公司理财精要版原书第12版课后习题答案FCF 12th edition Chapter 18
公司理财精要版原书第12版习题库答案Ross12e_Chapter22_TB_AnswerKey
Fundamentals of Corporate Finance, 12e (Ross)Chapter 22 Behavioral Finance: Implications for Financial Management1) Nadine made a business decision that turned out badly. In reflecting upon her decision, she decided it was a reasoning error that led to the faulty decision. Which one of the following areas of study best applies to this situation?A) Corporate ethicsB) Financial statement analysisC) Managerial financeD) Debt managementE) Behavioral financeAnswer: EDifficulty: 1 EasyTopic: Behavioral financeLearning Objective: 22-01 Describe how behaviors such as overconfidence, overoptimism, and confirmation bias can affect decision making.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation2) Peter has successfully managed the finances of A.D. Leadbetter in a manner that has yielded abnormally high returns. Due to this success, Peter has decided to publish a newsletter for financial executives so that he can share his superior financial wisdom with others. There is a very real probability that Peter has which one of the following characteristics?A) Gambler's fallacyB) Frame dependenceC) OverconfidenceD) Representativeness heuristicE) Sentiment-based risk attitudesAnswer: CDifficulty: 1 EasyTopic: BiasesLearning Objective: 22-01 Describe how behaviors such as overconfidence, overoptimism, and confirmation bias can affect decision making.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation3) Jeremy believes he excels at picking stock winners and thus trades frequently. Which characteristic does he most likely represent?A) Confirmation biasB) Frame dependenceC) OverconfidenceD) Representativeness heuristicE) Break-even effectAnswer: CDifficulty: 1 EasyTopic: BiasesLearning Objective: 22-01 Describe how behaviors such as overconfidence, overoptimism, and confirmation bias can affect decision making.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation4) Anytime Ted analyzes a proposed project, he always assigns a much higher probability of success to the project than is warranted by the information he has gathered. Ted suffers from which one of the following?A) Frame dependenceB) Mental accountingC) Endowment effectD) Confirmation biasE) OveroptimismAnswer: EDifficulty: 1 EasyTopic: BiasesLearning Objective: 22-01 Describe how behaviors such as overconfidence, overoptimism, and confirmation bias can affect decision making.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation5) The tendency for a decision maker to search for reassurance that a recent decision he or she made was a good decision represents which one of the following characteristics?A) OverconfidenceB) OveroptimismC) Affect heuristicD) Confirmation biasE) Representativeness heuristicAnswer: DDifficulty: 1 EasyTopic: BiasesLearning Objective: 22-01 Describe how behaviors such as overconfidence, overoptimism, and confirmation bias can affect decision making.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation6) Which one of the following best illustrates an error which you, as a project manager, might make due to confirmation bias?A) Overestimating the best outcome expected from a project while underestimating the possibility of a less favorable outcomeB) Assuming that a new project will be profitable since similar projects in the past were successfulC) Assuming that your expectations of the future outcome from a project are more accurate than the expectations of others within your organizationD) Listening to the advice of subordinates with whom you agree while ignoring the advice of subordinates with whom you tend to disagreeE) Downplaying the cost of future failure of an existing project since the project has already paid for itselfAnswer: DDifficulty: 1 EasyTopic: BiasesLearning Objective: 22-01 Describe how behaviors such as overconfidence, overoptimism, and confirmation bias can affect decision making.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation7) Assume you are an overconfident manager. You are most apt to do which one of the following more so than you would if you were not overconfident?A) Research a project more thoroughly before committing funds to commence itB) Accept risky projects that turn out to be less profitable than you expectedC) Wait until new technology proves its worth before incorporating it into your firm's operationsD) Avoid mergers and acquisitionsE) Invest excess company cash more conservatively than your peers at other firmsAnswer: BDifficulty: 1 EasyTopic: BiasesLearning Objective: 22-01 Describe how behaviors such as overconfidence, overoptimism, and confirmation bias can affect decision making.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation8) Marzella Corp. is analyzing a project that involves expanding the firm into a new product line. The project's financial projections will tend to have which one of the following characteristics if the person compiling those projections suffers from overoptimism?A) Overestimated construction costsB) Overestimated expensesC) Overestimated net present valuesD) Underestimated profitsE) Underestimated sales estimatesAnswer: CDifficulty: 1 EasyTopic: BiasesLearning Objective: 22-01 Describe how behaviors such as overconfidence, overoptimism, and confirmation bias can affect decision making.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation9) Alice believes she can accurately forecast the future and makes business decisions based on this belief. Which characteristics does this belief represent?A) OverconfidenceB) OveroptimismC) Affect heuristicD) Confirmation biasE) Representativeness heuristicAnswer: ADifficulty: 1 EasyTopic: BiasesLearning Objective: 22-01 Describe how behaviors such as overconfidence, overoptimism, and confirmation bias can affect decision making.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation10) Kate tends to hold onto assets that have lost value in the hope that their values will increase in the future. Kate illustrates which one of the following?A) Frame dependenceB) Self-attribution biasC) Gambler's fallacyD) Break-even effectE) Regret aversionAnswer: DDifficulty: 1 EasyTopic: Framing effectsLearning Objective: 22-02 Demonstrate how framing effects can result in inconsistent and/or incorrect decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation11) Which one of the following refers to the fact that an individual may reply differently if a question is asked in an equivalent but different manner?A) Loss aversionB) Gambler's fallacyC) Frame dependenceD) OverconfidenceE) Format referenceAnswer: CDifficulty: 1 EasyTopic: Framing effectsLearning Objective: 22-02 Demonstrate how framing effects can result in inconsistent and/or incorrect decisions.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation12) Aivree wants to accumulate great wealth but she invests all of her funds in U.S. Treasury bills because she wants to avoid the potential losses she knows can occur in the stock markets. Aivree best illustrates which one of these characteristics?A) Loss aversionB) Gambler's fallacyC) Disposition effectD) Law of small numbersE) Mental accountingAnswer: ADifficulty: 1 EasyTopic: Framing effectsLearning Objective: 22-02 Demonstrate how framing effects can result in inconsistent and/or incorrect decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation13) Consumer Marketing just conducted a two-phase survey. In the first phase, the survey questions were worded such that the answers tended to sound positive. In the second phase, the survey questions were reworded so the answers tended to convey a negative feeling. Both sets of survey questions should have resulted in similar results as the information solicited was essentially identical. However, the survey results varied significantly. This survey best illustrates which one of the following?A) Mental accountingB) OverconfidenceC) Self-attribution biasD) Confirmation biasE) Frame dependenceAnswer: EDifficulty: 1 EasyTopic: Framing effectsLearning Objective: 22-02 Demonstrate how framing effects can result in inconsistent and/or incorrect decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation14) Recently, a neighbor you have known for years won a lottery and received a $250,000 prize. This neighbor decided to invest all of his winnings in a new business venture that he knew only had a 5 percent chance of success. Previous to this, the neighbor had always been ultra conservative with his money and had refused to invest in this business venture as recently as last week. Which one of the following behaviors most applies to your neighbor's decision to invest in this business venture now?A) Disposition effectB) Affect heuristicC) Gambler's fallacyD) House moneyE) Get-evenitisAnswer: DDifficulty: 1 EasyTopic: Framing effectsLearning Objective: 22-02 Demonstrate how framing effects can result in inconsistent and/or incorrect decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation15) The tendency to sell winners and hold losers is known as the:A) representativeness heuristic.B) disposition effect.C) house money effect.D) self-attribution bias.E) affect heuristic.Answer: BDifficulty: 1 EasyTopic: Framing effectsLearning Objective: 22-02 Demonstrate how framing effects can result in inconsistent and/or incorrect decisions.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation16) Steve purchased a stock last year for $34 a share. The stock increased in value to $36 a share before declining to its current value of $30. Steve has decided to sell the stock, but only if he can receive $34 a share or better. Steve is primarily suffering from which one of the following behavioral conditions?A) Representativeness heuristicB) House moneyC) Loss aversionD) RandomnessE) Myopic loss aversionAnswer: CDifficulty: 1 EasyTopic: Framing effectsLearning Objective: 22-02 Demonstrate how framing effects can result in inconsistent and/or incorrect decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation17) Over the past six months, you have watched as your parent's retirement savings have declined in value by 25 percent due to a severe financial market downturn. As a result, you have decided that you will never invest in stocks for your own retirement but will instead keep all of your money in an insured bank account. Which behavioral characteristic have you acquired as a result of the market downturn?A) Myopic loss aversionB) Get-evenitisC) Self-attribution biasD) Mental accountingE) Regret aversionAnswer: ADifficulty: 1 EasyTopic: Framing effectsLearning Objective: 22-02 Demonstrate how framing effects can result in inconsistent and/or incorrect decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation18) Ramon opened a combination laundry and dry cleaning establishment three years ago that is quite successful. He has considered expanding this business by opening another location but keeps putting off that decision for fear that the second location will not be a success. Ramon is currently displaying which one of the following behavioral characteristics?A) Self-attribution biasB) OverconfidenceC) Regret aversionD) House money effectE) Frame dependenceAnswer: CDifficulty: 1 EasyTopic: Framing effectsLearning Objective: 22-02 Demonstrate how framing effects can result in inconsistent and/or incorrect decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation19) Phyllis is planning for her retirement in 15 years. She currently lives comfortably on $38,000a year given that she is debt-free. Based on her family history she only expects to live ten years after she retires. Thus, she computes her retirement need as $38,000 a year for ten years. Which one of the following behaviors applies to Phyllis?A) Regret aversionB) Money illusionC) Self-attribution biasD) Endowment effectE) Myopic loss aversionAnswer: BDifficulty: 1 EasyTopic: Framing effectsLearning Objective: 22-02 Demonstrate how framing effects can result in inconsistent and/or incorrect decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation20) Kate is attempting to sell her house for $260,000. Fred lives across the street in an identical house. Fred recently stated to his wife that Kate's house is probably worth only $250,000 but that once she sells her house, he would like to put their house on the market at $285,000 and then move into a condominium. Which one of the following behaviors applies to Fred?A) Myopic loss aversionB) House money effectC) Money illusionD) Self-attribution biasE) Endowment effectAnswer: EDifficulty: 1 EasyTopic: Framing effectsLearning Objective: 22-02 Demonstrate how framing effects can result in inconsistent and/or incorrect decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation21) You have a tendency to take credit for the decisions you make that have good outcomes even when those outcomes are out of your control. On the other hand, you blame bad luck for your decisions that turn out badly. Which of these terms applies to you?A) Myopic loss aversionB) House money effectC) Money illusionD) Self-attribution biasE) Endowment effectAnswer: DDifficulty: 1 EasyTopic: Framing effectsLearning Objective: 22-02 Demonstrate how framing effects can result in inconsistent and/or incorrect decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation22) A tendency to be overly conservative when faced with new information is referred to as:A) anchoring and adjustment.B) heuristics.C) self-attribution.D) loss aversion.E) regret aversion.Answer: ADifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation23) Bill feels that he possesses a good dose of "street smarts." Thus, he makes his business decisions based on how a project feels to him rather than taking the time to financially analyze a project. This type of behavior is referred to as:A) overconfidence.B) endowment effect.C) money illusion.D) affect heuristic.E) sentiment-based risk.Answer: DDifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation24) Which term refers to the tendency to shy away from the unknown?A) Aversion to ambiguityB) Clustering illusionC) Anchoring and adjustmentD) Recency biasE) Availability biasAnswer: ADifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation25) You recently overheard your boss telling someone that if he'd actually crunched some numbers and done some analysis instead of just going with his instincts, he never would have opened the new store in Centre City. Which one of the following caused your boss to make a bad decision?A) Regret aversionB) Endowment effectC) Money illusionD) Affect heuristicE) Representativeness heuristicAnswer: DDifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation26) Roger's Meat Market is a chain of retail stores that limits its sales to fresh-cut meats. The stores have been very profitable in northern cities. However, when two stores were opened in the south, both lost money and had to be closed. Roger, the owner, has now concluded that no southern-based store should be opened as it would not be profitable. Which one of the following applies to Roger?A) Confirmation biasB) Endowment effectC) Money illusionD) Affect heuristicE) Representativeness heuristicAnswer: EDifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation27) Up until three years ago, A.C. Dime opened an average of ten new retail stores a year. One of every ten new stores had to be closed within two years due to poor sales. This 90 percent success ratio was fairly steady for over 30 years. Starting three years ago, the firm has opened 40 new stores and every one had significant profits within six months. Management believes their recent success is not just a random event and that all future stores will be profitable. Thus, the managers have decided to open a minimum of 15 new stores each year. The managers are suffering from:A) arbitrage limitations.B) anchoring and adjustment.C) aversion to ambiguity.D) the clustering illusion.E) myopic aversion.Answer: DDifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation28) You are employed as a commission-based sales clerk for a cosmetics retail store. You know that, on average, exactly 50 percent of the customers that enter your store will make at least one purchase. Thus far this morning, you have waited on eight customers without making a single sale. You are convinced that the next customer you wait on will buy something. This belief is known as:A) aversion to ambiguity.B) the law of small numbers.C) anchoring and adjusting.D) gambler's fallacy.E) false consensus.Answer: DDifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation29) The last six times you purchased a stock you earned high returns within one year. Thus, you believe you will have the same result with your next stock purchase. This is an example of which one of the following?A) Recency biasB) Anchoring and adjustmentC) Frame dependenceD) Aversion to ambiguityE) Clustering illusionAnswer: ADifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation30) You started an online business two weeks ago. Thus far, you have averaged ten sales a day, which is one sale for every five hits. You are now considering giving up your day job and becoming a full-time online retailer. You have calculated the amount of income you can earn based on ten sales a day and know that level of income would support you in a comfortable fashion. The belief that you will have ten sales per day if this becomes your full-time occupation is based on which one of the following?A) Mental accountingB) Anchoring and adjustmentC) Law of small numbersD) Bubble and crash theoryE) Confirmation biasAnswer: CDifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation31) You are a hard-charging manager who doesn't really like to sit at a desk for too long. You prefer to gather information quickly, make a decision, and move on to the next item on your agenda. Which one of the following applies to you?A) Availability biasB) Arbitrage limitsC) Law of small numbersD) Representativeness heuristicE) Regret aversionAnswer: ADifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation32) Your friends are all investing in a start-up company. You, on the other hand, refuse to invest in the company because you don't know the odds of it becoming successful. Which behavioral characteristic are you displaying?A) Aversion to ambiguityB) Recency biasC) Sentiment-based risk aversionD) Clustering illusionE) Money illusionAnswer: ADifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation33) You are the manager of a retail store. You believe the economy is in a recession and that sales for the month will be unusually slow. Since you have complete discretion over the pricing at your location, you decide to have a storewide sale and offer ten percent off all merchandise for a three-day period. You don't expect your superiors to criticize this decision as you believe they, along with the majority of the other store managers, feel the same way about the economy as you do. Which one of the following applies to you?A) Recency biasB) Law of small numbersC) Gambler's fallacyD) False consensusE) Money illusionAnswer: DDifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation34) The last two promotions within a firm involved individuals who completed the same advanced managerial program. As a result, the company president has stipulated that all future management hires must be graduates of that program. This behavior is typical of someone who has which one of the following characteristics?A) Endowment effectB) Framing effectC) Representativeness heuristicD) Narrow framingE) Affect heuristicAnswer: CDifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation35) Which term refers to the reliance on stereotypes or limited samples to form opinions about an entire class?A) Clustering illusionB) Law of small numbersC) Representativeness heuristicD) False consensusE) Recency biasAnswer: CDifficulty: 1 EasyTopic: HeuristicsLearning Objective: 22-03 Show how the use of heuristics can lead to suboptimal financial decisions.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation36) It is believed by some individuals that, in an efficient market, the actions of traders who constantly buy and sell on any perceived market mispricing will in effect cause market prices to correctly reflect asset values. A person who believes that the actions of these traders will not result in correctly valued prices are most apt to believe in which one of the following?A) Gambler's fallacyB) Limits to arbitrageC) Availability biasD) False consensusE) Clustering illusionAnswer: BDifficulty: 1 EasyTopic: Arbitrage and its limitsLearning Objective: 22-04 Define the shortcomings and limitations to market efficiency from the behavioral finance view.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation37) Which one of the following is an investment risk that investors face in addition to firm-based risk and market-based risk?A) Management-related riskB) Inflation riskC) Supply chain riskD) Interest rate riskE) Sentiment-based riskAnswer: EDifficulty: 1 EasyTopic: Behavioral financeLearning Objective: 22-04 Define the shortcomings and limitations to market efficiency from the behavioral finance view.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation38) Which word best describes the stock market during the month of October 1987?A) CrashB) CircleC) BubbleD) LimitE) FlatAnswer: ADifficulty: 1 EasyTopic: Historical performanceLearning Objective: 22-04 Define the shortcomings and limitations to market efficiency from the behavioral finance view.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation39) All of the following create limits to arbitrage except:A) firm-specific risk.B) noise traders.C) thinly traded securities.D) rational traders.E) implementation costs.Answer: DDifficulty: 1 EasyTopic: Arbitrage and its limitsLearning Objective: 22-04 Define the shortcomings and limitations to market efficiency from the behavioral finance view.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation40) AB Industries is an all-equity firm that has $10 per share in cash and a book value per share of $12. At which one of the following market prices would you know with absolute certainty that the stock was mispriced?A) $9B) $10C) $11D) $12E) $13Answer: ADifficulty: 1 EasyTopic: Market efficiencyLearning Objective: 22-04 Define the shortcomings and limitations to market efficiency from the behavioral finance view.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation41) Approximately what percent of its total value did the stock market lose on "Black Monday"?A) 19B) 10C) 23D) 30E) 38Answer: CDifficulty: 1 EasyTopic: Historical performanceLearning Objective: 22-04 Define the shortcomings and limitations to market efficiency from the behavioral finance view.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation42) Which one of the following statements related to market crashes is correct?A) Financial market crashes are unique to the United States.B) A market crash tends to occur within a week but have effects that last many years.C) Once the market finally crashed in 1929, stock prices began a long period of steady increases.D) The market crash of 1987 occurred on a day when trading volume was light indicating there were a limited number of irrational investors involved.E) Actions in Washington, D.C., may have helped contribute to the market crash in 1929 but not to the 1987 crash.Answer: BDifficulty: 1 EasyTopic: Historical performanceLearning Objective: 22-04 Define the shortcomings and limitations to market efficiency from the behavioral finance view.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation。
公司理财精要版原书第12版习题库答案Ross12e_Chapter03_TB
Fundamentals of Corporate Finance, 12e (Ross)Chapter 3 Working with Financial Statements1) Which one of the following is a source of cash for a tax-exempt firm?A) Increase in accounts receivableB) Increase in depreciationC) Decrease in accounts payableD) Increase in common stockE) Increase in inventory2) Which one of the following is a use of cash?A) Decrease in fixed assetsB) Decrease in inventoryC) Increase in long-term debtD) Decrease in accounts receivablesE) Decrease in accounts payable3) Which one of the following is a source of cash?A) Repurchase of common stockB) Acquisition of debtC) Purchase of inventoryD) Payment to a supplierE) Granting credit to a customer4) Which one of the following is a source of cash?A) Increase in accounts receivableB) Decrease in common stockC) Increase in fixed assetsD) Decrease in accounts payableE) Decrease in inventory5) On the statement of cash flows, which one of the following is considered a financing activity?A) Increase in inventoryB) Decrease in accounts payableC) Increase in net working capitalD) Dividends paidE) Decrease in fixed assets6) On the statement of cash flows, which one of the following is considered an operating activity?A) Increase in net fixed assetsB) Decrease in accounts payableC) Purchase of equipmentD) Dividends paidE) Repayment of long-term debt7) According to the statement of cash flows, an increase in inventory will ________ the cash flow from ________ activities.A) increase; operatingB) decrease; financingC) decrease; operatingD) increase; financingE) increase; investment8) According to the statement of cash flows, an increase in interest expense will ________ the cash flow from ________ activities.A) decrease; operatingB) decrease; financingC) increase; operatingD) increase; financingE) Increase; investment9) Activities of a firm that require the spending of cash are known as:A) sources of cash.B) uses of cash.C) cash collections.D) cash receipts.E) cash on hand.10) The sources and uses of cash over a stated period of time are reflected on the:A) income statement.B) balance sheet.C) tax reconciliation statement.D) statement of cash flows.E) statement of operating position.11) A common-size income statement is an accounting statement that expresses all of a firm's expenses as a percentage of:A) total assets.B) total equity.C) net income.D) taxable income.E) sales.12) Which one of the following standardizes items on the income statement and balance sheet relative to their values as of a chosen point in time?A) Statement of standardizationB) Statement of cash flowsC) Common-base year statementD) Common-size statementE) Base reconciliation statement13) On a common-size balance sheet all accounts for the current year are expressed as a percentage of:A) sales for the period.B) the base year sales.C) total equity for the base year.D) total assets for the current year.E) total assets for the base year.14) On a common-base year financial statement, accounts receivables for the current year will be expressed relative to which one of the following?A) Current year salesB) Current year total assetsC) Base-year salesD) Base-year total assetsE) Base-year accounts receivables15) Which one of the following ratios is a measure of a firm's liquidity?A) Cash coverage ratioB) Profit marginC) Debt-equity ratioD) Quick ratioE) NWC turnover16) An increase in current liabilities will have which one of the following effects, all else held constant? Assume all ratios have positive values.A) Increase in the cash ratioB) Increase in the net working capital to total assets ratioC) Decrease in the quick ratioD) Decrease in the cash coverage ratioE) Increase in the current ratio17) An increase in which one of the following will increase a firm's quick ratio without affecting its cash ratio?A) Accounts payableB) CashC) InventoryD) Accounts receivableE) Fixed assets18) A supplier, who requires payment within 10 days, should be most concerned with which one of the following ratios when granting credit?A) CurrentB) CashC) Debt-equityD) QuickE) Total debt19) A firm has an interval measure of 48. This means that the firm has sufficient liquid assets to do which one of the following?A) Pay all of its debts that are due within the next 48 hoursB) Pay all of its debts that are due within the next 48 daysC) Cover its operating costs for the next 48 hoursD) Cover its operating costs for the next 48 daysE) Meet the demands of its customers for the next 48 hours20) Ratios that measure a firm's liquidity are known as ________ ratios.A) asset managementB) long-term solvencyC) short-term solvencyD) profitabilityE) book value21) Which one of the following statements is correct?A) If the total debt ratio is greater than .50, then the debt-equity ratio must be less than 1.0.B) Long-term creditors would prefer the times interest earned ratio be 1.4 rather than 1.5.C) The debt-equity ratio can be computed as 1 plus the equity multiplier.D) An equity multiplier of 1.2 means a firm has $1.20 in sales for every $1 in equity.E) An increase in the depreciation expense will not affect the cash coverage ratio.22) If a firm has a debt-equity ratio of 1.0, then its total debt ratio must be which one of the following?A) 0B) .5C) 1.0D) 1.5E) 2.023) The cash coverage ratio directly measures the ability of a company to meet its obligation to pay:A) an invoice to a supplier.B) wages to an employee.C) interest to a lender.D) principal to a lender.E) a dividend to a shareholder.24) All-State Moving had sales of $899,000 in 2017 and $967,000 in 2018. The firm's current accounts remained constant. Given this information, which one of the following statements must be true?A) The total asset turnover rate increased.B) The days' sales in receivables increased.C) The net working capital turnover rate increased.D) The fixed asset turnover decreased.E) The receivables turnover rate decreased.25) The Corner Hardware has succeeded in increasing the amount of goods it sells while holding the amount of inventory on hand at a constant level. Assume that both the cost per unit and the selling price per unit also remained constant. This accomplishment will be reflected in the firm's financial ratios in which one of the following ways?A) Decrease in the inventory turnover rateB) Decrease in the net working capital turnover rateC) Increase in the fixed asset turnover rateD) Decrease in the day's sales in inventoryE) Decrease in the total asset turnover rate26) RJ's has a fixed asset turnover rate of 1.26 and a total asset turnover rate of .97. Sam's has a fixed asset turnover rate of 1.31 and a total asset turnover rate of .94. Both companies have similar operations. Based on this information, RJ's must be doing which one of the following?A) Utilizing its fixed assets more efficiently than Sam'sB) Utilizing its total assets more efficiently than Sam'sC) Generating $1 in sales for every $1.26 in net fixed assetsD) Generating $1.26 in net income for every $1 in net fixed assetsE) Maintaining the same level of current assets as Sam's27) Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as ________ ratios.A) asset managementB) long-term solvencyC) short-term solvencyD) profitabilityE) turnover28) If a company produces a return on assets of 14 percent and also a return on equity of 14 percent, then the firm:A) may have short-term, but not long-term debt.B) is using its assets as efficiently as possible.C) has no net working capital.D) has a debt-equity ratio of 1.0.E) has an equity multiplier of 1.0.29) Which one of the following will decrease if a firm can decrease its operating costs, all else constant?A) Return on equityB) Return on assetsC) Profit marginD) Total asset turnoverE) Price-earnings ratio30) Al's has a price-earnings ratio of 18.5. Ben's also has a price-earnings ratio of 18.5. Which one of the following statements must be true if Al's has a higher PEG ratio than Ben's?A) Al's has more net income than Ben's.B) Ben's is increasing its earnings at a faster rate than Al's.C) Al's has a higher market value per share than does Ben's.D) Ben's has a lower market-to-book ratio than Al's.E) Al's has a higher earnings growth rate than Ben's.31) Tobin's Q relates the market value of a firm's assets to which one of the