the conversion value is:A.less than the conversion price.B.greater than the straight bond value.C.greater than the call price.D.less than the face value.E.None of the above.Difficulty level: MediumTopic: EMPIRICAL RESEARCH - CALLING CONVERTIBLESType: CONCEPTS26.Which of the following would not be a sensible explanation of why convertibles and warrants are issued if markets are efficientA.Cash flow from these securities best match cash flow of the firm.B.If the firm does well, convertible bonds will turn out to have been the better alternative versus issuing common stock.C.The securities are useful when it is costly to assess the risk of the issuing firm.D.The securities may resolve agency problems associated with raising money.E.All of the above are sensible explanations.Difficulty level: MediumTopic: MARKET EFFICIENCY AND CONVERTIBLESType: CONCEPTS27.BrightView Windows issued warrants with an exercise price of $17for one share per warrant. On May 1, BrightView's common stock is at $20 per share. The lower and upper limits on the warrant value on May 1 are:A.$0 and $3B.$0 and $17C.$3 and $17D.$3 and $20E.$17 and $20(Price - Exercise)/# Required = ($20 - $17)/1 = $3Difficulty level: MediumTopic: UPPER AND LOWER LIMITSType: PROBLEMS。

公司理财罗斯习题集共54页

公司理财罗斯习题集
6、纪律是自由的第一条件。——黑格尔 7、纪律是集体的面貌，集体的声音，集体的动作，集体的表情，集体的信念。 ——马卡连柯
8、我们现在必须完全保持党的纪律，否则一切都会陷入污泥中。 ——马克思 9、学校没有纪律便如磨坊没有水。— —夸美纽斯
10、一个人应该：活泼而守纪律，天真而不幼稚，勇敢而鲁莽，倔强而有原则，热情而不冲动，乐观而不盲目。 ——马克思
Байду номын сангаас
1、最灵繁的人也看不见自己的背脊。——非洲 2、最困难的事情就是认识自己。——希腊 3、有勇气承担命运这才是英雄好汉。——黑塞 4、与肝胆人共事，无字句处读书。——周恩来 5、阅读使人充实，会谈使人敏捷，写作使人精确。——培根

(完整版)公司理财-罗斯课后习题答案

(完整版)公司理财-罗斯课后习题答案-CAL-FENGHAI-(2020YEAR-YICAI)_JINGBIAN第一章1.在所有权形式的公司中,股东是公司的所有者。

股东选举公司的董事会,董事会任命该公司的管理层。

企业的所有权和控制权分离的组织形式是导致的代理关系存在的主要原因。

管理者可能追求自身或别人的利益最大化,而不是股东的利益最大化。

在这种环境下,他们可能因为目标不一致而存在代理问题。

2.非营利公司经常追求社会或政治任务等各种目标。

非营利公司财务管理的目标是获取并有效使用资金以最大限度地实现组织的社会使命。

3.这句话是不正确的。

管理者实施财务管理的目标就是最大化现有股票的每股价值，当前的股票价值反映了短期和长期的风险、时间以及未来现金流量。

4.有两种结论。

一种极端,在市场经济中所有的东西都被定价。

因此所有目标都有一个最优水平，包括避免不道德或非法的行为，股票价值最大化。

另一种极端,我们可以认为这是非经济现象,最好的处理方式是通过政治手段。

一个经典的思考问题给出了这种争论的答案:公司估计提高某种产品安全性的成本是30美元万。

然而,该公司认为提高产品的安全性只会节省20美元万。

请问公司应该怎么做呢?”5.财务管理的目标都是相同的,但实现目标的最好方式可能是不同的,因为不同的国家有不同的社会、政治环境和经济制度。

6.管理层的目标是最大化股东现有股票的每股价值。

如果管理层认为能提高公司利润，使股价超过35美元,那么他们应该展开对恶意收购的斗争。

如果管理层认为该投标人或其它未知的投标人将支付超过每股35美元的价格收购公司,那么他们也应该展开斗争。

然而,如果管理层不能增加企业的价值,并且没有其他更高的投标价格,那么管理层不是在为股东的最大化权益行事。

现在的管理层经常在公司面临这些恶意收购的情况时迷失自己的方向。

7.其他国家的代理问题并不严重,主要取决于其他国家的私人投资者占比重较小。

较少的私人投资者能减少不同的企业目标。

罗斯公司理财题库全集

Chapter 15Long-Term Financing: An Introduction Multiple Choice Questions1. The book capital of a corporation is determined by:A. the sum of the capital in excess of par and the retained earnings.B. the par value of preferred stock.C. the sum of the treasury stock and the preferred stock.D. the number of shares issued multiplied by the par value of each share.E. the market price of the company's debt.2. Retained earnings are:A. the amount of cash that the firm has saved up.B. the difference between the net income earned and the dividends paid.C. the difference between the market price of the stock and the book value.D. the amount of stock repurchased.E. None of the above.3. The book value of the shareholders' ownership is represented by:A. the sum of the par value of common stock, the capital surplus and the accumulated retained earnings.B. the total assets minus the net worth.C. the sum of the preferred stock, debt and the capital surplus.D. the sum of the total assets minus the current liabilities.E. None of the above.4. Shares of stock that have been repurchased by the corporation are called:A. treasury stock.B. undistributed capital stock.C. retained equity.D. capital surplus shares.E. None of the above.5. The market value of the ownership of the firm equals:A. the market price of the stock times the number of shares outstanding.B. the sum of the market price of the bonds and the stock.C. the par value of the stock times the number of shares outstanding.D. the market price of the stock minus the retained earnings.E. None of the above.6. A grant of authority allowing someone else to vote shares of stock that you own is called:A. a power-of-share authorization.B. a proxy.C. a share authority grant (SAG).D. a restricted conveyance.E. None of the above.7. Unsecured corporate debt is called a(n):A. indenture.B. debenture.C. bond.D. mortgage.E. None of the above.8. A standard arrangement for the orderly retirement of long-term debt calls for the corporation to make regular payments into a(n):A. custodial account.B. sinking fund.C. retirement fund.D. irrevocable trustee fund.E. None of the above9. Debt that may be extinguished before maturity is referred to as:A. sinking-fund debt.B. debentures.C. callable debt.D. indenture debt.E. None of the above.10. If a long-term debt instrument is perpetual, it is called a(n):A. secured debt issue.B. subordinated debt issue.C. consol.D. capital debt issue.E. indenture.11. The amount of loan a person or firm borrows from a lender is the:A. creditor.B. indenture.C. debenture.D. principal.E. amortization.12. The written agreement between a corporation and its bondholders is called:A. the collateral agreement.B. the deed.C. the indenture.D. the deed of conveyance.E. None of the above.13. If cumulative voting is permitted:A. the total number of votes a shareholder has is equal to the number of shares owned.B. the total number of votes a shareholder has is equal to the number of shares owned times the average number of years the shareholder has owned the shares.C. the total number of votes a shareholder has can be calculated as the number of shares owned times the number of directors to be elected.D. the total number of votes a shareholder has is equal to the number of shares times the number of board meetings the shareholder has attended.E. None of the above.14. The market-to-book value ratio is implies growth and success when it is:A. greater than 0.B. less than 10.C. less than 0.D. less than 1.E. greater than 1.15. There are 3 directors' seats up for election. If you own 1,000 shares of stock and you can cast 3,000 votes for a particular director, this is illustrative of:A. cumulative voting.B. absolute priority voting.C. sequential voting.D. straight voting.E. None of the above.16. If you own 1,000 shares of stock and you can cast only 1,000 votes fora particular director, then the stock features:A. cumulative voting.B. absolute priority voting.C. sequential voting.D. straight voting.E. None of the above.17. If a group other than management solicits the authority to vote shares to replace management, a _____ is said to occur.A. proxy fightB. stockholder derivative actionC. tender offerD. vote of confidenceE. None of the above.18. Shareholders usually have which of the following right(s)A. To elect board members, the authorizing of new shares and other matters of great importance to shareholders such as being acquired.B. To share proportionally in regular and liquidating dividends.C. To share proportionally in any new stock sold.D. All of the above.E. None of the above.19. Different classes of stock usually are issued to:A. maintain ownership control by holding the class of stock with greater voting rights.B. pay less in dividends between the classes of stock.C. fool investors into thinking that equity is equity and there is no difference in control or value features.D. extract perquisites without the other class of stockholders knowing.E. None of the above.20. Which of the following statements is falseA. Creditors do not have voting power.B. Payment on interest on debt in considered an expense, while payment of dividends is a return on capital.C. Unpaid debt is a liability of the firm, and if not paid, can result in liquidation of the firm. Unpaid common stock dividends cannot force liquidation.D. One of the costs of issuing equity is the possibility of financial distress, while no financial distress is associated with debt.E. None of the above.21. Corporations try to create hybrid securities that look like equity but are called debt because:A. debt interest expense is tax deductible.B. bankruptcy costs are eliminated or reduced.C. these securities have lower risk than debt.D. Both A and C.E. Both A and B.22. Technically speaking, a long-term corporate debt offering that features a specific attachment to corporate property is generally called:A. a debenture.B. a bond.C. a long-term liability.D. a preferred liability.E. None of the above.23. If a firm retires or extinguishes a debt issue before maturity, the specific amount they pay is:A. the amortization amount.B. the call price.C. the sinking fund amount.D. the spread premium.E. None of the above.24. If a debenture is subordinated, it:A. has a higher priority status than specified creditors.B. is secondary to equity.C. must give preference to the specified creditor in the event of default.D. has been issued because the company is in default.E. None of the above.25. Not paying the dividends on a cumulative preferred issue may result in:A. preferred dividend arrears that can be eliminated by the common shareholders only after common dividends are paid.B. voting rights are granted to preferred stockholders if preferred dividends are in arrears.C. no payment of dividends to common shareholders.D. Both A and B.E. Both B and C.26. Preferred stock has both a tax advantage and a tax disadvantage. These two are:A. in default there are no taxes and dividends are taxed in corporate hands at 70%.B. corporate dividends are taxed on 30% of the dividends received and expenses are deductible.C. dividends are not a tax-deductible expense but are 70% exempt from corporate taxation.D. dividends are fully tax deductible but are not equity capital.E. None of the above.27. Preferred stock may be desirable to issue for which of the following reason(s)A. If there is no taxable income, preferred stock does not impose a tax penalty.B. The failure to pay preferred dividends, cumulative or noncumulative, will not cause bankruptcy.C. Preferred dividends are not tax deductible and therefore will not provide a tax shield but will reduce net income.D. Both B and C.E. Both A and B.28. Preferred stock may exist because:A. losses before income taxes prevent a company from enjoying the tax advantages of debt interest while there is no tax advantage for preferred dividends.B. an advantage exists for the firm; preferred shareholders can not force the company into bankruptcy because of unpaid dividends.C. corporations get a 70% tax exemption on preferred dividends received.D. All of the above.E. None of the above.29. The written agreement between a corporation and its bondholders might contain a prohibition against paying dividends in excess of current earnings. This prohibition is an example of a(n):A. maintenance of security provision.B. collateral restriction.C. affirmative indenture.D. restrictive covenant.E. None of the above.30. What percentage of the dividends received by one corporation from another is taxableA. 15%B. 30%C. 34%D. 70%E. 100%31. Which of the following statements about preferred stock is trueA. Unlike dividends paid on common stock, dividends paid on preferred stock are a tax-deductible expense.B. Unpaid dividends on preferred stock are a debt of the corporation.C. If preferred dividends are non-cumulative, then preferred dividends not paid in a particular year will be carried forward to the next year.D. There is no difference in the voting rights of preferred and common stockholders.E. None of the above.32. If a debt issue is callable, the call price is generally ____ par.A. greater thanB. less thanC. equal toD. unrelated toE. It varies widely based on the risk of the firm.33. There was an upward trend in the ratio of the book value of debt to the book value of debt and equity throughout the 1990s. Some of this was due to the repurchasing of stock. The market value ratio of debt to debt and equity exhibited no upward trend. This can be explained by:A. the change in the accounting rules of the period.B. the difference between tax accounting and accounting for financial accounting purposes.C. a large increase in the market value of equity that was greater than the increase in debt.D. All of the above.E. None of the above.34. Based on historical experience, which of the following best describes the "pecking order" of long-term financing strategy in the .A. Long-term debt first, new common equity, internal financing last.B. Long-term debt first, internal financing, new common equity last.C. Internal financing first, new common equity, long-term borrowing last.D. Internal financing first, long-term borrowing, new common equity last.E. None of the above.35. Financial deficits are created when:A. profits and retained earnings are greater than the capital-spending requirement.B. profits and retained earnings are less than the capital-spending requirement.C. profits and retained earnings are equal to the capital-spending requirement.D. All of the above.E. None of the above.36. Financial economists prefer to use market values when measuring debt ratios because:A. market values are more stable than book values.B. market values are a better reflection of current value than historical value.C. market values are readily available and do not have to be calculated like book values.D. market values are more difficult to calculate which makes financial economists more valuable.E. None of the above.37. Corporate financial officers prefer to use book values when measuring debt ratios because:A. book values are more stable than market values.B. debt covenant restriction are usually expressed in book value terms.C. rating agencies measure debt ratios in book values terms.D. All of the above.E. None of the above.38. Rockwell Corporation had net income of $150,000 for the year ending 2008. The company decided to payout 40% of earnings per share as a dividend. Rockwell has 120,000 shares issued and outstanding. What are the retained earnings for 2008A. $40,000B. $60,000C. $90,000D. $150,000E. None of the above39. Nelson Company had equity accounts in 2008 as follows:Projected income is $150,000 and 40% of this amount will be paid out immediately as dividends. What will the ending retained earnings account beA. $90,000B. $92,000C. $122,000D. $210,000E. $242,00040. Holden Bicycles has 1,000 shares outstanding each with a par value of $. If they are sold to shareholders at $10 each, what would the capital surplus beA. $100B. $900C. $9,900D. $10,000E. $11,00041. The Lory Bookstore used internal financing as a source of long-term financing for 80% of its total needs in 2008. The company borrowed an additional 27% of its total needs in the long-term debt markets in 2008. What were Lory's net new stock issues in that yearA. -20%B. -7%C. 7%D. 20%E. 27%42. David's Building Equipment (DBE) had net income of $200,000 for the year ending 2008. The company decided to payout 30% of earnings per share as a dividend. DBE has 50,000 shares issued and outstanding. What are the retained earnings for 