following?A) Initial cost of creating the firmB) Current book value of the firmC) Average asset value of similar firmsD) Average market value of similar firmsE) Today's cost to duplicate those assets32) The price-sales ratio is especially useful when analyzing firms that have:A) volatile market prices.B) negative earnings.C) positive PEG ratios.D) a high Tobin's Q.E) increasing sales.33) Mortgage lenders probably have the most interest in the ________ ratios.A) return on assets and profit marginB) long-term debt and times interest earnedC) price-earnings and debt-equityD) market-to-book and times interest earnedE) return on equity and price-earnings34) Relationships determined from a company's financial information and used for comparison purposes are known as:A) financial ratios.B) identities.C) dimensional analysis.D) scenario analysis.E) solvency analysis.35) DL Farms currently has $600 in debt for every $1,000 in equity. Assume the company uses some of its cash to decrease its debt while maintaining its current equity and net income. Which one of the following will decrease as a result of this action?A) Equity multiplierB) Total asset turnoverC) Profit marginD) Return on assetsE) Return on equity36) Which one of these identifies the relationship between the return on assets and the return on equity?A) Profit marginB) Profitability determinantC) Balance sheet multiplierD) DuPont identityE) Debt-equity ratio37) Which one of the following accurately describes the three parts of the DuPont identity?A) Equity multiplier, profit margin, and total asset turnoverB) Debt-equity ratio, capital intensity ratio, and profit marginC) Operating efficiency, equity multiplier, and profitability ratioD) Return on assets, profit margin, and equity multiplierE) Financial leverage, operating efficiency, and profitability ratio38) An increase in which of the following must increase the return on equity, all else constant?A) Total assets and salesB) Net income and total equityC) Total asset turnover and debt-equity ratioD) Equity multiplier and total equityE) Debt-equity ratio and total debt39) Which one of the following is a correct formula for computing the return on equity?A) Profit margin × ROAB) ROA × Equity multiplierC) Profit margin × Total asset turnover × Debt-equity ratioD) Net income/Total assetsE) Debt-equity ratio × ROA40) The DuPont identity can be used to help managers answer which of the following questions related to a company's operations?I. How many sales dollars are being generated per each dollar of assets?II. How many dollars of assets have been acquired per each dollar in shareholders' equity? III. How much net profit is being generating per dollar of sales?IV. Does the company have the ability to meet its debt obligations in a timely manner?A) I and III onlyB) II and IV onlyC) I, II, and III onlyD) II, III and IV onlyE) I, II, III, and IV41) The U.S. government coding system that classifies a company by the nature of its business operations is known as the:A) Centralized Business Index.B) Peer Grouping codes.C) Standard Industrial Classification codes.D) Governmental ID codes.E) Government Engineered Coding System.42) Which one of the following statements is correct?A) Book values should always be given precedence over market values.B) Financial statements are rarely used as the basis for performance evaluations.C) Historical information is useful when projecting a company's future performance.D) Potential lenders place little value on financial statement information.E) Reviewing financial information over time has very limited value.43) The most acceptable method of evaluating the financial statements is to compare the company's current financial:A) ratios to the company's historical ratios.B) statements to the financial statements of similar companies operating in other countries.C) ratios to the average ratios of all companies located within the same geographic area.D) statements to those of larger companies in unrelated industries.E) statements to the projections that were created based on Tobin's Q.44) All of the following issues represent problems encountered when comparing the financial statements of two separate entities except the issue of the companies:A) being conglomerates with unrelated lines of business.B) having geographically varying operations.C) using differing accounting methods.D) differing seasonal peaks.E) having the same fiscal year.45) Which one of these is the least important factor to consider when comparing the financial situations of utility companies that generate electric power and have the same SIC code?A) Type of ownershipB) Government regulations affecting the firmC) Fiscal year endD) Methods of power generationE) Number of part-time employees46) At the beginning of the year, Brick Makers had cash of $183, accounts receivable of $392, accounts payable of $463, and inventory of $714. At year end, cash was $167, accounts payables was $447, inventory was $682, and accounts receivable was $409. What is the amount of the net source or use of cash by working capital accounts for the year?A) Net use of $16 cashB) Net use of $17 cashC) Net source of $17 cashD) Net source of $15 cashE) Net use of $15 cash47) During the year, Al's Tools decreased its accounts receivable by $160, increased its inventory by $115, and decreased its accounts payable by $70. How did these three accounts affect the sources of uses of cash by the firm?A) Net source of cash of $120B) Net source of cash of $205C) Net source of cash of $45D) Net use of cash of $115E) Net use of cash of $2548) Lani's generated net income of $911, depreciation expense was $47, and dividends paid were $25. Accounts payables increased by $15, accounts receivables increased by $28, inventory decreased by $14, and net fixed assets decreased by $8. There was no interest expense. What was the net cash flow from operating activity?A) $776B) $865C) $959D) $922E) $98549) For the past year, Jenn's Floral Arrangements had taxable income of $198,600, beginning common stock of $68,000, beginning retained earnings of $318,750, ending common stock of $71,500, ending retained earnings of $316,940, interest expense of $11,300, and a tax rate of 21 percent. What is the amount of dividends paid during the year?A) $157,280B) $159,935C) $163,200D) $153,555E) $158,70450) The Floor Store had interest expense of $38,400, depreciation of $28,100, and taxes of $19,600 for the year. At the start of the year, the firm had total assets of $879,400 and current assets of $289,600. By year's end total assets had increased to $911,900 while current assets decreased to $279,300. What is the amount of the cash flow from investment activity for the year?A) −$51,150B) $21,850C) $29,300D) −$70,900E) −$89,40051) Williamsburg Market is an all-equity firm that has net income of $96,200, depreciation expense of $6,300, and an increase in net working capital of $2,800. What is the amount of the net cash from operating activity?A) $91,300B) $99,700C) $93,400D) $105,300E) $113,70052) The accounts payable of a company changed from $136,100 to $104,300 over the course of a year. This change represents a:A) use of $31,800 of cash as investment activity.B) source of $31,800 of cash as an operating activity.C) source of $31,800 of cash as a financing activity.D) source of $31,800 of cash as an investment activity.E) use of $31,800 of cash as an operating activity.53) Oil Creek Auto has sales of $3,340, net income of $274, net fixed assets of $2,600, and current assets of $920. The firm has $430 in inventory. What is the common-size statement value of inventory?A) 12.22 percentB) 44.16 percentC) 16.54 percentD) 13.36 percentE) 46.74 percent54) Pittsburgh Motors has sales of $4,300, net income of $320, total assets of $4,800, and total equity of $2,950. Interest expense is $65. What is the common-size statement value of the interest expense?A) .89 percentB) 1.51 percentC) 1.69 percentD) 2.03 percentE) 1.35 percent55) Last year, which is used as the base year, a firm had cash of $52, accounts receivable of $223, inventory of $509, and net fixed assets of $1,107. This year, the firm has cash of $61,accounts receivable of $204, inventory of $527, and net fixed assets of $1,216. What is this year's common-base-year value of inventory?A) .67B) .91C) .88D) 1.04E) 1.1856) Duke's Garage has cash of $68, accounts receivable of $142, accounts payable of $235, and inventory of $318. What is the value of the quick ratio?A) 2.25B) .53C) .71D) .89E) 1.3557) Uptown Men's Wear has accounts payable of $2,214, inventory of $7,950, cash of $1,263, fixed assets of $8,400, accounts receivable of $3,907, and long-term debt of $4,200. What is the value of the net working capital to total assets ratio?A) .31B) .42C) .47D) .51E) .5658) DJ's has total assets of $310,100 and net fixed assets of $168,500. The average daily operating costs are $2,980. What is the value of the interval measure?A) 31.47 daysB) 47.52 daysC) 56.22 daysD) 68.05 daysE) 104.62 days59) Corner Books has a debt-equity ratio of .57. What is the total debt ratio?A) .36B) .30C) .44D) 2.27E) 2.7560) SS Stores has total debt of $4,910 and a debt-equity ratio of 0.52. What is the value of the total assets?A) $16,128.05B) $7,253.40C) $9,571.95D) $11,034.00E) $14,352.3161) JK Motors has sales of $96,400, costs of $53,800, interest paid of $2,800, and depreciation of $7,100. The tax rate is 21 percent. What is the value of the cash coverage ratio?A) 15.21B) 12.14C) 17.27D) 23.41E) 12.6862) Terry's Pets paid $2,380 in interest and $2,200 in dividends last year. The times interest earned ratio is 2.6 and the depreciation expense is $680. What is the value of the cash coverage ratio?A) 1.42B) 2.72C) 2.94D) 2.89E) 2.4663) The Up-Towner has sales of $913,400, costs of goods sold of $579,300, inventory of $123,900, and accounts receivable of $78,900. How many days, on average, does it take the firm to sell its inventory assuming that all sales are on credit?A) 74.19 daysB) 84.69 daysC) 78.07 daysD) 96.46 daysE) 71.01 days64) Flo's Flowers has accounts receivable of $4,511, inventory of $1,810, sales of $138,609, and cost of goods sold of $64,003. How many days does it take the firm to sell its inventory and collect the payment on the sale assuming that all sales are on credit?A) 11.88 daysB) 22.20 daysC) 16.23 daysD) 14.50 daysE) 18.67 days65) The Harrisburg Store has net working capital of $2,715, net fixed assets of $22,407, sales of $31,350, and current liabilities of $3,908. How many dollars' worth of sales are generated from every $1 in total assets?A) $1.08B) $1.14C) $1.19D) $84E) $9366) TJ's has annual sales of $813,200, total debt of $171,000, total equity of $396,000, and a profit margin of 5.78 percent. What is the return on assets?A) 8.29 percentB) 6.48 percentC) 9.94 percentD) 7.78 percentE) 8.02 percent67) Frank's Used Cars has sales of $807,200, total assets of $768,100, and a profit margin of 6.68 percent. The firm has a total debt ratio of 54 percent. What is the return on equity?A) 13.09 percentB) 12.04 percentC) 11.03 percentD) 8.56 percentE) 15.26 percent68) Bernice's has $823,000 in sales. The profit margin is 4.2 percent and the firm has 7,500 shares of stock outstanding. The market price per share is $16.50. What is the price-earnings ratio?A) 3.58B) 3.98C) 4.32D) 3.51E) 4.2769) Hungry Lunch has net income of $73,402, a price-earnings ratio of 13.7, and earnings per share of $.43. How many shares of stock are outstanding?A) 13,520B) 12,460C) 165,745D) 171,308E) 170,70270) A firm has 160,000 shares of stock outstanding, sales of $1.94 million, net income of $126,400, a price-earnings ratio of 21.3, and a book value per share of $7.92. What is the market-to-book ratio?A) 2.12B) 1.84C) 1.39D) 2.45E) 2.6971) Taylor's Men's Wear has a debt-equity ratio of 48 percent, sales of $829,000, net income of $47,300, and total debt of $206,300. What is the return on equity?A) 19.29 percentB) 11.01 percentC) 15.74 percentD) 18.57 percentE) 14.16 percent72) Nielsen's has inventory of $29,406, accounts receivable of $46,215, net working capital of $4,507, and accounts payable of $48,919. What is the quick ratio?A) 1.55B) .49C) 1.32D) .94E) .9273) The Strong Box has sales of $859,700, cost of goods sold of $648,200, net income of $93,100, and accounts receivable of $102,300. How many days of sales are in receivables?A) 57.60 daysB) 40.32 daysC) 54.53 daysD) 29.41 daysE) 43.43 days74) Corner Books has sales of $687,400, cost of goods sold of $454,200, and a profit margin of 5.5 percent. The balance sheet shows common stock of $324,000 with a par value of $5 a share, and retained earnings of $689,500. What is the price-sales ratio if the market price is $43.20 per share?A) 4.28B) 12.74C) 6.12D) 4.07E) 14.5175) Gem Jewelers has current assets of $687,600, total assets of $1,711,000, net working capital of $223,700, and long-term debt of $450,000. What is the debt-equity ratio?A) .87B) .94C) 1.21D) 1.15E) 1.0676) Russell's has annual sales of $649,200, cost of goods sold of $389,400, interest of $23,650, depreciation of $121,000, and a tax rate of 21 percent. What is the cash coverage ratio for the year?A) 8.43B) 10.99C) 11.64D) 5.87E) 18.2277) Lawn Care, Inc., has sales of $367,400, costs of $183,600, depreciation of $48,600, interest of $39,200, and a tax rate of 25 percent. The firm has total assets of $422,100, long-term debt of $102,000, net fixed assets of $264,500, and net working capital of $22,300. What is the return on equity?A) 24.26 percentB) 15.38 percentC) 38.96 percentD) 29.96 percentE) 17.06 percent78) Frank's Welding has net fixed assets of $36,200, total assets of $51,300, long-term debt of $22,000, and total debt of $29,700. What is the net working capital to total assets ratio?A) 12.18 percentB) 16.82 percentC) 14.42 percentD) 17.79 percentE) 9.90 percent79) The Green Fiddle has current liabilities of $28,000, sales of $156,900, and cost of goods sold of $62,400. The current ratio is 1.22 and the quick ratio is .71. How many days on average does it take to sell the inventory?A) 128.13 daysB) 74.42 daysC) 199.81 daysD) 147.46 daysE) 83.53 days80) Green Yard Care has net income of $62,300, a tax rate of 21 percent, and a profit margin of 6.7 percent. Total assets are $1,100,500 and current assets are $328,200. How many dollars of sales are being generated from every dollar of net fixed assets?A) $2.83B) $1.37C) $.84D) $1.20E) $1.2381) Jensen's Shipping has total assets of $694,800 at year's end. The beginning owners' equity was $362,400. During the year, the company had sales of $711,000, a profit margin of 5.2 percent, a tax rate of 21 percent, and paid $12,500 in dividends. What is the equity multiplier at year-end?A) 1.67B) 1.72C) 1.93D) 1.80E) 1.8682) Western Gear has net income of $12,400, a tax rate of 21 percent, and interest expense of $1,600. What is the times interest earned ratio for the year?A) 9.63B) 7.75C) 10.81D) 14.97E) 10.9783) Big Tree Lumber has earnings per share of $1.36. The firm's earnings have been increasing at an average rate of 2.9 percent annually and are expected to continue doing so. The firm has 21,500 shares of stock outstanding at a price per share of $23.40. What is the firm's PEG ratio?A) 2.27B) 11.21C) 4.85D) 3.94E) 5.9384) Townsend Enterprises has a PEG ratio of 5.3, net income of $49,200, a price-earnings ratio of 17.6, and a profit margin of 7.1 percent. What is the earnings growth rate?A) 2.48 percentB) 1.06 percentC) 3.32 percentD) 5.20 percentE) 10.60 percent85) A firm has total assets with a current book value of $71,600, a current market value of $82,300, and a current replacement cost of $90,400. What is the value of Tobin's Q?A) .85B) .87C) .90D) .94E) .9186) Dixie Supply has total assets with a current book value of $368,900 and a current replacement cost of $486,200. The market value of these assets is $464,800. What is the value of Tobin's Q?A) .79B) .76C) .96D) 1.26E) 1.0587) Dandelion Fields has a Tobin's Q of .96. The replacement cost of the firm's assets is $225,000 and the market value of the firm's debt is $101,000. The firm has 20,000 shares of stock outstanding and a book value per share of $2.09. What is the market-to-book ratio?A) 2.75 timesB) 3.18 timesC) 3.54 timesD) 4.01 timesE) 4.20 times88) The Tech Store has annual sales of $416,000, a price-earnings ratio of 18, and a profit margin of 3.7 percent. There are 12,000 shares of stock outstanding. What is the price-sales ratio?A) .97B) .67C) 1.08D) 1.15E) .8689) Lassiter Industries has annual sales of $328,000 with 8,000 shares of stock outstanding. The firm has a profit margin of 4.5 percent and a price-sales ratio of 1.20. What is the firm's price-earnings ratio?A) 21.9B) 17.4C) 18.6D) 26.7E) 24.390) Drive-Up has sales of $31.4 million, total assets of $27.6 million, and total debt of $14.9 million. The profit margin is 3.7 percent. What is the return on equity?A) 6.85 percentB) 9.15 percentC) 11.08 percentD) 13.31 percentE) 14.21 percent91) Corner Supply has a current accounts receivable balance of $246,000. Credit sales for the year just ended were $2,430,000. How many days on average did it take for credit customers to pay off their accounts during this past year?A) 44.29 daysB) 55.01 daysC) 55.50 daysD) 36.95 daysE) 41.00 days92) BL Industries has ending inventory of $302,800, annual sales of $2.33 million, and annual cost of goods sold of $1.41 million. On average, how long did a unit of inventory sit on the shelf before it was sold?A) 47.43 daysB) 22.18 daysC) 78.38 daysD) 61.78 daysE) 83.13 days93) Billings Inc. has net income of $161,000, a profit margin of 7.6 percent, and an accounts receivable balance of $127,100. Assume that 66 percent of sales are on credit. What is the days' sales in receivables?A) 21.90 daysB) 27.56 daysC) 33.18 daysD) 35.04 daysE) 36.19 days94) Stone Walls has a long-term debt ratio of .6 and a current ratio of 1.2. Current liabilities are $800, sales are $7,800, the profit margin is 6.5 percent, and return on equity is 15.5 percent. What is the amount of the firm's net fixed assets?A) $8,880.15B) $8,017.43C) $7,666.67D) $5,848.15E) $8,977.43。