2008A. $60,000B. $140,000C. $150,000D. $200,000E. None of the above.43. Alexandra Investments had equity accounts in 2008 as follows:Projected income is $200,000 and 20% of this amount will be paid out immediately as dividends. What will the ending retained earnings account beA. $160,000B. $250,000C. $270,000D. $410,000E. $470,00044. Michael's Motor Scooters has 1,000 shares outstanding each with a par value of $. If they are sold to shareholders at $5 each, what would the capital surplus beA. $4,400B. $4,500C. $4,750D. $4,950E. $5,00045. Calhoun Computech used internal financing as a source of long-term financing for 80% of its total needs in 2008. The company borrowed an additional 15% of its total needs in the long-term debt markets in 2008. What were Calhoun's net new stock issues, in percentage terms, for 2008A. -10%B. -5%C. 5%D. 10%E. 15%Essay QuestionsInformation on shareholder's equity as currently shown on the books of the Eaton Corporation is given as:46. From this information, calculate Eaton's book value per share.47. Rework the shareholder's equity as it appears on the books if the company issues 40,000 new shares of common at $70 per share.48. Preferred Stock, as a hybrid security, presents somewhat of a puzzle as to why they are issued. What elements give rise to the puzzle and how is it explained49. Different countries have different sources of funds. For example, in the United States, internally generated funds count for over 4/5 of all funds while in Japan, it is about ½ with externally generated funds making up the remainder. The disparities are less in the United Kingdom and Germany, with about 2/3 of funds coming from internal sources. Discuss this disparity and why it might exist.Chapter 15 Long-Term Financing: An Introduction Answer KeyMultiple Choice Questions1. The book capital of a corporation is determined by:A.the sum of the capital in excess of par and the retained earnings.B.the par value of preferred stock.C.the sum of the treasury stock and the preferred stock.D.the number of shares issued multiplied by the par value of each share.E.the market price of the company's debt.Difficulty level: EasyTopic: BOOK CAPITALType: DEFINITIONS2. Retained earnings are:A.the amount of cash that the firm has saved up.B.the difference between the net income earned and the dividends paid.C.the difference between the market price of the stock and the book value.D.the amount of stock repurchased.E.None of the above.Difficulty level: EasyTopic: RETAINED EARNINGSType: DEFINITIONS3. The book value of the shareholders' ownership is represented by:A.the sum of the par value of common stock, the capital surplus and the accumulated retained earnings.B.the total assets minus the net worth.C.the sum of the preferred stock, debt and the capital surplus.D.the sum of the total assets minus the current liabilities.E.None of the above.Difficulty level: MediumTopic: BOOK VALUEType: DEFINITIONS4. Shares of stock that have been repurchased by the corporation are called:A.treasury stock.B.undistributed capital stock.C.retained equity.D.capital surplus shares.E.None of the above.Difficulty level: EasyTopic: TREASURY STOCKType: DEFINITIONS5. The market value of the ownership of the firm equals:A.the market price of the stock times the number of shares outstanding.B.the sum of the market price of the bonds and the stock.C.the par value of the stock times the number of shares outstanding.D.the market price of the stock minus the retained earnings.E.None of the above.Difficulty level: EasyTopic: MARKET VALUE OF EQUITYType: DEFINITIONS6. A grant of authority allowing someone else to vote shares of stock that you own is called:A. a power-of-share authorization.B. a proxy.C. a share authority grant (SAG).D. a restricted conveyance.E.None of the above.Difficulty level: EasyTopic: PROXYType: DEFINITIONS7. Unsecured corporate debt is called a(n):A.indenture.B.debenture.C.bond.D.mortgage.E.None of the above.Difficulty level: EasyTopic: DEBENTUREType: DEFINITIONS8. A standard arrangement for the orderly retirement of long-term debt calls for the corporation to make regular payments into a(n):A.custodial account.B.sinking fund.C.retirement fund.D.irrevocable trustee fund.E.None of the aboveDifficulty level: EasyTopic: SINKING FUNDType: DEFINITIONS9. Debt that may be extinguished before maturity is referred to as:A.sinking-fund debt.B.debentures.C.callable debt.D.indenture debt.E.None of the above.Difficulty level: EasyTopic: CALLABLE DEBTType: DEFINITIONS10. If a long-term debt instrument is perpetual, it is called a(n):A.secured debt issue.B.subordinated debt issue.C.consol.D.capital debt issue.E.indenture.Difficulty level: EasyTopic: CONSOL OR PERPETUAL DEBTType: DEFINITIONS11. The amount of loan a person or firm borrows from a lender is the:A.creditor.B.indenture.C.debenture.D.principal.E.amortization.Difficulty level: EasyTopic: LOAN PRINCIPALType: DEFINITIONS12. The written agreement between a corporation and its bondholders is called:A.the collateral agreement.B.the deed.C.the indenture.D.the deed of conveyance.E.None of the above.Difficulty level: EasyTopic: INDENTUREType: DEFINITIONS13. If cumulative voting is permitted:A.the total number of votes a shareholder has is equal to the number of shares owned.B.the total number of votes a shareholder has is equal to the number of shares owned times the average number of years the shareholder has owned the shares.C.the total number of votes a shareholder has can be calculated as the number of shares owned times the number of directors to be elected.D.the total number of votes a shareholder has is equal to the number of shares times the number of board meetings the shareholder has attended.E.None of the above.Difficulty level: EasyTopic: CUMULATIVE VOTINGType: CONCEPTS14. The market-to-book value ratio is implies growth and success when it is:A.greater than 0.B.less than 10.C.less than 0.D.less than 1.E.greater than 1.Difficulty level: MediumTopic: MARKET-TO-BOOK RATIOType: CONCEPTS15. There are 3 directors' seats up for election. If you own 1,000 shares of stock and you can cast 3,000 votes for a particular director, this is illustrative of:A.cumulative voting.B.absolute priority voting.C.sequential voting.D.straight voting.E.None of the above.Difficulty level: EasyTopic: CUMULATIVE VOTINGType: CONCEPTS16. If you own 1,000 shares of stock and you can cast only 1,000 votes fora particular director, then the stock features:A.cumulative voting.B.absolute priority voting.C.sequential voting.D.straight voting.E.None of the above.Difficulty level: EasyTopic: STRAIGHT VOTINGType: CONCEPTS17. If a group other than management solicits the authority to vote shares to replace management, a _____ is said to occur.A.proxy fightB.stockholder derivative actionC.tender offerD.vote of confidenceE.None of the above.Difficulty level: EasyTopic: PROXY FIGHTType: CONCEPTS18. Shareholders usually have which of the following right(s)A.To elect board members, the authorizing of new shares and other matters of great importance to shareholders such as being acquired.B.To share proportionally in regular and liquidating dividends.C.To share proportionally in any new stock sold.D.All of the above.E.None of the above.Difficulty level: EasyTopic: SHAREHOLDER RIGHTSType: CONCEPTS19. Different classes of stock usually are issued to:A.maintain ownership control by holding the class of stock with greater voting rights.B.pay less in dividends between the classes of stock.C.fool investors into thinking that equity is equity and there is no difference in control or value features.D.extract perquisites without the other class of stockholders knowing.E.None of the above.Difficulty level: MediumTopic: CLASSES OF STOCKType: CONCEPTS20. Which of the following statements is falseA.Creditors do not have voting power.B.Payment on interest on debt in considered an expense, while payment of dividends is a return on capital.C.Unpaid debt is a liability of the firm, and if not paid, can result in liquidation of the firm. Unpaid common stock dividends cannot force liquidation.D.One of the costs of issuing equity is the possibility of financial distress, while no financial distress is associated with debt.E.None of the above.Difficulty level: MediumTopic: COSTS OF LONG TERM FINANCINGType: CONCEPTS21. Corporations try to create hybrid securities that look like equity but are called debt because:A.debt interest expense is tax deductible.B.bankruptcy costs are eliminated or reduced.C.these securities have lower risk than debt.D.Both A and C.E.Both A and B.Difficulty level: MediumTopic: HYBRID SECURITIESType: CONCEPTS22. Technically speaking, a long-term corporate debt offering that features a specific attachment to corporate property is generally called:A. a debenture.B. a bond.C. a long-term liability.D. a preferred liability.E.None of the above.Difficulty level: EasyTopic: BONDType: CONCEPTS23. If a firm retires or extinguishes a debt issue before maturity, the specific amount they pay is:A.the amortization amount.B.the call price.C.the sinking fund amount.D.the spread premium.E.None of the above.Difficulty level: EasyTopic: CALLABLE DEBTType: CONCEPTS24. If a debenture is subordinated, it:A.has a higher priority status than specified creditors.B.is secondary to equity.C.must give preference to the specified creditor in the event of default.D.has been issued because the company is in default.E.None of the above.Difficulty level: MediumTopic: SUBORDINATED DEBENTUREType: CONCEPTS25. Not paying the dividends on a cumulative preferred issue may result in:A.preferred dividend arrears that can be eliminated by the common shareholders only after common dividends are paid.B.voting rights are granted to preferred stockholders if preferred dividends are in arrears.C.no payment of dividends to common shareholders.D.Both A and B.E.Both B and C.Difficulty level: MediumTopic: PREFERRED STOCK AND DIVIDENDSType: CONCEPTS26. Preferred stock has both a tax advantage and a tax disadvantage. These two are:A.in default there are no taxes and dividends are taxed in corporate hands at 70%.B.corporate dividends are taxed on 30% of the dividends received and expenses are deductible.C.dividends are not a tax-deductible expense but are 70% exempt from corporate taxation.D.dividends are fully tax deductible but are not equity capital.E.None of the above.Difficulty level: MediumTopic: PREFERRED STOCKType: CONCEPTS27. Preferred stock may be desirable to issue for which of the following reason(s)A.If there is no taxable income, preferred stock does not impose a tax penalty.B.The failure to pay preferred dividends, cumulative or noncumulative, will not cause bankruptcy.C.Preferred dividends are not tax deductible and therefore will not provide a tax shield but will reduce net income.D.Both B and C.E.Both A and B.Difficulty level: ChallengeTopic: PREFERRED STOCKType: CONCEPTS28. Preferred stock may exist because:A.losses before income taxes prevent a company from enjoying the tax advantages of debt interest while there is no tax advantage for preferred dividends.B.an advantage exists for the firm; preferred shareholders can not force the company into bankruptcy because of unpaid dividends.C.corporations get a 70% tax exemption on preferred dividends received.D.All of the above.E.None of the above.Difficulty level: MediumTopic: PREFERRED STOCKType: CONCEPTS29. The written agreement between a corporation and its bondholders might contain a prohibition against paying dividends in excess of current earnings. This prohibition is an example of a(n):A.maintenance of security provision.B.collateral restriction.C.affirmative indenture.D.restrictive covenant.E.None of the above.Difficulty level: EasyTopic: RESTRICTIVE COVENANTType: CONCEPTS30. What percentage of the dividends received by one corporation from another is taxableA.15%B.30%C.34%D.70%E.100%Difficulty level: EasyTopic: TAXABLE CORPORATE DIVIDENDSType: CONCEPTS31. Which of the following statements about preferred stock is trueA.Unlike dividends paid on common stock, dividends paid on preferred stock are a tax-deductible expense.B.Unpaid dividends on preferred stock are a debt of the corporation.C.If preferred dividends are non-cumulative, then preferred dividends not paid in a particular year will be carried forward to the next year.D.There is no difference in the voting rights of preferred and common stockholders.E.None of the above.Difficulty level: MediumTopic: PREFERRED STOCKType: CONCEPTS32. If a debt issue is callable, the call price is generally ____ par.A.greater thanB.less thanC.equal toD.unrelated toE.It varies widely based on the risk of the firm.Difficulty level: EasyTopic: CALLABLE DEBTType: CONCEPTS33. There was an upward trend in the ratio of the book value of debt to the book value of debt and equity throughout the 1990s. Some of this was due to the repurchasing of stock. The market value ratio of debt to debt and equity exhibited no upward trend. This can be explained by:A.the change in the accounting rules of the period.B.the difference between tax accounting and accounting for financial accounting purposes.C. a large increase in the market value of equity that was greater than the increase in debt.D.All of the above.E.None of the above.Difficulty level: EasyTopic: DEBT FINANCING TRENDSType: CONCEPTS。

罗斯公司理财题库全集

Chapter 14Efficient Capital Markets and Behavioral Challenges Multiple Choice Questions1. An efficient capital market is one in which:A. brokerage commissions are zero.B. taxes are irrelevant.C. securities always offer a positive rate of return to investors.D. security prices are guaranteed by the U.S. Securities and Exchange Commission to be fair.E. security prices reflect available information.2. The notion that actual capital markets, such as the NYSE, are fairly priced is called the:A. Efficient Markets Hypothesis (EMH).B. Law of One Price.C. Open Markets Theorem.D. Laissez-Faire Axiom.E. Monopoly Pricing Theorem.3. The hypothesis that market prices reflect all available information of every kind is called_____ form efficiency.A. openB. strongC. semistrongD. weakE. stable4. The hypothesis that market prices reflect all publicly available information is called _____ form efficiency.A. openB. strongC. semistrongD. weakE. stable5. The hypothesis that market prices reflect all historical information is called _____ form efficiency.A. openB. strongC. semistrongD. weakE. stable6. In an efficient market, the price of a security will:A. always rise immediately upon the release of new information with no further price adjustments related to that information.B. react to new information over a two-day period after which time no further price adjustments related to that information will occur.C. rise sharply when new information is first released and then decline to a new stable level by the following day.D. react immediately to new information with no further price adjustments related to that information.E. be slow to react for the first few hours after new information is released allowing time for that information to be reviewed and analyzed.7. If the financial markets are efficient, then investors should expect their investments in those markets to:A. earn extraordinary returns on a routine basis.B. generally have positive net present values.C. generally have zero net present values.D. produce arbitrage opportunities on a routine basis.E. produce negative returns on a routine basis.8. Which one of the following statements is correct concerning market efficiency?A. Real asset markets are more efficient than financial markets.B. If a market is efficient, arbitrage opportunities should be common.C. In an efficient market, some market participants will have an advantage over others.D. A firm will generally receive a fair price when it sells shares of stock.E. New information will gradually be reflected in a stock's price to avoid any sudden change in the price of the stock.9. According to the efficient market hypothesis, financial markets fluctuate daily because they:A. are inefficient.B. slowly react to new information.C. are continually reacting to new information.D. offer tremendous arbitrage opportunities.E. only reflect historical information.10. Insider trading does not offer any advantages if the financial markets are:A. weak form efficient.B. semiweak form efficient.C. semistrong form efficient.D. strong form efficient.E. inefficient.11. According to theory, studying historical prices in order to identify mispriced stocks will not work in markets that are _____ efficient.I. weak formII. semistrong formIII. strong formA. I onlyB. II onlyC. I and II onlyD. II and III onlyE. I, II, and III12. Which of the following tend to reinforce the argument that the financial markets are efficient?I. Information spreads rapidly in today's world.II. There is tremendous competition in the financial markets.III. Market prices continually fluctuate.IV. Market prices react suddenly to unexpected news announcements.A. I and III onlyB. II and IV onlyC. I, II, and III onlyD. II, III, and IV onlyE. I, II, III, and IV13. If you excel in analyzing the future outlook of firms, you would prefer that the financial markets be ____ form efficient so that you can have an advantage in the marketplace.A. weakB. semiweakC. semistrongD. strongE. perfect14. Your best friend works in the finance office of the Delta Corporation. You are aware that this friend trades Delta stock based on information he overhears in the office. You know that this information is not known to the general public. Your friend continually brags to you about the profits he earns trading Delta stock. Based on this information, you would tend to argue that the financial markets are at best _____ form efficient.A. weakB. semiweakC. semistrongD. strongE. perfect15. The U.S. Securities and Exchange Commission periodically charges individuals for insider trading and claims those individuals have made unfair profits. Based on this fact, you would tend to argue that the financial markets are at best _____ form efficient.A. weakB. semiweakC. semistrongD. strongE. perfect16. Individuals that continually monitor the financial markets seeking mispriced securities:A. tend to make substantial profits on a daily basis.B. tend to make the markets more efficient.C. are never able to find a security that is temporarily mispriced.D. are always quite successful using only well-known public information as their basis of evaluation.E. are always quite successful using only historical price information as their basis of evaluation.17. Efficient capital markets are financial markets:A. in which current market prices reflect available information.B. in which current market prices reflect the present value of securities.C. in which there is no excess profit from using available information.D. All of the above.E. None of the above.18. If the efficient market hypothesis holds, investors should expect:A. to earn only a normal return.B. to receive a fair price for their securities.C. to always be able to pick stocks that will outperform the market averages.D. Both A and B.E. Both B and C.19. Financial managers can create value through financing decisions that:A. reduce costs or increase subsidies.B. increase the product prices.C. create a new security.D. Both A and B.E. Both A and C.20. In an efficient market when a firm makes an announcement of a new product or product enhancement with superior technology providing positive NPV, the price of the stock will:A. rise gradually over the next few days.B. decline gradually over the next few days.C. rise on the same day to the new price.D. stay at the same price, with no net effect.E. drop on the same day to the new price.21. An investor discovers that for a certain group of stocks, large positive price changes are always followed by large negative price changes. This finding is a violation of the:A. moderate form of the efficient market hypothesis.B. semistrong form of the efficient market hypothesis.C. strong form of the efficient market hypothesis.D. weak form of the efficient market hypothesis.E. None of the above.22. Which of the following would be indicative of inefficient markets?A. Overreaction and reversionB. Delayed responseC. Immediate and accurate responseD. Both A and B.E. Both A and C.23. When the stock price follows a random walk, the price today is said to be equal to the prior period price plus the expected return for the period with any remaining difference to the actual return due to:A. a predictable amount based on the past prices.B. a component based on new information unrelated to past prices.C. the security's risk.D. the risk free rate.E. None of the above.24. Which form of the efficient market hypothesis implies that security prices reflect only information contained in past prices?A. Weak formB. Semistrong formC. Strong formD. Hard formE. Past form25. If the weak form of efficient markets holds, then:A. technical analysis is useless.B. stock prices reflect all information contained in past prices.C. stock prices follow a random walk.D. All of the above.E. None of the above.26. Under the concept of an efficient market, a random walk in stock prices means that:A. there is no driving force behind price changes.B. technical analysts can predict future price movements to earn excess returns.C. the unexplained portion of price change in one period is unrelated to the unexplained portion of price change in any other period.D. the unexplained portion of price change in one period that can not be explained by expected return can only be explained by the unexplained portion of price change in a prior period.E. None of the above.27. A semistrong form efficient market is distinct from a weak form efficient market by:A. incorporating only random movements in the price.B. incorporating all publicly available information in the price.C. incorporating inside information in the price.D. All of the above.E. None of the above.28. If a market is strong form efficient, it also implies that:A. semistrong form efficiency holds.B. weak form efficiency holds.C. one cannot earn abnormal returns with inside information.D. Both A and C.E. A, B and C.29. An investor discovers that predictions about weather patterns published years in advance and found in the Farmer's Almanac are amazingly accurate. In fact, these predictions enable the investor to predict the health of the farm economy and therefore certain security prices. This finding is a violation of the:A. moderate form of the efficient market hypothesis.B. semistrong form of the efficient market hypothesis.C. strong form of the efficient market hypothesis.D. weak form of the efficient market hypothesis.E. None of the above.30. A lawyer works for a firm that advises corporate firms planning to sue other corporations for antitrust damages. He finds that he can "beat the market" by short-selling the stock of the firm that will be sued. This finding is a violation of the:A. moderate form of the efficient market hypothesis.B. semistrong form of the efficient market hypothesis.C. strong form of the efficient market hypothesis.D. weak form of the efficient market hypothesis.E. None of the above.31. An investor discovers that stock prices change drastically as a result of certain events. This finding is a violation of the:A. moderate form of the efficient market hypothesis.B. semistrong form of the efficient market hypothesis.C. strong form of the efficient market hypothesis.D. weak form of the efficient market hypothesis.E. None of the above.32. The semistrong form of the efficient market hypothesis states that:A. all information is reflected in the price of securities.B. security prices reflect all publicly available information.C. future prices are predictable.D. Both A and C.E. None of the above.33. The market price of a stock moves or fluctuates daily. This fluctuation is:A. inconsistent with the semistrong efficient market hypothesis because prices should be stable.B. inconsistent with the weak form efficient market hypothesis because all past information should be priced in.C. consistent with the semistrong form of the efficient market hypothesis because as new information arrives daily prices will adjust to it.D. consistent with the strong form because prices are controlled by insiders.E. None of the above.34. An investor who picks a portfolio by throwing darts at the financial pages:A. believes that efficient markets will protect the portfolio from harm as all information is priced.B. believes that riskier portfolios earn the same as less risky portfolios.C. does so because stock prices do not matter; only cash flow generated matters.D. Both A and C.E. Both B and C.35. Suppose that firms with unexpectedly high earnings earn abnormally high returns for several months after the announcement. This would be evidence of:A. efficient markets in the weak form.B. inefficient markets in the weak form.C. efficient markets in the semistrong form.D. inefficient markets in the semistrong form.E. inefficient markets in the strong form.36. Which of the following is not true about serial correlation?A. It measures the correlation between the current return on a security and the current return on another security.B. It involves only one security.C. Positive serial correlation indicates a tendency for continuation.D. Negative serial correlation indicates a tendency toward reversal.E. Significant positive or negative serial correlation coefficients are indicative of market inefficiency in the weak form.37. Which of the following is true?A. A random walk for stock price changes is inconsistent with observed patterns in price changes.B. If the stock market follows a random walk, price changes should be highly correlated.C. If the stock market is weak form efficient, then stock prices follow a random walk.D. All of the above.E. Both B and C.38. Event studies attempt to measure:A. the influence of information released to the market on returns in days surrounding its announcement.B. if the market is at least semistrong form efficient.C. whether there is a significant reaction to public announcements.D. All of the above.E. None of the above.39. The abnormal return in an event study is described as:A. the return earned on the day of announcement for the stock.B. the excess return earned on the day of announcement for the stock.C. the total return earned for the investment holding period.D. All of the above.E. None of the above.40. Evidence on stock prices finds that the sudden death of a chief executive officer causes stock prices to fall and the sudden death of an active founding chief executive officer causes stock price to rise. This contrary evidence happens because:A. markets are inefficient and unsure of the real value of the events.B. death is inevitable and market prices are random.C. things simply happen.D. the value of the founding executive was a negative to the firm.E. None of the above.41. Studies of the performance of professionally managed mutual funds find that these funds:A. do not outperform a market index. Assuming mutual fund managers rely primarily on public information, this finding refutes the semistrong form of the efficient market hypothesis.B. do not outperform a market index. Assuming mutual fund managers rely primarily on public information, this finding supports the semistrong form of the efficient market hypothesis.C. outperform a market index. Assuming mutual fund managers rely primarily on public information, this finding refutes the semistrong form of the efficient market hypothesis.D. outperform a market index. Assuming mutual fund managers rely primarily on public information, this finding supports the semistrong form of the efficient market hypothesis.E. Both C and D.42. Which of the following statements is true?A. In efficient markets, a stock's price should change with the arrival of new information.B. Average stock returns are higher in January than other months.C. Studies by Fama and French and others find that returns of high book to market stocks are much higher than low book to market value stocks to be consistent with the efficient market hypothesis.D. All of the above.E. None of the above.43. Which of the following is true?A. Most empirical evidence is consistent with strong form efficiency.B. Most empirical evidence is inconsistent with weak form efficiency.C. Strong form market efficiency is not supported by the empirical evidence.D. Both A and C.E. Both B and C.44. In examining the issue of whether the choice of accounting methods affects stock prices, studies have found that:A. accounting depreciation methods can significantly affect stock prices.B. switching depreciation methods can significantly affect stock prices.C. accounting changes that increase accounting earnings also increases stock prices.D. accounting changes can affect stock prices if the company were either to withhold information or provide incorrect information.E. All of the above.45. Market efficiency says:A. prices may not reflect underlying value.B. a good financial manager can time stock sales.C. managers may profitablly speculate in foreign currency.D. managers cannot boost stock prices through creative accounting.E. None of the above.46. The abnormal returns for initial public offerings over longer time periods seem to call market efficiency into question because:A. the average returns at announcement are large and positive while the long-term results are much lower than the returns for seasoned equity offerings.B. the average returns at announcement are small and negative while the long-term results are much lower than the returns for seasoned equity offerings.C. the average returns at announcement are zero while the long-term results are much higher than the returns for seasoned equity offerings.D. the average returns at announcement are large and positive while the long-term results are much higher than the returns for seasoned equity offerings.E. the average returns at announcement are insignificant while the long-term results are much lower than the returns for seasoned equity offerings.47. An example of financially irrational behavior is:A. gambling in Las Vegas.B. when a firm announces an increase in earnings and the stock price enjoys three days of large abnormal returns.C. when a firm announces an increase in earnings and the stock price enjoys an immediate surge in value which is captured in one day.D. Both A and B.E. Both A and C.48. Ritter's study of Initial Public Offerings (IPOs) showed that the post offering stock performance was:A. less than the control group by about 2% in the five years following the IPO.B. incorrectly priced at issuance because over the next five years the abnormal returns were greater than zero on average.C. immaterial to the pricing of the IPO because future market performance is unknown at issuance.D. equal across IPOs, irrespective of risk or which year they were issued.E. All of the above.49. If the securities market is efficient, an investor need only throw darts at the stock pages to pick securities and be just as well off.A. This is true because there are no differences in risk and return.B. This is true because in an efficient stock market prices do not fluctuate.C. This is false because professional portfolio managers prefer to generate commissions by active trading.D. This is false because investors may not hold a desirable risk-return combination in their portfolio.E. This is false because the markets are controlled by the institutional investors.50. Financial managers must be cognizant of market efficiency because:A. manipulating earnings by accounting changes does not fool the market.B. timing security sales is futile because without private information the current price reflects all known information.C. there is limited price pressure from any large sale of stock depressing prices only momentarily before recovering to prior levels.D. All of the above.E. None of the above.51. Event studies have been used to examine:A. IPOs, SEOs, and other equity issuances.B. changes in earnings.C. mergers and acquisitions.D. most financial events.E. All of the above.52. If the market is weak form efficient:A. semistrong form efficiency holds.B. strong form efficiency must hold.C. semistrong form efficiency may hold.D. markets are not weak form efficient.E. None of the above.53. In order to create value from capital budgeting decisions, the firm is likely to:A. locate an unsatisfied demand for a particular product or service.B. create a barrier to make it more difficult for other firms to compete.C. produce products or services at a lower cost than the competition.D. A and C.E. A, B, and C.54. Valuable financing opportunities can be created by:A. fooling investors.B. reducing costs or increasing subsidies.C. the creation of a new security.D. A and B.E. A, B, and C.55. The following time period(s) is/are consistent with the bubble theory:A. the stock market crash of 1929.B. the stock market crash of 1972.C. the stock market crash of 1987.D. A and C.E. A, B, and C.56. In the five years after the offering, ___ underperform matched control groups.A. initial public offeringsB. seasoned equity offeringsC. bond offeringsD. A and BE. A, B, and C57. In the three years prior to a forced departure of management, stock prices, adjusted for market performance, on average will:A. decline about 20%.B. decline about 40%.C. decline about 60%.D. remain stable.E. increase about 20%.Essay Questions58. Define the three forms of market efficiency.59. Explain why it is that in an efficient market, investments have an expected NPV of zero.60. Do you think the lessons from capital market history will hold for each year in the future? That is, as an example, if you buy small stocks will your investment always outperformU.S. Treasury bonds?61. Suppose your cousin invests in the stock market and doubles her money in a single year while the market, on average, earned a return of only about 15%. Is your cousin's performance a violation of market efficiency?62. Why should a financial decision maker such as a corporate treasurer or CFO be concerned with market efficiency?Chapter 14 Efficient Capital Markets and Behavioral Challenges Answer KeyMultiple Choice Questions1. An efficient capital market is one in which:A. brokerage commissions are zero.B. taxes are irrelevant.C. securities always offer a positive rate of return to investors.D. security prices are guaranteed by the U.S. Securities and Exchange Commission to be fair.E. security prices reflect available information.Difficulty level: EasyTopic: EFFICIENT CAPITAL MARKETType: DEFINITIONS2. The notion that actual capital markets, such as the NYSE, are fairly priced is called the:A. Efficient Markets Hypothesis (EMH).B. Law of One Price.C. Open Markets Theorem.D. Laissez-Faire Axiom.E. Monopoly Pricing Theorem.Difficulty level: EasyTopic: EFFICIENT MARKETS HYPOTHESISType: DEFINITIONS3. The hypothesis that market prices reflect all available information of every kind is called _____ form efficiency.A. openB. strongC. semistrongD. weakE. stableDifficulty level: EasyTopic: STRONG FORM EFFICIENCYType: DEFINITIONS4. The hypothesis that market prices reflect all publicly available information is called _____ form efficiency.A. openB. strongC. semistrongD. weakE. stableDifficulty level: EasyTopic: SEMI STRONG FORM EFFICIENCYType: DEFINITIONS5. The hypothesis that market prices reflect all historical information is called _____ form efficiency.A. openB. strongC. semistrongD. weakE. stableDifficulty level: EasyTopic: WEAK FORM EFFICIENCYType: DEFINITIONS6. In an efficient market, the price of a security will:A. always rise immediately upon the release of new information with no further price adjustments related to that information.B. react to new information over a two-day period after which time no further price adjustments related to that information will occur.C. rise sharply when new information is first released and then decline to a new stable level by the following day.D. react immediately to new information with no further price adjustments related to that information.E. be slow to react for the first few hours after new information is released allowing time for that information to be reviewed and analyzed.Difficulty level: MediumTopic: MARKET EFFICIENCYType: CONCEPTS7. If the financial markets are efficient, then investors should expect their investments in those markets to:A. earn extraordinary returns on a routine basis.B. generally have positive net present values.C. generally have zero net present values.D. produce arbitrage opportunities on a routine basis.E. produce negative returns on a routine basis.Difficulty level: MediumTopic: MARKET EFFICIENCYType: CONCEPTS8. Which one of the following statements is correct concerning market efficiency?A. Real asset markets are more efficient than financial markets.B. If a market is efficient, arbitrage opportunities should be common.C. In an efficient market, some market participants will have an advantage over others.D. A firm will generally receive a fair price when it sells shares of stock.E. New information will gradually be reflected in a stock's price to avoid any sudden change in the price of the stock.Difficulty level: MediumTopic: MARKET EFFICIENCYType: CONCEPTS9. According to the efficient market hypothesis, financial markets fluctuate daily because they:A. are inefficient.B. slowly react to new information.C. are continually reacting to new information.D. offer tremendous arbitrage opportunities.E. only reflect historical information.Difficulty level: MediumTopic: MARKET EFFICIENCYType: CONCEPTS10. Insider trading does not offer any advantages if the financial markets are:A. weak form efficient.B. semiweak form efficient.C. semistrong form efficient.D. strong form efficient.E. inefficient.Difficulty level: EasyTopic: MARKET EFFICIENCYType: CONCEPTS11. According to theory, studying historical prices in order to identify mispriced stocks will not work in markets that are _____ efficient.I. weak formII. semistrong formIII. strong formA. I onlyB. II onlyC. I and II onlyD. II and III onlyE. I, II, and IIIDifficulty level: MediumTopic: MARKET EFFICIENCYType: CONCEPTS12. Which of the following tend to reinforce the argument that the financial markets are efficient?I. Information spreads rapidly in today's world.II. There is tremendous competition in the financial markets.III. Market prices continually fluctuate.IV. Market prices react suddenly to unexpected news announcements.A. I and III onlyB. II and IV onlyC. I, II, and III onlyD. II, III, and IV onlyE. I, II, III, and IVDifficulty level: MediumTopic: MARKET EFFICIENCYType: CONCEPTS13. If you excel in analyzing the future outlook of firms, you would prefer that the financial markets be ____ form efficient so that you can have an advantage in the marketplace.A. weakB. semiweakC. semistrongD. strongE. perfectDifficulty level: EasyTopic: MARKET EFFICIENCYType: CONCEPTS14. Your best friend works in the finance office of the Delta Corporation. You are aware that this friend trades Delta stock based on information he overhears in the office. You know that this information is not known to the general public. Your friend continually brags to you about the profits he earns trading Delta stock. Based on this information, you would tend to argue that the financial markets are at best _____ form efficient.A. weakB. semiweakC. semistrongD. strongE. perfectDifficulty level: MediumTopic: MARKET EFFICIENCYType: CONCEPTS15. The U.S. Securities and Exchange Commission periodically charges individuals for insider trading and claims those individuals have made unfair profits. Based on this fact, you would tend to argue that the financial markets are at best _____ form efficient.A. weakB. semiweakC. semistrongD. strongE. perfectDifficulty level: MediumTopic: MARKET EFFICIENCYType: CONCEPTS16. Individuals that continually monitor the financial markets seeking mispriced securities:A. tend to make substantial profits on a daily basis.B. tend to make the markets more efficient.C. are never able to find a security that is temporarily mispriced.D. are always quite successful using only well-known public information as their basis of evaluation.E. are always quite successful using only historical price information as their basis of evaluation.Difficulty level: MediumTopic: MARKET EFFICIENCYType: CONCEPTS。