公司理财精要版原书第12版习题库答案Ross12e_Chapter01_TB_AnswerKey
Fundamentals of Corporate Finance, 12e (Ross)Chapter 1 Introduction to Corporate Finance1) Which one of the following functions should be the responsibility of the controller rather than the treasurer?A) Depositing cash receiptsB) Processing cost reportsC) Analyzing equipment purchasesD) Approving credit for a customerE) Paying a vendorAnswer: BDifficulty: 1 EasyTopic: Management organization and rolesLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation2) The treasurer of a corporation generally reports directly to the:A) board of directors.B) chairman of the board.C) chief executive officer.D) president.E) vice president of finance.Answer: EDifficulty: 1 EasyTopic: Management organization and rolesLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation3) Which one of the following correctly defines the upward chain of command in a typical corporate organizational structure?A) The vice president of finance reports to the chairman of the board.B) The chief executive officer reports to the president.C) The controller reports to the chief financial officer.D) The treasurer reports to the president.E) The chief operations officer reports to the vice president of production.Answer: CDifficulty: 1 EasyTopic: Management organization and rolesLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation4) An example of a capital budgeting decision is deciding:A) how many shares of stock to issue.B) whether or not to purchase a new machine for the production line.C) how to refinance a debt issue that is maturing.D) how much inventory to keep on hand.E) how much money should be kept in the checking account.Answer: BDifficulty: 1 EasyTopic: Financial management decisionsLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation5) When evaluating the timing of a project's projected cash flows, a financial manager is analyzing:A) the amount of each expected cash flow.B) only the start-up costs that are expected to require cash resources.C) only the date of the final cash flow related to the project.D) the amount by which cash receipts are expected to exceed cash outflows.E) when each cash flow is expected to occur.Answer: EDifficulty: 1 EasyTopic: Financial management decisionsLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation6) Capital structure decisions include determining:A) which one of two projects to accept.B) how to allocate investment funds to multiple projects.C) the amount of funds needed to finance customer purchases of a new product.D) how much debt should be assumed to fund a project.E) how much inventory will be needed to support a project.Answer: DDifficulty: 1 EasyTopic: Financial management decisionsLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation7) The decision to issue additional shares of stock is an example of:A) working capital management.B) a net working capital decision.C) capital budgeting.D) a controller's duties.E) a capital structure decision.Answer: EDifficulty: 1 EasyTopic: Financial management decisionsLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation8) Which one of the following questions is a working capital management decision?A) Should the company issue new shares of stock or borrow money?B) Should the company update or replace its older equipment?C) How much inventory should be on hand for immediate sale?D) Should the company close one of its current stores?E) How much should the company borrow to buy a new building?Answer: CDifficulty: 1 EasyTopic: Financial management decisionsLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation9) Which one of the following is a working capital management decision?A) What type(s) of equipment is (are) needed to complete a current project?B) Should the firm pay cash for a purchase or use the credit offered by the supplier?C) What amount of long-term debt is required to complete a project?D) How many shares of stock should the firm issue to fund an acquisition?E) Should a project should be accepted?Answer: BDifficulty: 1 EasyTopic: Financial management decisionsLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation10) Working capital management decisions include determining:A) the minimum level of cash to be kept in a checking account.B) the best method of producing a product.C) the number of employees needed to work during a particular shift.D) when to replace obsolete equipment.E) if a competitor should be acquired.Answer: ADifficulty: 1 EasyTopic: Financial management decisionsLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation11) Which one of the following terms is defined as the management of a firm's long-term investments?A) Working capital managementB) Financial allocationC) Agency cost analysisD) Capital budgetingE) Capital structureAnswer: DDifficulty: 1 EasyTopic: Financial management decisionsLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation12) Which one of the following terms is defined as the mixture of a firm's debt and equity financing?A) Working capital managementB) Cash managementC) Cost analysisD) Capital budgetingE) Capital structureAnswer: EDifficulty: 1 EasyTopic: Financial management decisionsLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation13) A firm's short-term assets and its short-term liabilities are referred to as the firm's:A) working capital.B) debt.C) investment capital.D) net capital.E) capital structure.Answer: ADifficulty: 1 EasyTopic: Financial management decisionsLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation14) Which one of the following questions is least likely to be addressed by financial managers?A) How should a product be marketed?B) Should customers be given 30 or 45 days to pay for their credit purchases?C) Should the firm borrow more money?D) Should the firm acquire new equipment?E) How much cash should the firm keep on hand?Answer: ADifficulty: 1 EasyTopic: Financial management decisionsLearning Objective: 01-01 Define the basic types of financial management decisions and the role of the financial manager.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation15) A business owned by a solitary individual who has unlimited liability for the firm's debt is called a:A) corporation.B) sole proprietorship.C) general partnership.D) limited partnership.E) limited liability company.Answer: BDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation16) A business formed by two or more individuals who each have unlimited liability for all of the firm's business debts is called a:A) corporation.B) sole proprietorship.C) general partnership.D) limited partnership.E) limited liability company.Answer: CDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation17) A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a:A) general partner.B) sole proprietor.C) limited partner.D) corporate shareholder.E) zero partner.Answer: CDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation18) A business created as a distinct legal entity and treated as a legal "person" is called a(n):A) corporation.B) sole proprietorship.C) general partnership.D) limited partnership.E) unlimited liability company.Answer: ADifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation19) Which one of the following statements concerning a sole proprietorship is correct?A) A sole proprietorship is designed to protect the personal assets of the owner.B) The profits of a sole proprietorship are subject to double taxation.C) The owner of a sole proprietorship is personally responsible for all of the company's debts.D) There are very few sole proprietorships remaining in the U.S. today.E) A sole proprietorship is structured the same as a limited liability company.Answer: CDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation20) Which one of the following statements concerning a sole proprietorship is correct?A) The life of a sole proprietorship is limited.B) A sole proprietor can generally raise large sums of capital quite easily.C) Transferring ownership of a sole proprietorship is easier than transferring ownership of a corporation.D) A sole proprietorship is taxed the same as a C corporation.E) A sole proprietorship is the most regulated form of organization.Answer: ADifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation21) Which of the following individuals have unlimited liability for a firm's debts based on their ownership interest?A) Only general partnersB) Only sole proprietorsC) All stockholdersD) Both limited and general partnersE) Both general partners and sole proprietorsAnswer: EDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation22) The primary advantage of being a limited partner is:A) the receipt of tax-free income.B) the partner's active participation in the firm's activities.C) the lack of any potential financial loss.D) the daily control over the business affairs of the partnership.E) the partner's maximum loss is limited to their capital investment.Answer: EDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation23) A general partner:A) is personally responsible for all partnership debts.B) has no say over a firm's daily operations.C) faces double taxation whereas a limited partner does not.D) has a maximum loss equal to his or her equity investment.E) receives a salary in lieu of a portion of the profits.Answer: ADifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation24) A limited partnership:A) has an unlimited life.B) can opt to be taxed as a corporation.C) terminates at the death of any one limited partner.D) has at least one partner who has unlimited liability for all of the partnership's debts.E) consists solely of limited partners.Answer: DDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation25) A partnership with four general partners:A) distributes profits based on percentage of ownership.B) has an unlimited partnership life.C) limits the active involvement in the firm to a single partner.D) limits each partner's personal liability to 25 percent of the partnership's total debt.E) must distribute 25 percent of the profits to each partner.Answer: EDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation26) One disadvantage of the corporate form of business ownership is the:A) limited liability of its shareholders for the firm's debts.B) double taxation of distributed profits.C) firm's greater ability to raise capital than other forms of ownership.D) firm's potential for an unlimited life.E) firm's ability to issue additional shares of stock.Answer: BDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation27) Which one of the following statements is correct?A) The majority of firms in the U.S. are structured as corporations.B) Corporate profits are taxable income to the shareholders when earned.C) Corporations can have an unlimited life.D) Shareholders are protected from all potential losses.E) Shareholders directly elect the corporate president.Answer: CDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation28) Which one of the following statements is correct?A) A general partnership is legally the same as a corporation.B) Income from both sole proprietorships and partnerships that is taxable is treated as individual income.C) Partnerships are the most complicated type of business to form.D) All business organizations have bylaws.E) Only firms organized as sole proprietorships have limited lives.Answer: BDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation29) The articles of incorporation:A) describe the purpose of the firm and set forth the number of shares of stock that can be issued.B) are amended periodically especially prior to corporate elections.C) explain how corporate directors are to be elected and the length of their terms.D) sets forth the procedures by which a firm regulates itself.E) include only the corporation's name and intended life.Answer: ADifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation30) Corporate bylaws:A) must be amended should a firm decide to increase the number of shares authorized.B) cannot be amended once adopted.C) define the name by which the firm will operate.D) describe the intended life and purpose of the organization.E) determine how a corporation regulates itself.Answer: EDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation31) A limited liability company:A) can only have a single owner.B) is comprised of limited partners only.C) is taxed similar to a partnership.D) is taxed similar to a C corporation.E) generates totally tax-free income.Answer: CDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation32) Which business form is best suited to raising large amounts of capital?A) Sole proprietorshipB) Limited liability companyC) CorporationD) General partnershipE) Limited partnershipAnswer: CDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation33) A ________ has all the respective rights and privileges of a legal person.A) sole proprietorshipB) general partnershipC) limited partnershipD) corporationE) limited liability companyAnswer: DDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation34) Sam, Alfredo, and Juan want to start a small U.S. business. Juan will fund the venture but wants to limit his liability to his initial investment and has no interest in the daily operations. Sam will contribute his full efforts on a daily basis but has limited funds to invest in the business. Alfredo will be involved as an active consultant and manager and will also contribute funds. Sam and Alfredo are willing to accept liability for the firm's debts as they feel they have nothing to lose by doing so. All three individuals will share in the firm's profits and wish to keep the initial organizational costs of the business to a minimum. Which form of business entity should these individuals adopt?A) Sole proprietorshipB) Joint stock companyC) Limited partnershipD) General partnershipE) CorporationAnswer: CDifficulty: 2 MediumTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: ApplyAACSB: Knowledge ApplicationAccessibility: Keyboard Navigation35) Sally and Alicia are equal general partners in a business. They are content with their current management and tax situation but are uncomfortable with their unlimited liability. Which form of business entity should they consider as a replacement to their current arrangement assuming they wish to remain the only two owners of the business?A) Sole proprietorshipB) Joint stock companyC) Limited partnershipD) Limited liability companyE) CorporationAnswer: DDifficulty: 2 MediumTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: ApplyAACSB: Knowledge ApplicationAccessibility: Keyboard Navigation36) The growth of both sole proprietorships and partnerships is frequently limited by the firm's:A) double taxation.B) bylaws.C) inability to raise cash.D) limited liability.E) agency problems.Answer: CDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation37) Corporate dividends are:A) tax-free because the income is taxed at the personal level when earned by the firm.B) tax-free because they are distributions of aftertax income.C) tax-free since the corporation pays tax on that income when it is earned.D) taxed at both the corporate and the personal level when the dividends are paid to shareholders.E) taxable income of the recipient even though that income was previously taxed.Answer: EDifficulty: 1 EasyTopic: Forms of business organizationLearning Objective: 01-03 Articulate the financial implications of the different forms of business organization.