公司理财罗斯习题集.ppt

security has the same cash flows as a portfolio of one share of B1 and one share of B2. Therefore, its noarbitrage price is 94 + 85 = $179. b. This security has the same cash flows as a portfolio of one share of B1 and five shares of B2. Therefore, its noarbitrage price is 94 + 5 × 85 = $519 c. There is an arbitrage opportunity because the noarbitrage price should be $132 (94 / 2 + 85). One should buy two shares of the security at $130/share and sell one share of B1 and two shares of B2. Total profit would be $4 (94 + 85 × 2 – 130 × 2).
Suppose you observe that a three-year, default-free security with an annual coupon rate of 10% and a face value of $1000 has a price today of $1183.50. Is there an arbitrage opportunity? If so, show specifically how you would take advantage of this opportunity. If not, why not?

罗斯《公司理财》（第9版）配套题库【课后习题-资本结构：债务运用的制约因素】

罗斯《公司理财》（第9版）配套题库【课后习题-资本结构：债务运用的制约因素】第17章资本结构：债务运用的制约因素一、概念题1．代理成本（agency costs）答：代理成本指委托人基于委托代理关系所产生的，因代理人（经营者、雇员等）怠工、不负责任、偏离股东目标和以种种手段从公司获取财富等而发生的各种成本的总称。

在本章中，代理成本是指债权人为保护自身利益，防止公司股东财富最大化的利己策略，对企业经营做出种种限制或提高利率，由此使企业增加的费用或机会成本。

所有权和控制权的分离是产生代理问题和代理成本的根本原因。

实证分析表明，代理关系产生的经济基础是公司股东向经营者（代理人）授予经营管理权，虽然这样做可降低公司的经营成本，因为由众多的股东直接参与公司决策、经营管理、生产控制的成本是惊人的。

但是代理关系的确立又必然招致代理成本。

代理成本的存在会影响公司经营效率，甚至可能威胁公司的生存。

代理成本可划分为三部分：委托人的监督成本、代理人的担保成本和剩余损失。

2．转换发行（exchange offers）答：转换发行是资本结构变更的一种形式，指以债券或优先股交换普通股，或相反，以普通股交换比优先股更高的要求权，从而达到调整杠杆率、调整资本风险的目的的资本结构变更形式。