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation38) Financial managers should primarily focus on the interests of:A) stakeholders.B) the vice president of finance.C) their immediate supervisor.D) shareholders.E) the board of directors.Answer: DDifficulty: 1 EasyTopic: Goal of financial managementLearning Objective: 01-02 Explain the goal of financial management.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation39) Which one of the following best states the primary goal of financial management?A) Maximize current dividends per shareB) Maximize the current value per shareC) Increase cash flow and avoid financial distressD) Minimize operational costs while maximizing firm efficiencyE) Maintain steady growth while increasing current profitsAnswer: BDifficulty: 1 EasyTopic: Goal of financial managementLearning Objective: 01-02 Explain the goal of financial management.Bloom's: RememberAACSB: Reflective ThinkingAccessibility: Keyboard Navigation40) Which one of the following best illustrates that the management of a firm is adhering to thegoal of financial management?A) An increase in the amount of the quarterly dividendB) A decrease in the per unit production costsC) An increase in the number of shares outstandingD) A decrease in the net working capitalE) An increase in the market value per shareAnswer: EDifficulty: 1 EasyTopic: Goal of financial managementLearning Objective: 01-02 Explain the goal of financial management.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation41) Financial managers should strive to maximize the current value per share of the existing stock to:A) guarantee the company will grow in size at the maximum possible rate.B) increase employee salaries.C) best represent the interests of the current shareholders.D) increase the current dividends per share.E) provide managers with shares of stock as part of their compensation.Answer: CDifficulty: 1 EasyTopic: Goal of financial managementLearning Objective: 01-02 Explain the goal of financial management.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation42) Decisions made by financial managers should primarily focus on increasing the:A) size of the firm.B) growth rate of the firm.C) gross profit per unit produced.D) market value per share of outstanding stock.E) total sales.Answer: DDifficulty: 1 EasyTopic: Goal of financial managementLearning Objective: 01-02 Explain the goal of financial management.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation43) The Sarbanes-Oxley Act of 2002 is a governmental response to:A) decreasing corporate profits.B) the terrorist attacks on 9/11/2001.C) a weakening economy.D) deregulation of the stock exchanges.E) management greed and abuses.Answer: EDifficulty: 1 EasyTopic: Ethics, governance, and regulationLearning Objective: 01-04 Explain the conflicts of interest that can arise between managers and owners.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation44) Which one of the following is an unintended result of the Sarbanes-Oxley Act?A) More detailed and accurate financial reportingB) Increased management awareness of internal controlsC) Corporations delisting from major exchangesD) Increased responsibility for corporate officersE) Identification of internal control weaknessesAnswer: CDifficulty: 1 EasyTopic: Ethics, governance, and regulationLearning Objective: 01-04 Explain the conflicts of interest that can arise between managers and owners.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation45) A firm which opts to "go dark" in response to the Sarbanes-Oxley Act:A) must continue to provide audited financial statements to the public.B) must continue to provide a detailed list of internal control deficiencies on an annual basis.C) can provide less information to its shareholders than it did prior to "going dark".D) can continue publicly trading its stock but only on the exchange on which it was previously listed.E) ceases to exist.Answer: CDifficulty: 1 EasyTopic: Ethics, governance, and regulationLearning Objective: 01-04 Explain the conflicts of interest that can arise between managers and owners.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation46) The Sarbanes-Oxley Act of 2002 holds a public company's ________ responsible for the accuracy of the company's financial statements.A) managersB) internal auditorsC) external legal counselD) internal legal counselE) Securities and Exchange Commission agentAnswer: ADifficulty: 1 EasyTopic: Ethics, governance, and regulationLearning Objective: 01-04 Explain the conflicts of interest that can arise between managers and owners.Bloom's: UnderstandAACSB: Reflective ThinkingAccessibility: Keyboard Navigation。
《公司理财》课后习题标准答案
《公司理财》课后习题答案————————————————————————————————作者：————————————————————————————————日期：《公司理财》考试范围：第3~7章，第13章，第16~19章，其中第16章和18章为较重点章节。
书上例题比较重要，大家记得多多动手练练。
PS：书中课后例题不出，大家可以当习题练练~考试题型：1.单选题10分 2.判断题10分 3.证明题10分 4.计算分析题60分 5.论述题10分注：第13章没有答案第一章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。
公司理财精要版原书第12版习题库答案Ross12e_Chapter15_TB
Fundamentals of Corporate Finance, 12e (Ross)Chapter 15 Raising Capital1) Business Aid is funded by a group of wealthy investors for the sole purpose of providing funding for individuals and small firms that are trying to convert their new ideas into viable products. What is this type of funding called?A) Green shoe fundingB) Tombstone underwritingC) Venture capitalD) Red herring fundingE) Life cycle capital2) It is common for venture capitalists to receive at least ________ percent of a start-up company's equity in exchange for the venture capital.A) 10B) 15C) 20D) 30E) 403) Equity financing of new, non-public companies is broadly referred to as:A) singular-risk financing.B) mezzanine-level stock.C) stylized financing.D) private equity.E) exit funding.4) Which one of the following statements concerning venture capital financing is correct?A) Venture capitalists desire shares of common stock but avoid preferred stock.B) Venture capital is relatively easy to obtain.C) Venture capitalists rarely assume active roles in the management of the financed firm.D) Venture capitalists should have key contacts and financial strength.E) Venture capital is relatively inexpensive in today's competitive markets.5) Which one of the following statements concerning venture capitalists is correct?A) Venture capitalists always assume management responsibility for the companies they finance.B) Exit strategy is a key consideration when selecting a venture capitalist.C) Venture capitalists limit their services to providing money to start-up firms.D) Most venture capitalists are long-term investors in the companies they finance.E) A venture capitalist normally invests in a new idea from conception through the IPO.6) When selecting a venture capitalist, which one of the following characteristics is probably the least important?A) Financial strengthB) Level of involvementC) ContactsD) Exit strategyE) Underwriting experience7) Trevor is the CEO of Harvest Foods, which is a privately held corporation. What is the first step he must take if he wishes to take Harvest Foods public?A) Select an underwriterB) Obtain SEC approvalC) Gain board approvalD) Prepare a registration statementE) Distribute a prospectus8) Which one of these describes an exception to the registration filing requirement of the SEC?A) Loans that mature in one year or lessB) Issues that have an approved prospectusC) Loans of $10 million or lessD) Issues of less than $5 millionE) Issues that have received an approved letter of comment9) The Securities and Exchange Commission:A) verifies the accuracy of the information contained in the prospectus.B) publishes red herrings on prospective new security offerings.C) examines the prospectus during the Green Shoe period.D) reviews registration statements to ensure they comply with current laws and regulations.E) determines the final offer price once they have approved the registration statement.10) What is the form called that is filed with the SEC and discloses the material information on a securities issuer when that issuer offers new securities to the general public?A) ProspectusB) Red herringC) IndentureD) Public disclosure statementE) Registration statement11) M&C Merchants is offering $2.5 million of new securities to the general public. Which SEC regulation governs this offering?A) Regulation AB) Regulation CC) Regulation GD) Regulation QE) Regulation R12) What is a prospectus?A) A letter issued by the SEC authorizing a new issue of securitiesB) A report stating that the SEC recommends a new security to investorsC) A letter issued by the SEC that outlines the changes required for a registration statement to be approvedD) A document that describes the details of a proposed security offering along with relevant information about the issuerE) An advertisement in a financial newspaper that describes a security offering13) Which one of the following is a preliminary prospectus?A) TombstoneB) Green shoeC) Registration statementD) Rights offerE) Red herring14) Advertisements in a financial newspaper announcing a public offering of securities, along with a list of the investment banks handling the offering, are called:A) red herrings.B) tombstones.C) Green Shoes.D) registration statements.E) cash offers.15) The raising of small amounts of capital from a large number of people is known as:A) a rights offering.B) over allocating.C) a diversified offer.D) crowdfunding.E) a standby offer.16) During a 12-month period, a company is permitted to issue new securities through crowdfunding up to a limit of:A) $200 thousand.B) $500 thousand.C) $1 million.D) $5 million.E) $50 million.17) What is an issue of securities that is offered for sale to the general public on a direct cash basis called?A) Best efforts underwritingB) Firm commitment underwritingC) General cash offerD) Rights offerE) Herring offer18) Alberto currently owns 2,500 shares of Southern Tools. He has just been notified that the company is issuing additional shares and he is being given a chance to purchase some of these shares prior to the shares being offered to the general public. What is this type of an offer called?A) Best efforts offerB) Firm commitment offerC) General cash offerD) Rights offerE) Priority offer19) JLK is a partnership that was formed two years ago and has been extremely successful thus far. The owners have decided to incorporate and offer shares of stock to the general public. What is this type of an equity offering called?A) Venture capital offeringB) Shelf offeringC) Private placementD) Seasoned equity offeringE) Initial public offering20) What is a seasoned equity offering?A) An offering of shares by shareholders for repurchase by the issuerB) Shares of stock that have been recommended for purchase by the SECC) Equity securities held by a company's founder that are being offered for sale to the general publicD) Sale of newly issued equity shares by a publicly owned companyE) Outstanding shares that are offered for sale by one of a company's original founders21) Executive Tours has decided to go public and has hired an investment firm to handle the offering. The investment firm is serving as a(n):A) aftermarket specialist.B) venture capitalist.C) underwriter.D) seasoned writer.E) primary investor.22) Underwriters generally:A) pay a spread to the issuing firm.B) provide only best efforts underwriting in the U.S.C) accept the risk of selling the new securities in exchange for the gross spread.D) market and distribute an entire issue of new securities within their own firm.E) pass the risk of unsold shares back to the issuing firm via a firm commitment agreement.23) A syndicate can best be defined as a:A) venture capitalist.B) group of attorneys providing services for an IPO.C) block of investors who control a firm.D) bank that loans funds to finance the start-up of a new company.E) group of underwriters sharing the risk of selling a new issue of securities.24) The difference between the underwriters' cost of buying shares in a firm commitment and the offering price of those securities to the public is called the:A) gross spread.B) under price amount.C) filing fee.D) new issue premium.E) offer price.25) Jones & Co. recently went public and received $23.07 a share on their entire offer of 30,000 shares. Keeser & Co. served as the underwriter and sold 28,500 shares to the public at an offer price of $26.50 a share. What type of underwriting was this?A) Best effortsB) ShelfC) OversubscribedD) Private placementE) Firm commitment26) Blue Stone Builders recently offered to sell 45,000 newly issued shares of stock to the public. The underwriters charged a fee of 8.2 percent and paid Blue Stone Builders the uniform auction price for each of those shares. Which one of the following terms best describes this underwriting?A) Dutch auctionB) Best effortsC) Public rightsD) Private placementE) Market commitment27) The 40-day period following an IPO during which the SEC places restrictions on the public communications of the issuer is known as the ________ period.A) auctionB) quietC) lockupD) Green ShoeE) red28) Mobile Units recently offered 75,000 new shares of stock for sale. The underwriters sold a total of 78,500 shares to the public at a price of $16 a share. The additional 3,500 shares were purchased in accordance with which one of the following?A) Green Shoe provisionB) Red herring provisionC) Quiet provisionD) Lockup agreementE) Post-issue agreement29) With firm commitment underwriting, the issuing firm:A) is unsure of the total amount of funds it will receive until after the offering is completed.B) is unsure of the number of shares it will actually issue until after the offering is completed.C) knows exactly how many shares will be purchased by the general public during the offer period.D) retains the financial risk associated with unsold shares.E) knows upfront the amount of money it will receive from the stock offering.30) Which one of the following is a key goal of the aftermarket period?A) Collecting the largest number of Dutch auction bids as possibleB) Determining a fair offer priceC) Supporting the market price for a new securities issueD) Establishing a broad-based underwriting syndicateE) Distributing red herrings to as many potential investors as possible31) Which one of the following statements is correct?A) The quiet period commences when a registration statement is filed with the SEC and ends on the day the IPO shares commence trading.B) Lockup agreements outline how oversubscribed IPO shares will be allocated.C) Additional IPO shares can be issued in accordance with the lockup agreement.D) Quiet period restrictions only apply to the issuer of new securities.E) A public interview with an issuer's CFO could cause a forced delay in the issuer's IPO.32) With Dutch auction underwriting:A) each winning bidder pays the minimum price offered by any bidder.B) all successful bidders pay the same price per share.C) all bidders receive at least a portion of the quantity for which they bid.D) the selling firm receives the maximum possible price for each security sold.E) the bidder for the largest quantity receives the first allocation of securities.33) Individual investors might avoid requesting 100 shares in an upcoming IPO because they:A) do not want to be bothered with submitting their bid to the SEC for approval.B) do not want to abide by the quiet period requirement.C) are prevented from entering orders for less than 1,000 shares.D) are more apt to receive shares if the IPO is under allocated.E) would have to pay a premium based on their small order size.34) If a firm commitment IPO is overpriced then the:A) investors in the IPO may consider suing the underwriters.B) Green Shoe provision will probably be utilized.C) stock price will generally increase on the first day of trading.D) issuing firm is guaranteed to be successful in the long term.E) issuing firm receives less money than it probably should have.35) All of the following are supporting arguments in favor of IPO underpricing except which one?A) Helps prevent the "winner's curse"B) Rewards institutional investors who share their market value opinionsC) Reduces potential lawsuits against underwritersD) Diminishes underwriting riskE) Provides better returns to issuing firms36) When a firm announces an upcoming seasoned stock offering, the market price of the firm's existing shares tends to:A) increase.B) decrease.C) remain constant.D) respond, but the direction of the response is not predictable as shown by past studies.E) decrease momentarily and then immediately increase substantially within an hour following the announcement.37) The total direct costs of underwriting an equity IPO:A) tend to increase on a percentage basis as the total proceeds of the IPO increase.B) are generally between 7 and 9 percent, regardless of the issue size.C) tend to be less than the direct costs of issuing bonds on a percentage of proceeds basis.D) exclude the gross spread.E) can be as low as 5.5 percent and as high as 25 percent of gross proceeds.38) Which one of the following statements is correct concerning the direct costs of issuing securities?A) Domestic bonds are generally more expensive to issue than equity IPOs.B) The gross spread as a percentage of proceeds is the same for similar-sized IPOs and SEOs.C) A seasoned offering is always more expensive on a percentage basis than an IPO.D) There tends to be substantial economies of scale when issuing any type of security.E) The costs of issuing convertible bonds tend to be less on a percentage basis than the costs of issuing straight debt.39) Shares of PLS United have been selling with rights attached. Tomorrow, the stock will sell independent of these rights. Which one of the following terms applies to tomorrow in relation to this stock?A) Pre-issue dateB) Aftermarket dateC) Declaration dateD) Holder-of-record dateE) Ex-rights date40) The date on which a shareholder is officially listed as the recipient of stock rights is called the:A) issue date.B) offer date.C) declaration date.D) holder-of-record date.E) ex-rights date.41) A rights offering in which an underwriting syndicate agrees to purchase the unsubscribed portion of an issue is called a(n) ________ underwriting.A) standbyB) best effortsC) firm commitmentD) direct feeE) oversubscription42) BK & Co. offered 15,000 shares in a rights offer. T.L. Moore & Co. was the underwriter that by prior agreement purchased the 639 unsold shares. For its participation in this rights offer, T.L. Moore & Co. is most likely entitled to:A) the gross margin.B) the optional spread.C) a standby fee.D) the subscription price.E) an oversubscription fee.43) Franklin Minerals recently had a rights offering of 12,000 shares at an offer price of $17 a share. Isabelle is a shareholder who exercised her rights option by buying all of the rights to which she was entitled based on the number of shares she owns. Currently, there are six shareholders who have opted not to participate in the rights offering. Isabelle would like to purchase these unsubscribed shares. Which one of the following will allow her to do so?A) Standby provisionB) Oversubscription privilegeC) Open offer privilegeD) New issues provisionE) Overallotment provision44) Existing shareholders:A) may or may not have a pre-emptive right to newly issued shares.B) must purchase new shares whenever rights are issued.C) are prohibited from selling their rights.D) are generally well advised to let the rights they receive expire.E) can maintain their proportional ownership positions without exercising their rights.45) To purchase a share in a rights offering, an existing shareholder generally just needs to:A) pay the subscription amount in cash.B) submit the required form along with the required number of rights.C) pay the difference between the market price of the stock and the subscription price.D) submit the required number of rights along with a payment for the underwriting fee.E) submit the required number of rights along with the subscription price.46) The value of a right depends upon the number of rights required for each new share as well as the:A) subscription price and book value per share.B) market and book values per share.C) market price, book value, and subscription price.D) market and subscription prices.E) difference between the market and book values per share.47) Before a seasoned stock offering, you owned 500 shares of a firm that had 20,000 shares outstanding. After the seasoned offering, you still owned 500 shares but the number of shares outstanding rose to 25,000. Which one of the following terms best describes this situation?A) OverallotmentB) Percentage ownership dilutionC) Green Shoe allocationD) Red herring allotmentE) Abnormal event48) Which one of the following statements concerning dilution is correct?A) Dilution of percentage ownership occurs whenever an investor fully participates in a rights offer.B) Market value dilution increases as the net present value of a project increases.C) Market value dilution occurs when the net present value of a project is negative.D) Neither book value dilution nor market value dilution has any direct bearing on individual shareholders.E) Book value dilution is the cause of market value dilution.49) Roy owns 200 shares of RTF Inc. He has opted not to participate in the current rights offering by this company. As a result, Roy will most likely be subject to:A) an oversubscription cost.B) underpricing.C) dilution.D) the Green Shoe provision.E) a locked-in period.50) Direct business loans typically ranging from one to five years are called:A) private placements.B) debt SEOs.C) notes payable.D) debt IPOs.E) term loans.51) The High-End mutual fund recently loaned $13.6 million to Henderson Hardware for 15 years at 6.8 percent interest. This loan is best described as a:A) private placement.B) debt SEO.C) note payable.D) debt IPO.E) term loan.52) Which one of the following statements is correct concerning the issuance of long-term debt?A) A direct private long-term loan has to be registered with the SEC.B) Direct placement debt tends to have more restrictive covenants than publicly issued debt.C) Distribution costs are lower for public debt than for private debt.D) It is easier to renegotiate public debt than private debt.E) Wealthy individuals tend to dominate the private debt market.53) Shelf registration allows a firm to register multiple issues at one time with the SEC and then sell those registered shares anytime during the subsequent:A) 3 months.B) 6 months.C) 180 days.D) 2 years.E) 5 years.54) Pearson Electric recently registered 180,000 shares of stock under SEC Rule 415. The company plans to sell 100,000 shares this year and the remaining 80,000 shares next year. What type of registration was this?A) Standby registrationB) Shelf registrationC) Regulation A registrationD) Regulation Q registrationE) Private placement registration55) The Boat Works decided to go public by offering a total of 135,000 shares of common stockto the public. The company hired an underwriter who arranged a firm commitment underwriting and an initial selling price of $24 a share with a spread of 8.3 percent. As it turned out, the underwriters only sold 122,400 shares to the public. What is the amount paid to the issuer?A) $2,227,280B) $3,074,420C) $2,971,080D) $2,692,820E) $2,477,38056) Nelson Paints recently went public by offering 50,000 shares of common stock to the public. The underwriters provided their services in a best efforts underwriting. The offering price was set at $17.50 a share and the gross spread was $2.30. After completing their sales efforts, the underwriters determined that they sold a total of 47,500 shares. How much cash did the company receive from its IPO?A) $722,000B) $717,000C) $735,000D) $705,000E) $748,00057) LC Delivery has decided to sell 1,800 shares of stock through a Dutch auction. The bids received are as follows: 600 shares at $37 a share, 800 shares at $36, 900 shares at $35, 200 shares at $34, and 100 shares at $32 a share. How much will the company receive in total from selling the 1,800 shares? Ignore all transaction and flotation costs.A) $63,100B) $52,500C) $63,000D) $58,800E) $52,10058) Bakers' Town Bread is selling 1,500 shares of stock through a Dutch auction. The bids received are as follows: 200 shares at $17 a share, 400 shares at $15, 700 shares at $14, 400 shares at $13, and 200 shares at $11 a share. How much cash will the company receive from selling these shares of stock? Ignore all transaction and flotation costs.A) $22,000B) $22,500C) $23,000D) $24,500E) $20,20059) Eastern Electric is offering 2,100 shares of stock in a Dutch auction. The bids include: 1,400 shares at $32 a share, 1,500 shares at $31, 1,400 shares at $30, and 900 shares at $29 a share. How much cash will Eastern Electric receive from selling these shares? Ignore all transaction and flotation costs.A) $62,100B) $64,200C) $60,000D) $63,000E) $63,30060) You have been instructed to place an order for a client to purchase 500 shares of every IPO that comes to market. The next two IPOs are each priced at $26 a share and will begin trading on the same day. The client is allocated 500 shares of IPO A and 240 shares of IPO B. At the end of the first day of trading, IPO A was selling for $23.90 a share and IPO B was selling for $29.40 a share. What is the client's total profit or loss on these two IPOs as of the end of the first day of trading?A) − $286B) − $234C) − $148D) $275E) $32961) Richard placed an order for 1,000 shares in each of three IPOs at $28 a share. He was allocated 1,000 shares of IPO A, 200 shares of IPO B, and 600 shares of IPO C. On the first day of trading, IPO A opened at $28 a share and ended the day at $24.25 a share. IPO B opened at $30 a share and finished the day at $37 a share. IPO C opened at $28 a share and ended the day at $27.65 a share. What is the total profit or loss on these three IPO purchases as of the end of the first day of trading?A) − $2,160B) − $1,850C) − $1,950D) $2,240E) $2,17562) Two IPOs will commence trading next week. Scott places an order to buy 600 shares of IPOA. Steve places an order to purchase 600 shares of IPO A and 600 shares of IPOB. Both IPOs are priced at $21 a share. Scott is allocated 300 shares of IPO A. Steve is allocated 300 shares of IPO A and 600 shares of IPO B. At the end of the first day of trading, IPO A is selling for $23.30 a share and IPO B is selling for $17.75 a share. How much additional profit did Steve have at the end of the first day of trading as compared to Scott?A) $1,950B) $1,260C) $1,870D) −$1,950E) −$1,26063) Davis Bros. and The Storage Shed have both announced IPOs at $32 per share. One of these is undervalued by $9, and the other is overvalued by $4, but you have no way of knowing whichis which. You plan on buying 1,000 shares of each issue. If an issue is underpriced, it will be rationed, and only half your order will be filled. What is the amount of the difference between your expected profit and the amount of profit you could earn if you could get 1,000 shares of both IPO offerings?A) $4,500B) $5,000C) $4,000D) $5,500E) $6,00064) Wear Ever is expanding and needs $6.8 million to help fund this growth. The company estimates it can sell new shares of stock for $43 a share. It also estimates it will cost an additional $352,000 for filing and legal fees related to the stock issue. The underwriters have agreed to a spread of 7.5 percent. How many shares of stock must be sold for the company to fund its expansion?A) 170,376B) 185,127C) 179,811D) 154,209E) 61,80665) Mountain Teas wants to raise $13.6 million to open a new production facility. The company estimates the issue costs for legal and accounting fees will be $386,000. The underwriters have set the stock price at $27.50 a share and the underwriting spread at 8.15 percent. How many shares of stock must be sold to meet this cash need?A) 528,414B) 553,709C) 569,315D) 492,144E) 501,90966) Outdoor Goods needs $3.8 million to modernize its production equipment. The underwriters set the stock price at $29.50 a share with an underwriting spread of 7.35 percent. This would be a firm commitment underwriting. The estimated issue costs are $272,000. How many shares of stock must be sold to finance this project?A) 148,984B) 188,917C) 152,311D) 186,299E) 162,40067) Flagler Inc. needs to raise $11.6 million, including all accounting and legal fees, to finance its expansion so has decided to sell new shares of equity via a general cash offering. The offer price is $22.50 per share and the underwriting spread is 7.85 percent. How many shares need to be sold?A) 559,474B) 604,011C) 566,667D) 571,008E) 538,40968) New Education needs to raise $8.79 million to finance its expansion and has decided to sell new shares of equity via a general cash offering. The offer price is $31.40 per share, the underwriting spread is 7.32 percent, and the associated administrative expenses and fees are $517,600. How many shares need to be sold?A) 348,907B) 361,222C) 311,111D) 329,937E) 319,83269) The Huff Co. has just gone public. Under a firm commitment agreement, the company received $17.64 for each of the 3.2 million shares sold. The initial offering price was $22.50 per share, and the stock rose to $24.15 per share in the first day of trading. The company paid $984,900 in direct legal and other costs and incurred $340,000 in indirect costs. What was the flotation cost as a percentage of the net amount raised?A) 38.56 percentB) 40.32 percentC) 41.68 percentD) 40.20 percentE) 39.09 percent70) Mountain Mining requires $3.3 million to expand its current operations and has decided to raise these funds through a rights offering at a subscription price of $18 a share. The current market price of the company's stock is $24.70 a share. How many shares of stock must be sold to fund the expansion plans?A) 140,015B) 133,603C) 148,909D) 183,333E) 195,60771) Northwest Rail wants to raise $27.8 million through a rights offering to upgrade its rail lines. How many shares of stock need to be sold if the current market price is $30.34 a share and the subscription price is $26.50 a share?A) 916,282B) 937,856C) 985,065D) 1,058,604E) 1,049,05772) S&S wants to raise $11.3 million through a rights offering with a subscription price of $15 a share. The company has 1.24 million shares outstanding and a market price of $17.50 a share. Each shareholder will receive one right for each share of stock owned. How many rights will be needed to purchase one new share of stock in this offering?A) 1.42B) 1.75C) 1.65D) 1.82E) 1.5573) P&T wants to raise $2.8 million through a rights offering with a subscription price of $20 a share. Currently, the company has 750,000 shares of stock outstanding at a market price of $24.50 a share. One right will be granted for each share of stock outstanding. How many rights are required to purchase one new share of stock in this offering?A) 5.36B) 6.02C) 5.55D) 6.56E) 6.6774) Miller Fruit wants to expand and needs $1.6 million to do so. Currently, the firm has 465,000 shares of stock outstanding at a market price per share of $32.50. The firm decided on a rights offering with one right granted for each share of outstanding stock. The subscription price is $28 a share. How many rights are needed to purchase one new share of stock in this offering?A) 8.14B) 7.17C) 8.22D) 8.63E) 9.45。