如果公司认为其财务杠杆率过高，那么公司可以增发部分普通股，用以换回部分债券或优先股，以降低公司的财务负担。

但这种做法容易造成股权分散。

反之，若公司认为有必要通过提高财务杠杆率来提高股东权益的收益率水平，则可以增发债券或优先股，以换回部分流通在外的普通股。

3．市场索取权（marketed claims）答：市场索取权指可以在金融市场上买卖交易的财产索取权利，包括股东和债权人对公司财产的索取权。

谈到公司价值时，一般仅指市场性索取权的价值V M，而不包括非市场性索取权的价值V N。

市场性索取权的价值V M，通常会随资本结构的变化而变化，尤其是随负债权益比的变化而变化。

罗斯公司理财题库全集精修订

罗斯公司理财题库全集集团标准化工作小组 #Q8QGGQT-GX8G08Q8-GNQGJ8-MHHGN#Chapter 24Warrants and Convertibles Multiple Choice Questions1.A warrant gives the owner:A.the obligation to sell securities directly to the firm at a fixed price for a specified time.B.the right to purchase securities directly from the firm at a fixed price for a specified time.C.the obligation to purchase securities directly from the firm at a fixed price for a specified time.D.the right to sell securities directly to the firm at a fixed price for a specified time.E.None of the above.2.Warrants are most often issued in combination with:A.new publicly placed common stock.B.new privately placed common stock.C.new publicly placed debt.D.new privately placed debt.E.preferred stock.3.An "equity kicker" most often refers to a:A.bond with conversion privileges.B.preferred stock offering with conversion privileges.C.warrant.D.lettered common stock.E.None of the above.4.Warrants are similar to traded options except:A.only warrants have exercise prices.B.only warrants depend on changes in the underlying stock to determine value.C.warrants affect the number of shares outstanding.D.Both A and C.E.Both A and B.5.BrightView Windows issued warrants with an exercise price of $17. BrightView's common stock currently sells for $20 per share. The warrants are:A.in the money.B.out of the money.C.valuable.D.not very valuable.E.Both A and C.6.Warrants are similar to options, in that the value of the warrant is limited by:A.expiring worthless if the stock price is below the total warrant exercise price.B.the trading capabilities of the exchange used.C.the price of the underlying stock divided by the number of warrants needed to purchase a share.D.Both A and C.E.Both B and C.7.Which of the following would not describe the difference between warrants and call optionsA.Warrants are issued by firms whereas call options are issued by individuals.B.Call options have an exercise price whereas warrants do not.C.Exercising of warrants creates dilution whereas exercising call options does not.D.When call options are exercised existing shares trade hands whereas if warrants are exercised new stock must be issued.E.None of the above.8.Two major differences between a warrant and a call option are:A.warrants are contracts outside of the firm while options are within the firm.B.warrants have long maturities while options are usually short maturities.C.warrant exercise dilutes the value of equity while option exercise does not.D.Both A and C.E.Both B and C.9.Concerning warrants and call options, which of the following statements generally is correctA.The issue procedures for both are quite similar.B.When a call option is exercised, the firm must issue new stock.C.When a warrant is exercised, existing stock changes hands.D.Exercise of a call option does not affect share value, but warrant exercise does.E.None of the above is correct.10.Which of the following would harm the position of a warrant holderA.a 3 for 1 stock splitB.a large stock dividend of 20%C.a large cash dividendD.listing of the warrants on the NYSEE.None of the above would harm the warrant holders.11.The gain from exercising a warrant is similar to the gain from exercising a call option except:A.the gain on a warrant is greater by the fraction of warrant shares divided by total shares.B.the gain on a warrant is limited by the firm's value after being reduced by the debt of the firm.C.the gain on a warrant is decreased by the fraction of original shares divided by total post exercise shares.D.Both A and B.E.Both B and C.12.The exercise of warrants creates new shares which:A.increases the total number of shares but does not affect share value.B.increases the total number of shares which can reduce an individual share value.C.does not change the number of shares outstanding, similar to options.D.increases share value because cash is paid into the firm at the time of warrant exercise.E.None of the above.13.If a corporate security can be exchanged for a fixed number of shares of stock, the security is said to be:A.callable.B.convertible.C.protected.D.putable.E.None of the above.14.A convertible preferred stock is similar to a convertible bond except:A.the conversion ratio is fixed (given).B.the conversion price is fixed (given).C.the time to maturity is infinite.D.All of the above.E.None of the above.15.The holder of a $1,000 face value bond has the right to exchange the bond anytime before maturity for shares of stock priced at $50 per share. The $50 is called the:A.conversion price.B.stated price.C.exercise price.D.striking price.E.None of the above.16.Concerning convertible bonds, which of the following statements is not correctA.The value of a convertible bond will generally be greater than its straight bond value.B.The value of a convertible bond will generally be greater than its conversion value.C.The difference between the conversion value and the straight bond value is the conversion or option premium.D.The coupon rate on a nonconvertible bond will generally exceed the coupon rate on an otherwise identical convertible bond.E.All of the above are correct.17.Concerning convertible bonds, which of the following statements is not correctA.A convertible bond issue would generally have fewer restrictive covenants than an otherwise identical nonconvertible bond.B.Convertible bonds can be issued at a lower coupon compared with otherwise non-convertible bonds.C.If the value of a convertible bond exceeds the maximum of its straight bond value or its conversion value, the difference would be referred to as the option value.D.Since convertible bonds will be exchanged for common stock, convertible bonds are generally not callable.E.More than one of the above is incorrect.18.Concerning convertible bonds, which of the following statements is not correctA.With regard to security, most convertible bonds are secured by common stock ., they are collateral trust bonds).B.For most convertible bonds, the issuing firm can, under certain circumstances, effectively force bondholders to convert to common stock.C.When a convertible bond is called, the owner has the option of receiving cash or stock for the bond.D.All of the above are incorrect.E.All of the above are correct.19.A convertible bond has an option value which is equal to:A.the market value of the convertible bond minus the straight bond value.B.The market value of the convertible bond minus the conversion value.C.the market value of the convertible bond minus the conversion premium.D.the market value of the convertible bond minus the maximum of the straight bond value or conversion value.E.None of the above.20.A firm has experienced a significant increase in share value. In retrospect, which of the following securities would have been best to have been issued prior to the change in share valuemon stockB.Bond/warrant packageC.Convertible preferred stockD.Straight bondsE.Convertible bonds21.A firm has experienced a significant decrease in share value. In retrospect, which of the following securities would have been best to have been issued prior to the change in share valueA.Convertible bondsB.Convertible preferred stockC.Straight debtD.Indifferent between A and B.E.Indifferent between A, B, and C.22.Issuing convertible bonds or bonds with warrants is useful for a company of unknown risk because:A.the effects of risk are opposite on the two value components and tend to cancel each other out.B.if the firm is high risk, the option premium will be higher while the straight bond value is fixed.C.only risky companies issue these instruments.D.the equity value is dependent on current risks only, not the future risk at conversion.E.None of the above.23.Transfer or expropriation of wealth from bondholders to stockholders is less likely to occur when:A.subordinated straight debt is issued because there are other senior bondholders to protect them.B.convertible debt is issued because the equity component will reduce these agency costs when value is shared.C.convertible debt is issued because the holders can more readily sue when a high-risk project is undertaken.D.subordinated debt is issued because monitoring is much easier when subordinated straight debt is issued.E.None of the above.24.From the shareholder's point of view, the optimum time to call a convertible bond is when the bond's conversion value is:A.less than the call price, but greater than the face value.B.greater than the call price, but less than straight debt's value.C.equal to the face value.D.less than straight debt's value, but greater than the call price.E.None of the above.25.Based on empirical studies, firms tend to call convertible bonds when the conversion value is:A.less than the conversion price.B.greater than the straight bond value.C.greater than the call price.D.less than the face value.E.None of the above.26.Which of the following would not be a sensible explanation of why convertibles and warrants are issued if markets are efficientA.Cash flow from these securities best match cash flow of the firm.B.If the firm does well, convertible bonds will turn out to have been the better alternative versus issuing common stock.C.The securities are useful when it is costly to assess the risk of the issuing firm.D.The securities may resolve agency problems associated with raising money.E.All of the above are sensible explanations.27.BrightView Windows issued warrants with an exercise price of $17 for one share per warrant. On May 1, BrightView's common stock is at $20 per share. The lower and upper limits on the warrant value on May 1 are:A.$0 and $3B.$0 and $17C.$3 and $17D.$3 and $20E.$17 and $20Diamond Drill Inc. has 150,000 shares and 15,000 warrants outstanding. A warrant holder can purchase a new share of stock for five warrants and $ per warrant. The stock is currently selling for $27 per share.28.The holder of a $1,000 face value bond can exchange the bond any time for 25 shares of stock. The conversion ratio is:A.25.B.40.C.100.D.Depends on the current market price of the bond.E.None of the above.29.The holder of a $1,000 face value bond can exchange the bond any time for 25 shares of stock. The conversion price is:A.$25.B.$40.C.$100.D.Depends on the current market price of the bond.E.None of the above.30.If all warrants are exercised, what will your fraction of ownership be if you owned 20,000 shares originallyA.%B.%C.%D.%E.Without knowing the exercise price the percent can not be determined.31.If the warrants are all exercised immediately, what would be the market price of the stockA.$B.$C.$D.$E.$32.What would your gain per share be from exercising the warrants, assuming all are exercisedA.$ per shareB.$ per shareC.$ per shareD.$ per shareE.$ per share33.A firm has 100 shares of stock and 40 warrants outstanding. The warrants are about to expire, and all of them will be exercised. The market value of the firm's assets is $2,000, and the firm has no debt. Each warrant gives the owner the right to buy 2 shares at $15 per share. What is the price per share of the stockA.$B.$C.$D.$E.None of the above.The holders of Xenron Corporation's bond with a face value of $1,000 can exchange that bond for 35 shares of stock. The stock is selling for $.34.What is the conversion priceA.$B.$C.$D.$1,E.No conversion premium is given.35.What is the conversion premiumA.%B.%C.%D.%E.None of the above.36.What would the conversion price and conversion ratio be if Xenron had a 3 for 1 stock splitA.$; 75B.$; 105C.$; 25D.$; 35E.None of the above.37.What is the conversion value of the bondA.$25B.$40C.$770D.$1,000E.No conversion premium is given.The holders of Mikayla Corporation's bond with a face value of $1,000 can exchange that bond for 30 shares of stock. The stock is selling for $.38.What is the conversion priceA.$B.$C.$D.$1,E.No conversion premium is given.39.What is the conversion premiumA.%B.%C.%D.%E.None of the above.40.What would the conversion price and conversion ratio be if Mikayla had a 4 for 1 stock splitA.$; 75B.$; 120C.$; 125D.$; 135E.None of the above.41.What is the conversion value of the bondA.$25B.$40C.$750D.$1,000E.No conversion premium is given.42.A convertible bond has an 8% annual coupon and 15 years to maturity. The face value is $1,000 and the conversion ratio is 40. The stock currently sells for $ per share. Similar nonconvertible bonds are priced to yield 9%. The value of the convertible bond is at least:A.$.B.$.C.$1,.D.$1,.E.None of the above.43.A convertible bond is selling for $800. It has 10 years to maturity, a $1,000 face value, anda 10% coupon. Similar nonconvertible bonds are priced to yield 14%. The conversion price is $50 per share. The stock currently sells for $ per share. The conversion premium is:A.%.B.%.C.%.D.