公司理财精要版原书第12版习题库答案Ross12e_Chapter12_TB
公司理财精要版原书第12版习题库答案Ross12e_Chapter12_TBFundamentals of Corporate Finance, 12e (Ross)Chapter 12 Some Lessons from Capital Market History1) Stacy purchased a stock last year and sold it today for $4 a share more than her purchase price. She received a total of $1.15 per share in dividends. Which one of the following statements is correct in relation to this investment?A) The dividend yield is expressed as a percentage of the par value.B) The capital gain would have been less had Stacy not received the dividends.C) The total dollar return per share is $2.85.D) The capital gains yield is positive.E) The dividend yield is greater than the capital gains yield.2) Which one of the following correctly describes the dividend yield?A) Next year's annual dividend divided by today's stock priceB) This year's annual dividend divided by today's stock priceC) This year's annual dividend divided by next year's expected stock priceD) Next year's annual dividend divided by this year's annual dividendE) The increase in next year's dividend over this year's dividend divided by this year's dividend3) Bayside Marina just announced it is decreasing its annual dividend from $1.48 per share to $1.45 per share effective immediately. If the dividend yield remains at its pre-announcement level, then you know the stock price:A) was unaffected by the announcement.B) increased proportionately with the dividend decrease.C) decreased proportionately with the dividend decrease.D) decreased by $.03 per share.E) increased by $.03 per share.4) Which one of the following statements related to capital gains is correct?A) The capital gains yield includes only realized capital gains.B) An increase in an unrealized capital gain will increase the capital gains yield.C) The capital gains yield must be either positive or zero.D) The capital gains yield is expressed as a percentage of a security's total return.E) The capital gains yield represents the total return earned by an investor.5) Which of the following yields on a stock can be negative?A) Dividend yieldB) Capital gains yieldC) Capital gains yield and total returnD) Dividend yield, capital gains yield, and total returnE) Dividend yield and total return6) Small-company stocks, as the term is used in the textbook, are best defined as the:A) 500 newest corporations in the U.S.B) companies whose stock trades OTC.C) smallest 20 percent of the companies listed on the NYSE.D) smallest 25 percent of the companies listed on NASDAQ.E) companies whose stock is listed on NASDAQ.7) The historical record for the period 1926–2016 supports which one of the following statements?A) When large-company stocks have a negative return, they will have a negative return for at least two consecutive years.B) The return on U.S. Treasury bills exceeds the inflation rate by at least .5 percent each year.C) There was only one year during the period when double-digit inflation occurred.D) Small-company stocks have lost as much as 50 percent and gained as much as 100 percent in a single year.E) The inflation rate was positive each year throughout the period.8) Which one of the following time periods is associated with low rates of inflation?A) 1941–1942B) 1973–1974C) 2014–2015D) 1979–1980E) 1946–19479) For the period 1926–2016, U.S. Treasury bills always:A) provided an annual rate of return that exceeded the annual inflation rate.B) had an annual rate of return in excess of 1.2 percent.C) provided a positive annual rate of return.D) earned a higher annual rate of return than long-term government bonds.E) had a greater variation in returns year-over-year than did long-term government bonds.10) Which one of the following statements is a correct reflection of the U.S. financial markets for the period 1926–2016?A) U.S. Treasury bill returns never exceeded a return of 9 percent in any one year.B) U.S. Treasury bills had an annual return in excess of 10 percent in three or more years.C) Inflation equaled or exceeded the return on U.S. Treasury bills every year during the period.D) Long-term government bonds outperformed U.S. Treasury bills every year during the period.E) National deflation occurred in at least one year during every decade during the period.11) For the period 2009–2016, U.S. Treasury bills had an annual rate of return that was:A) between .5 and 1 percent.B) between 1 and 2 percent.C) negative in at least one year.D) negative for two or more years.E) between 0 and .25 percent.12) Which one of the following categories of securities had the highest average annual return for the period 1926–2016?A) U.S. Treasury billsB) Large-company stocksC) Small-company stocksD) Long-term corporate bondsE) Long-term government bonds13) Which one of the following categories of securities had the lowest average risk premium for the period 1926–2016?A) Long-term government bondsB) Small-company stocksC) Large-company stocksD) Long-term corporate bondsE) U.S. Treasury bills14) The rate of return on which type of security is normally used as the risk-free rate of return?A) Long-term Treasury bondsB) Long-term corporate bondsC) Treasury billsD) Intermediate-term Treasury bondsE) Intermediate-term corporate bonds15) For the period 1926–2016, the average risk premium on large-company stocks was about:A) 12.7 percent.B) 10.4 percent.C) 8.6 percent.D) 6.9 percent.E) 7.3 percent.16) Assume that last year T-bills returned 2.8 percent while your investment in large-company stocks earned an average of7.6 percent. Which one of the following terms refers to the difference between these two rates of return?A) Risk premiumB) Geometric average returnC) Arithmetic average returnD) Standard deviationE) Variance17) Which one of the following statements correctly applies to the period 1926–2016?A) Large-company stocks earned a higher average risk premium than did small-company stocks.B) The average inflation rate exceeded the average return on U.S. Treasury bills.C) Large-company stocks had an average annual return of 14.7 percent.D) Inflation averaged 2.6 percent for the period.E) Long-term corporate bonds outperformed long-term government bonds.18) The excess return is computed as the:A) return on a security minus the inflation rate.B) return on a risky security minus the risk-free rate.C) risk premium on a risky security minus the risk-free rate.D) risk-free rate plus the inflation rate.E) risk-free rate minus the inflation rate.19) Which one of the following earned the highest risk premium over the period 1926–2016?A) Long-term corporate bondsB) U.S. Treasury billsC) Small-company stocksD) Large-company stocksE) Long-term government bonds20) What was the average rate of inflation over the period of 1926–2016?A) Less than 2.0 percentB) Between 2.0 and 2.4 percentC) Between 2.4 and 2.8 percentD) Between 2.8 and 3.2 percentE) Greater than 3.2 percent21) Assume you invest in a portfolio of long-term corporate bonds. Based on the period 1926–2016, what average annual rate of return should you expect to earn?A) Less than 5 percentB) Between 5 and 6 percentC) Between 6 and 7 percentD) Between 7 and 8 percentE) More than 8 percent22) The average annual return on small-company stocks was about ________ percent greater than the average annual return on large-company stocks over the period 1926–2016.A) 3B) 5C) 7D) 9E) 1123) Based on the period 1926-2016, the actual real return on large-company stocks has been around:A) 9 percent.B) 10 percent.C) 6 percent.D) 7 percent.E) 8 percent.24) To convince investors to accept greater volatility, you must:A) decrease the risk premium.B) increase the risk premium.C) decrease the real return.D) decrease the risk-free rate.E) increase the risk-free rate.25) Which one of the following best defines the variance of an investment's annual returns over a number of years?A) The average squared difference between the arithmetic and the geometric average annual returnsB) The squared summation of the differences between the actual returns and the average geometric returnC) The average difference between the annual returns and the average return for the periodD) The difference between the arithmetic average and the geometric average return for the periodE) The average squared difference between the actual returns and the arithmetic average return26) Which one of the following categories of securities had the most volatile annual returns over the period 1926–2016?A) Long-term corporate bondsB) Large-company stocksC) Intermediate-term government bondsD) U.S. Treasury billsE) Small-company stocks27) If the variability of the returns on large-company stocks were to decrease over the long-term, you would expect which one of the following as related to large-company stocks to occur as a result?A) Increase in the risk premiumB) Increase in the average long-term rate of returnC) Decrease in the 68 percent probability range of returnsD) Increase in the standard deviationE) Increase in the geometric average rate of return28) Which one of the following statements is correct based on the historical record for the period 1926–2016?A) The standard deviation of returns for small-company stocks was double that of large-company stocks.B) U.S. Treasury bills had a zero standard deviation of returns because they are considered to be risk-free.C) Long-term government bonds had a lower return but a higher standard deviation on average than did long-term corporate bonds.D) Inflation was less volatile than the returns on U.S. Treasury bills.E) Long-term government bonds were less volatile than intermediate-term government bonds.29) What is the probability that small-company stocks will produce an annual return that is more than one standard deviation below the average?A) 1.0 percentB) 2.5 percentC) 5.0 percentD) 16 percentE) 32 percent30) Which one of the following is a correct ranking of securities based on the volatility of their annual returns over the period of 1926–2016? Rank from highest to lowest.A) Large-company stocks, U.S. Treasury bills, long-term government bondsB) Small-company stocks, long-term corporate bonds, large-company stocksC) Long-term government bonds, long-term corporate bonds, intermediate-term government bondsD) Large-company stocks, small-company stocks, long-term government bondsE) Intermediate-term government bonds, long-term corporate bonds, U.S. Treasury bills31) Which one of the following had the least volatile annual returns over the period of 1926–2016?A) Large-company stocksB) InflationC) Long-term corporate bondsD) U.S. Treasury billsE) Intermediate-term government bonds32) Which one of the following statements is correct based on the period 1926–2016?A) Long-term government bonds had more volatile annual returns than did the long-term corporate bonds.B) The standard deviation of the annual rate of inflation was less than 3 percent.C) U.S Treasury bills have a zero variance in returns because they are risk-free.D) The risk premium on small-company stocks was less than 10 percent.E) The risk premium on all U.S. government securities is 0 percent.33) Generally speaking, which of the following best correspond to a wide frequency distribution?A) High standard deviation, low rate of returnB) Low rate of return, large risk premiumC) Small risk premium, high rate of returnD) Small risk premium, low standard deviationE) High standard deviation, large risk premium34) Standard deviation is a measure of which one of the following?A) Average rate of returnB) VolatilityD) Risk premiumE) Real returns35) Which one of the following is defined by its mean and its standard deviation?A) Arithmetic nominal returnB) Geometric real returnC) Normal distributionD) VarianceE) Risk premium36) Which of the following statements are true based on the historical record for 1926–2016?A) Risk-free securities produce a positive real rate of return each year.B) Bonds are generally a safer, or less risky, investment than are stocks.C) Risk and potential reward are inversely related.D) The normal distribution curve for large-company stocks is narrower than the curve for small-company stocks.E) Returns are more predictable over the short term than they are over the long term.37) Estimates of the rate of return on a security based on the historical arithmetic average will probably tend to ________ the expected return for the long-term and estimates using the historical geometric average will probably tend to ________ the expected return for the short-term.A) overestimate; overestimateB) overestimate; underestimateC) underestimate; overestimateD) underestimate; underestimateE) accurately estimate; accurately estimate38) The primary purpose of Blume's formula is to:A) compute an accurate historical rate of return.B) determine a stock's true current value.C) consider compounding when estimating a rate of return.D) determine the actual real rate of return.E) project future rates of return.39) The average compound return earned per year over a multiyear period is called the ________ average return.A) arithmeticB) standardC) variantD) geometricE) real40) The return earned in an average year over a multiyear period is called the ________ average return.B) standardC) variantD) geometricE) real41) Assume all stock prices fairly reflect all of the available information on those stocks. Which one of the following terms best defines the stock market under these conditions?A) Riskless marketB) Evenly distributed marketC) Zero volatility marketD) Blume's marketE) Efficient capital market42) Which one of the following statements best defines the efficient market hypothesis?A) Efficient markets limit competition.B) Security prices in efficient markets remain steady as new information becomes available.C) Mispriced securities are common in efficient markets.D) All securities in an efficient market are zero net present value investments.E) All securities provide the same positive rate of return when the market is efficient.43) Which one of the following is the most likely reason why a stock price might not react at all on the day that new information related to the stock's issuer is released? Assume the market is semistrong form efficient.A) Company insiders were aware of the information prior to the announcement.B) Investors do not pay attention to daily news.C) Investors tend to overreact.D) The news was positive.E) The information was expected.44) Which one of the following is most indicative of a totally efficient stock market?A) Extraordinary returns earned on a routine basisB) Positive net present values on stock investments over the long-termC) Zero net present values for all stock investmentsD) Arbitrage opportunities which develop on a routine basisE) Realizing negative returns on a routine basis45) 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 issues new shares of stock if the market is efficient.E) New information