%.E.None of the above.Essay Questions44.A firm has 500 shares of stock and 100 warrants outstanding. The warrants are about to expire, and all of them will be exercised. The market value of the firm's assets is $25,000, and the market value of the debt is $8,000. Each warrant gives the owner the right to buy 5 shares at $25 per share. What is the value of a warrant45.A firm has 2,000 shares of stock and 200 warrants outstanding. The warrants are about to expire, and all of them will be exercised. The market value of the firm's assets is $14,000, and the firm has no debt. Each warrant gives the owner the right to buy 1 share at $5. What is the warrant's effective exercise price46.Kida Consultants has 100,000 shares of stock outstanding. The firm's value net of debt is $2 million. Kida has 1,000 warrants outstanding with an exercise price of $18, where each warrant entitles the holder to purchase one share of stock. Calculate the gain from exercising a single warrant.47.Kida Consultants currently has 300,000 shares of common outstanding. Firm value net of debt is $3,900,000. Kida has warrants outstanding with an exercise price of $10. How many warrants must the firm have issued if the gain from exercising a single warrant is $an 8% coupon paid semi-annually. Similar non-convertible bonds are priced to yield %. The conversion ratio is 20. The stock currently sells for $ per share. Calculate the convertible bond's option value.49.A convertible bond is selling for $1,. It has 10 years to maturity, a $1,000 face value, and a 10% coupon paid semi-annually. Similar non-convertible bonds are priced to yield 8%. The conversion ratio is 40. The stock currently sells for $ per share. Calculate the convertible bond's option value.50.A bond/warrant package is priced to sell at a face value of $1,000. Each bond comes with 50 detachable warrants. A warrant gives the owner the right to buy 1 share of stock at $20 per share. The value of a warrant has been estimated at $2. The bonds mature in 20 years. Similar bonds without warrants yield 10%. What is the bond's annual coupona 10% coupon paid semi-annually. Similar nonconvertible bonds are priced to yield 14%. The conversion price is $50 per share. The stock currently sells for $ per share. Determine the bond's option premium.52.Explain why there is neither a "Free" nor "Expensive Lunch" when convertible bonds are issued53.Illustrate and explain how a convertible bond value is based on both debt and equity value. What is the option value54.Why are warrants and convertibles issuedChapter 24 Warrants and Convertibles Answer KeyMultiple Choice Questions1.A warrant gives the owner:A.the obligation to sell securities directly to the firm at a fixed price for a specified time.B.the right to purchase securities directly from the firm at a fixed price for a specified time.C.the obligation to purchase securities directly from the firm at a fixed price for a specified time.D.the right to sell securities directly to the firm at a fixed price for a specified time.E.None of the above.Difficulty level: EasyTopic: WARRANTType: DEFINITIONS2.Warrants are most often issued in combination with:A.new publicly placed common stock.B.new privately placed common stock.C.new publicly placed debt.D.new privately placed debt.E.preferred stock.Difficulty level: EasyTopic: WARRANTType: DEFINITIONS3.An "equity kicker" most often refers to a:A.bond with conversion privileges.B.preferred stock offering with conversion privileges.C.warrant.D.lettered common stock.E.None of the above.Difficulty level: EasyTopic: WARRANTType: DEFINITIONS4.Warrants are similar to traded options except:A.only warrants have exercise prices.B.only warrants depend on changes in the underlying stock to determine value.C.warrants affect the number of shares outstanding.D.Both A and C.E.Both A and B.Difficulty level: MediumTopic: WARRANTType: DEFINITIONS5.BrightView Windows issued warrants with an exercise price of $17. BrightView's common stock currently sells for $20 per share. The warrants are:A.in the money.B.out of the money.C.valuable.D.not very valuable.E.Both A and C.Difficulty level: MediumTopic: VALUE OF WARRANTSType: DEFINITIONS6.Warrants are similar to options, in that the value of the warrant is limited by:A.expiring worthless if the stock price is below the total warrant exercise price.B.the trading capabilities of the exchange used.C.the price of the underlying stock divided by the number of warrants needed to purchase a share.D.Both A and C.E.Both B and C.Difficulty level: MediumTopic: VALUE OF WARRANTType: CONCEPTS7.Which of the following would not describe the difference between warrants and call optionsA.Warrants are issued by firms whereas call options are issued by individuals.B.Call options have an exercise price whereas warrants do not.C.Exercising of warrants creates dilution whereas exercising call options does not.D.When call options are exercised existing shares trade hands whereas if warrants are exercised new stock must be issued.E.None of the above.Difficulty level: EasyTopic: WARRANTS AND CALL OPTIONSType: CONCEPTS8.Two major differences between a warrant and a call option are:A.warrants are contracts outside of the firm while options are within the firm.B.warrants have long maturities while options are usually short maturities.C.warrant exercise dilutes the value of equity while option exercise does not.D.Both A and C.E.Both B and C.Difficulty level: MediumTopic: WARRANTS AND CALL OPTIONSType: CONCEPTS9.Concerning warrants and call options, which of the following statements generally is correctA.The issue procedures for both are quite similar.B.When a call option is exercised, the firm must issue new stock.C.When a warrant is exercised, existing stock changes hands.D.Exercise of a call option does not affect share value, but warrant exercise does.E.None of the above is correct.Difficulty level: MediumTopic: WARRANTS AND CALL OPTIONSType: CONCEPTS10.Which of the following would harm the position of a warrant holderA.a 3 for 1 stock splitB.a large stock dividend of 20%C.a large cash dividendD.listing of the warrants on the NYSEE.None of the above would harm the warrant holders.Difficulty level: ChallengeTopic: WARRANTS AND DIVIDENDSType: CONCEPTS11.The gain from exercising a warrant is similar to the gain from exercising a call option except:A.the gain on a warrant is greater by the fraction of warrant shares divided by total shares.B.the gain on a warrant is limited by the firm's value after being reduced by the debt of the firm.C.the gain on a warrant is decreased by the fraction of original shares divided by total post exercise shares.D.Both A and B.E.Both B and C.Difficulty level: ChallengeTopic: WARRANTS AND CALL OPTIONSType: CONCEPTS12.The exercise of warrants creates new shares which:A.increases the total number of shares but does not affect share value.B.increases the total number of shares which can reduce an individual share value.C.does not change the number of shares outstanding, similar to options.D.increases share value because cash is paid into the firm at the time of warrant exercise.E.None of the above.Difficulty level: EasyTopic: EXERCISE OF WARRANTSType: CONCEPTS13.If a corporate security can be exchanged for a fixed number of shares of stock, the security is said to be:A.callable.B.convertible.C.protected.D.putable.E.None of the above.Difficulty level: EasyTopic: CONVERTIBLESType: CONCEPTS14.A convertible preferred stock is similar to a convertible bond except:A.the conversion ratio is fixed (given).B.the conversion price is fixed (given).C.the time to maturity is infinite.D.All of the above.E.None of the above.Difficulty level: EasyTopic: CONVERTIBLESType: CONCEPTS15.The holder of a $1,000 face value bond has the right to exchange the bond anytime before maturity for shares of stock priced at $50 per share. The $50 is called the:A.conversion price.B.stated price.C.exercise price.D.striking price.E.None of the above.Difficulty level: EasyTopic: CONVERSION PRICEType: CONCEPTS16.Concerning convertible bonds, which of the following statements is not correctA.The value of a convertible bond will generally be greater than its straight bond value.B.The value of a convertible bond will generally be greater than its conversion value.C.The difference between the conversion value and the straight bond value is the conversion or option premium.D.The coupon rate on a nonconvertible bond will generally exceed the coupon rate on an otherwise identical convertible bond.E.All of the above are correct.Difficulty level: MediumTopic: CONVERTIBLE BONDSType: CONCEPTS17.Concerning convertible bonds, which of the following statements is not correctA.A convertible bond issue would generally have fewer restrictive covenants than an otherwise identical nonconvertible bond.B.Convertible bonds can be issued at a lower coupon compared with otherwise non-convertible bonds.C.If the value of a convertible bond exceeds the maximum of its straight bond value or its conversion value, the difference would be referred to as the option value.D.Since convertible bonds will be exchanged for common stock, convertible bonds are generally not callable.E.More than one of the above is incorrect.Difficulty level: MediumTopic: CONVERTIBLE BONDSType: CONCEPTS18.Concerning convertible bonds, which of the following statements is not correctA.With regard to security, most convertible bonds are secured by common stock ., they are collateral trust bonds).B.For most convertible bonds, the issuing firm can, under certain circumstances, effectively force bondholders to convert to common stock.C.When a convertible bond is called, the owner has the option of receiving cash or stock for the bond.D.All of the above are incorrect.E.All of the above are correct.Difficulty level: MediumTopic: CONVERTIBLE BONDSType: CONCEPTS19.A convertible bond has an option value which is equal to:A.the market value of the convertible bond minus the straight bond value.B.The market value of the convertible bond minus the conversion value.C.the market value of the convertible bond minus the conversion premium.D.the market value of the convertible bond minus the maximum of the straight bond value or conversion value.E.None of the above.Difficulty level: MediumTopic: CONVERTIBLE BONDSType: CONCEPTS20.A firm has experienced a significant increase in share value. In retrospect, which of the following securities would have been best to have been issued prior to the change in share valuemon stockB.Bond/warrant packageC.Convertible preferred stockD.Straight bondsE.Convertible bondsDifficulty level: MediumTopic: STRAIGHT BONDS AND SHARE VALUEType: CONCEPTS21.A firm has experienced a significant decrease in share value. In retrospect, which of the following securities would have been best to have been issued prior to the change in share valueA.Convertible bondsB.Convertible preferred stockC.Straight debtD.Indifferent between A and B.E.Indifferent between A, B, and C.Difficulty level: MediumTopic: CONVERTIBLE BONDS AND SHARE VALUEType: CONCEPTS22.Issuing convertible bonds or bonds with warrants is useful for a company of unknown risk because:A.the effects of risk are opposite on the two value components and tend to cancel each other out.B.if the firm is high risk, the option premium will be higher while the straight bond value is fixed.C.only risky companies issue these instruments.D.the equity value is dependent on current risks only, not the future risk at conversion.E.None of the above.Difficulty level: ChallengeTopic: CONVERTIBLES AND RISKType: CONCEPTS23.Transfer or expropriation of wealth from bondholders to stockholders is less likely to occur when:A.subordinated straight debt is issued because there are other senior bondholders to protect them.B.convertible debt is issued because the equity component will reduce these agency costs when value is shared.C.convertible debt is issued because the holders can more readily sue when a high-risk project is undertaken.D.subordinated debt is issued because monitoring is much easier when subordinated straight debt is issued.E.None of the above.Difficulty level: ChallengeTopic: CONVERTIBLE DEBTType: CONCEPTS24.From the shareholder's point of view, the optimum time to call a convertible bond is when the bond's conversion value is:A.less than the call price, but greater than the face value.B.greater than the call price, but less than straight debt's value.C.equal to the face value.D.less than straight debt's value, but greater than the call price.E.None of the above.Difficulty level: MediumTopic: TIMING OF CONVERSIONType: CONCEPTS25.Based on empirical studies, firms tend to call convertible bonds when the conversion value is:A.less than the conversion price.B.greater than the straight bond value.C.greater than the call price.D.less than the face value.E.None of the above.Difficulty level: MediumTopic: EMPIRICAL RESEARCH - CALLING CONVERTIBLESType: CONCEPTS26.Which of the following would not be a sensible explanation of why convertibles and warrants are issued if markets are efficientA.Cash flow from these securities best match cash flow of the firm.B.If the firm does well, convertible bonds will turn out to have been the better alternative versus issuing common stock.C.The securities are useful when it is costly to assess the risk of the issuing firm.D.The securities may resolve agency problems associated with raising money.E.All of the above are sensible explanations.Difficulty level: MediumTopic: MARKET EFFICIENCY AND CONVERTIBLESType: CONCEPTS27.BrightView Windows issued warrants with an exercise price of $17 for one share per warrant. On May 1, BrightView's common stock is at $20 per share. The lower and upper limits on the warrant value on May 1 are:A.$0 and $3B.$0 and $17C.$3 and $17D.$3 and $20E.$17 and $20(Price - Exercise)/# Required = ($20 - $17)/1 = $3Difficulty level: MediumTopic: UPPER AND LOWER LIMITSType: PROBLEMSDiamond Drill Inc. has 150,000 shares and 15,000 warrants outstanding. A warrant holder can purchase a new share of stock for five warrants and $ per warrant. The stock is currently selling for $27 per share.。

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练习6解答
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Choose project A because it has a higher IRR than project B. The difference in scale was ignored. Project B has a substantially larger initial investment than project A has. Thus, the simple IRR calculation may not lead to the best decision.
练习3解答
P = Div / r = 4 / 0.14 = 28.57 g = (0.25) (0.4)= 0.1 NPVGO = [(Investment + Return / r) / (r – g)] / (1+r)2 = [(-1 + 0.40 / .14) / (0.14 – 0.1)] / (1.14)2 = 35.73 P = PV(EPS) + NPVGO = 28.57 + 35.73 = 64.30
练习2解答
• （1）摇钱树的价值：PV = C1 / r= $100,000,000 / 0.15= $666,666,666.67 • 每股股票价格= $666,666,666.67 / 20,000,000= $33.33 • （2）NPVGO =C0 + C1 +[C2 / r] / (1+r)T • =-$15,000,000 -$5,000,000 / 1.15 + [$10,000,000 / 0.15] / (1.15) • =$38,623,188.41 • （3）每股股票价格= （1）+ NPVGO / (股数) • = $33.33 + $38,623,188.41 / 20,000,000 • = $35.26
Suppose you observe that a three-year, default-free security with an annual coupon rate of 10% and a face value of $1000 has a price today of $1183.50. Is there an arbitrage opportunity? If so, show specifically how you would take advantage of this opportunity. If not, why not?
练习6解答
• For investing-type projects, accept the larger project when the incremental rate of return is greater than the discount rate. Therefore, choose project B since the incremental IRR (19.1%) is greater than the 15 percent discount rate.
Solve for the IRR. IRR(Project A) = C0 + C1 / (1+IRR) + C2 / (1+IRR)2 0 = -$5,000 + $3,500 / (1+IRR) + $3,500 / (1+IRR)2 IRR = 0.2569 The IRR of project A is 25.69%. IRR(Project B) = C0 + C1 / (1+IRR) + C2 / (1+IRR)2 0 = -$100,000 + $65,000 / (1+IRR) + $65,000 / (1+IRR)2 IRR = 0.1943 The IRR of project B is 19.43%.
练习1解答
a. This security has the same cash flows as a portfolio of one share of B1 and one share of B2. Therefore, its noarbitrage price is 94 + 85 = $179. b. This security has the same cash flows as a portfolio of one share of B1 and five shares of B2. Therefore, its noarbitrage price is 94 + 5 × 85 = $519 c. There is an arbitrage opportunity because the noarbitrage price should be $132 (94 / 2 + 85). One should buy two shares of the security at $130/share and sell one share of B1 and two shares of B2. Total profit would be $4 (94 + 85 × 2 – 130 × 2).
The price of the coupon bond is too low, so there is an arbitrage opportunity. To take advantage of it:
课堂练习6
• • • • • 考虑两个互斥投资项目，现金流如下：年份项目A 项目B 0 -5000 -100000 1 3500 65000 2 3500 65000
练习6解答
• Calculate the incremental IRR. The incremental IRR is the IRR on the incremental investment from choosing the larger project instead of the smaller project. The incremental cash flows are the differences between the cash flows of project B and those of project A. Always subtract the project with the smaller initial cash outflow from the project with the larger initial cash outflow. In this way, the initial incremental cash flow will be negative.
练习6解答
• B–A： • -$95,000 $61,500 $61,500 • Next, find the IRR of those incremental cash flows. • IRR(B – A) = C0 + C1 / (1+IRR) + C2 / (1+IRR)2 • 0 = -$95,000 + $61,500 / (1+IRR) + $61,500 / (1+IRR)2 • IRR = 0.191
课堂练习3
某公司如果不从事新的投资项目，它每年的每股盈利为4元，在此情形下，公司把所有的盈利当作股利分发出去（假设第一笔股利刚好在一年后收到）。在另一种情形中，假设距今三年后的每一年，公司将其盈利的25%投资于新的项目，每一个投资项目将在一年后获得40%的收益率（直至永远）。设贴现率为14%，分别求公司在不从事新的投资项目和从事新的投资项目时的股票价格。
练习4解答
• Using dividend model, price of a stock can be written as P = D/(k – g)
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Or it can be written as P = E*PO/(k – g) where PO is the dividend payout ratio and denotes multiplication Rearranging terms we get, P/E = PO/(k – g) Substituting values 12 = .4/(k – g) → 1/(k – g) = 12/0.4 → 1/(k – g) = 30 P = E*PO/(k – g) Now substituting P = $32, PO = 40%, 1/(k – g) = 30 we get 32 = E*.4*30 → E = 8/3 If the dividend payout ratio were 60% P = E*PO/(k – g) P = (8/3)*.6*30 = $48
课堂练习1
Consider two securities that pay risk-free cash flows over the next two years and that have the current market prices shown here:
a. What is the no-arbitrage price of a security that pays cash flows of $100 in one year and $100 in two years? b. What is the no-arbitrage price of a security that pays cash flows of $100 in one year and $500 in two years? c. Suppose a security with cash flows of $50 in one year and $100 in two years is trading for a price of $130. What arbitrage opportunity is available?

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