will gradually be reflected in a stock's price to avoid any sudden price changes in an efficient market.46) Efficient financial markets fluctuate continuously because:A) the markets are continually reacting to old information as that information is absorbed.B) the markets are continually reacting to new information.C) arbitrage trading is limited.D) current trading systems require human intervention.E) investments produce varying levels of net present values.47) Inside information has the least value when financial markets are:A) weak form efficient.B) semiweak form efficient.C) semistrong form efficient.D) strong form efficient.E) inefficient.48) Evidence seems to support the view that studying public information to identify mispriced stocks is:A) effective as long as the market is only semistrong form efficient.B) effective provided the market is only weak form efficient.C) ineffective.D) effective only in strong form efficient markets.E) ineffective only in strong form efficient markets.49) Which one of the following statements related to market efficiency tends to be supported by current evidence?A) It is easy for investors to earn abnormal returns.B) Short-run price movements are easy to predict.C) Markets are most likely only weak form efficient.D) Mispriced stocks are easy to identify.E) Markets tend to respond quickly to new information.50) Which form of market efficiency would most likely offer the greatest profit potential to an outstanding professional stock analyst?A) WeakB) SemiweakC) SemistrongD) StrongE) Perfect51) You are aware that your neighbor trades stocks based on confidential information he overhears at his workplace. This information is not available to the general public. This neighborcontinually brags to you about the profits he earns on these trades. Given this, you would tend to argue that the financial markets are at best ________ form efficient.A) weakB) semiweakC) semistrongD) strongE) perfect52) The U.S. Securities and Exchange Commission periodically charges individuals with insider trading and claims those individuals have made unfair profits. Given this, you would be most apt to argue that the markets are less than ________ form efficient.A) weakB) semiweakC) semistrongD) strongE) perfect53) Individual investors who continually monitor the financial markets seeking mispriced securities:A) earn excess profits on all of their investments.B) make the markets increasingly more efficient.C) are never able to find a security that is temporarily mispriced.D) are overwhelmingly successful in earning abnormal profits.E) are always quite successful using only historical price information as their basis of evaluation.54) One year ago, you purchased a stock at a price of $43.20 per share. The stock pays quarterly dividends of $.18 per share. Today, the stock is selling for $45.36 per share. What is your capital gain on this investment?A) $1.44B) $2.16C) $2.80D) $1.74E) $2.3455) Six months ago, you purchased 300 shares of stock in Global Trading at a price of $26.19 a share. The stock pays a quarterly dividend of $.12 a share. Today, you sold all of your shares for $27.11 per share. What is the total amount of your dividend income on this investment?A) $36B) $72C) $348D) $144E) $20456) One year ago, you purchased 200 shares of SL Industries stock at a price of $18.97 a share. The stock pays an annual dividend of $1.42 per share. Today, you sold all of your shares for $17.86 per share. What is your total dollar return on this investment?A) $50B) $91C) $58D) $62E) $8257) You own 850 shares of Western Feed Mills stock valued at $53.15 per share. What is the dividend yield if your total annual dividend income is $1,256?A) 2.67 percentB) 2.78 percentC) 1.83 percentD) 2.13 percentE) 2.54 percent58) West Wind Tours stock is currently selling for $52.30 a share. The stock has a dividend yield of 2.48 percent. How much dividend income will you receive per year if you purchase 600 shares of this stock?A) $824.96B) $836.20C) $724.80D) $762.00E) $778.2259) One year ago, you purchased a stock at a price of $38.22 a share. Today, you sold the stock and realized a total loss of11.09 percent on your investment. Your capital gain was –$4.68 a share. What was your dividend yield?A) 1.15 percentB) .88 percentC) 1.02 percentD) .67 percentE) .38 percent60) You just sold 427 shares of stock at a price of $19.07 a share. You purchased the stock for $18.83 a share and have received total dividends of $614. What is the total capital gain on this investment?A) $716.48B) $511.52C) $102.48D) $618.48E) $476.5261) Last year, you purchased 400 shares of Analog stock for $12.92 a share. You have received a total of $136 in dividends and $4,301 in proceeds from selling the shares. What is your capital gains yield on this stock?A) 9.09 percentB) 6.73 percentC) ?16.78 percentD) ?14.14 percentE) ?11.02 percent62) Today, you sold 540 shares of stock and realized a total return of 7.3 percent. You purchased the shares one year ago ata price of $24 a share and have received a total of $86 in dividends. What is your capital gains yield on this investment?A) 5.68 percentB) 6.64 percentC) 6.39 percentD) 7.26 percentE) 7.41 percent63) Four months ago, you purchased 900 shares of LBM stock for $7.68 a share. Last month, you received a dividend payment of $.12 a share. Today, you sold the shares for $9.13 a share. What is your total dollar return on this investment?A) $1,305B) $1,413C) $1,512D) $1,394E) $1,08064) One year ago, you purchased 100 shares of Best Wings stock at a price of $38.19 a share. The company pays an annual dividend of $.46 per share. Today, you sold for the shares for $37.92 a share. What is your total percentage return on this investment?A) 2.62 percentB) 1.93 percentC) 2.72 percentD) 1.08 percentE) .50 percent65) Suppose a stock had an initial price of $76 per share, paid a dividend of $1.42 per share during the year, and had an ending share price of $81. What was the capital gains yield?A) 6.17 percentB) 6.69 percentC) 7.05 percentD) 6.58 percentE) 5.44 percent66) Suppose you bought a $1,000 face value bond with a coupon rate of 5.6 percent one year ago. The purchase price was $987.50. You sold the bond today for $994.20. If the inflation rate last year was 2.6 percent, what was your exact real rate of return on this investment?A) 4.88 percentB) 5.32 percentC) 3.65 percentD) 3.78 percentE) 4.47 percent67) Leo purchased a stock for $63.80 a share, received a dividend of $2.68 a share and sold the shares for $59.74 each. During the time he owned the stock, inflation averaged 2.8 percent. What is his approximate real rate of return on this investment?A) ?.64 percentB) ?4.96 percentC) ?2.16 percentD) 2.16 percentE) 4.96 percent68) Christina purchased 500 shares of stock at a price of $62.30 a share and sold the shares for $64.25 each. She also received $738 in dividends. If the inflation rate was 3.9 percent, what was her exact real rate of return on this investment?A) 4.20 percentB) 1.54 percentC) 1.60 percentD) 3.95 percentE) 5.50 percent69) What is the amount of the risk premium on a U.S. Treasury bill if the risk-free rate is 3.1 percent, the inflation rate is 2.6 percent, and the market rate of return is 7.4 percent?A) 0 percentB) 2.8 percentC) .5 percentD) 1.7 percentE) 4.3 percent70) You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 7 percent, 13 percent, 19 percent, ?8 percent, and 15 percent. Suppose the average inflation rate over this time period was 2.6 percent and the average T-bill rate was 3.1 percent. Based on this information, what was the average nominal risk premium?A) 6.6 percentB) 6.1 percentC) 9.2 percentD) 1.2 percentE) 3.5 percent71) You bought one of Shark Repellant's 6 percent coupon bonds one year ago for $867. These bonds pay annual payments, have a face value of $1,000, and mature 12 years from now. Suppose you decide to sell your bonds today when the required return on the bonds is 7.4 percent. The inflation rate over the past year was 2.9 percent. What was your total real return on this investment?A) 6.48 percentB) 6.61 percentC) 8.18 percentD) 7.44 percentE) 9.70 percent72) You find a certain stock that had returns of 8 percent, ?3 percent, 12 percent, and 17 percent for four of the last five years. The average return of the stock for the past five-year period was 6 percent. What is the standard deviation of the stock's returns for the five-year period?A) 10.39 percentB) 4.98 percentC) 7.16 percentD) 9.25 percentE) 5.38 percent73) A stock had returns of 5 percent, 14 percent, 11 percent, ?8 percent, and 6 percent over the past five years. What is the standard deviation of these returns?A) 7.74 percentB) 8.21 percentC) 9.68 percentD) 8.44 percentE) 7.49 percent74) The common stock of Air Express had annual returns of 11.7 percent, 8.8 percent,16.7 percent, and ?7.9 percent over the last four years, respectively. What is thestandard deviation of these returns?A) 8.29 percentB) 9.14 percentC) 11.54 percentD) 7.78 percentE) 10.66 percent75) A stock had annual returns of 5.3 percent, ?2.7 percent, 16.2 percent, and 13.6 percentover the past four years. Which one of the following best describes the probability that this stock will produce a return of 20 percent or more in a single year?A) Less than 2.5 percent but more than .5 percentB) More than 16 percentC) Less than .5 percentD) Less than 1 percent but more than .5 percentE) Less than 16 percent but more than 2.5 percent76) A stock has an expected rate of return of 9.8 percent and a standard deviation of 15.4 percent. Which one of the following best describes the probability that this stock will lose at leasthalf of its value in any one given year?A) less than 16 percentB) less than .5 percentC) less than 1.0 percentD) less than 2.5 percentE) less than 5.0 percent77) A stock had annual returns of 11.3 percent, 9.8 percent, ?7.3 percent, and 14.6percent for the past four years. Based on this information, what is the 95 percentprobability range of returns for any one given year?A) ?2.4 to 17.5 percentB) ?2.60 to 11.80 percentC) ?12.5 to 26.7 percentD) ?10.4 to 12.3 percentE) ?10.9 to 25.1 percent78) Aimee is the owner of a stock with annual returns of 17.6 percent, ?11.7 percent, 5.6 percent, and 9.7 percent for the past four years. She thinks the stock may achieve a returnof 17 percent again this coming year. What is the probability that your friend is correct?A) Less than .5 percentB) Greater than .5 percent but less than 1 percentC) Greater than 1 percent but less than 2.5 percentD) Greater than 2.5 percent but less than 16 percentE) Greater than 16 percent79) A stock had returns of 3 percent, 12 percent, 26 percent, ?14 percent, and ?1 percent for the past five years. Based on these returns, what is the approximate probability that this stock will return at least 20 percent in any one given year?A) Approximately .1 percentB) Approximately 5 percentC) Approximately 2.5 percentD) Approximately .5 percentE) Approximately 16 percent80) A stock had returns of 14 percent, 13 percent, ?10 percent, and 7 percent for thepast four years. Which one of the following best describes the probability that this stockwill lose no more than 10 percent in any one year?A) Greater than .5 but less than 1.0 percentB) Greater than 1 percent but less than 2.5 percentC) Greater than 2.5 percent but less than 16 percentD) Greater than 84 percent but less than 97.5 percentE) Greater than 95 percent81) Over the past five years, a stock produced returns of 11 percent, 14 percent, 4percent, ?9 percent, and 5 percent. What is the probability that an investor in this stockwill not lose more than 10 percent in any one given year?。
公司理财精要版原书第12版习题库答案Ross12e_Chapter06_TB
Fundamentals of Corporate Finance, 12e (Ross)Chapter 6 Discounted Cash Flow Valuation1) Which one of the following statements correctly defines a time value of money relationship?A) Time and future values are inversely related, all else held constant.B) Interest rates and time are positively related, all else held constant.C) An increase in a positive discount rate increases the present value.D) An increase in time increases the future value given a zero rate of interest.E) Time and present value are inversely related, all else held constant.2) Project X has cash flows of $8,500, $8,000, $7,500, and $7,000 for Years 1 to 4, respectively. Project Y has cash flows of $7,000, $7,500, $8,000, and $8,500 for Years 1 to 4, respectively. Which one of the following statements is true concerning these two projects given a positive discount rate? (No calculations needed)A) Both projects have the same future value at the end of Year 4.B) Both projects have the same value at Time 0.C) Both projects are ordinary annuities.D) Project Y has a higher present value than Project X.E) Project X has both a higher present and a higher future value than Project Y.3) Project A has cash flows of $4,000, $3,000, $0, and $3,000 for Years 1 to 4, respectively. Project B has cash flows of $2,000, $3,000, $2,000, and $3,000 for Years 1 to 4, respectively. Which one of the following statements is correct assuming the discount rate is positive? (No calculations needed)A) The cash flows for Project B are an annuity, but those of Project A are not.B) Both sets of cash flows have equal present values as of Time 0.C) The present value at Time 0 of the final cash flow for Project A will be discounted using an exponent of three.D) Both projects have equal values at any point in time since they both pay the same total amount.E) Project B is worth less today than Project A.4) You are comparing two investment options that each pay 6 percent interest, compounded annually. Both options will provide you with $12,000 of income. Option A pays $2,000 the first year followed by two annual payments of $5,000 each. Option B pays three annual payments of $4,000 each. Which one of the following statements is correct given these two investment options? Assume a positive discount rate. (No calculations needed.)A) Both options are of equal value since they both provide $12,000 of income.B) Option A has the higher future value at the end of Year 3.C) Option B has a higher present value at Time 0.D) Option B is a perpetuity.E) Option A is an annuity.5) Which one of the following statements related to annuities and perpetuities is correct?A) An ordinary annuity is worth more than an annuity due given equal annual cash flows for 10 years at 7 percent interest, compounded annually.B) A perpetuity comprised of $100 monthly payments is worth more than an annuity of $100 monthly payments provided the discount rates are equal.C) Most loans are a form of a perpetuity.D) The present value of a perpetuity cannot be computed but the future value can.E) Perpetuities are finite but annuities are not.6) Which one of these statements related to growing annuities and perpetuities is correct?A) You can compute the present value of a growing annuity but not a growing perpetuity.B) In computing the present value of a growing annuity, you discount the cash flows using the growth rate as the discount rate.C) The future value of an annuity will decrease if the growth rate is increased.D) An increase in the rate of growth will decrease the present value of an annuity.E) The present value of a growing perpetuity will decrease if the discount rate is increased.7) You are comparing two annuities that offer regular payments of $2,500 for five years and pay .75 percent interest per month. You will purchase one of these today with a single lump sum payment. Annuity A will pay you monthly, starting today, while annuity B will pay monthly, starting one month from today. Which one of the following statements is correct concerning these two annuities?A) These annuities have equal present values but unequal future values.B) These two annuities have both equal present and equal future values.C) Annuity B is an annuity due.D) Annuity A has a smaller future value than annuity B.E) Annuity B has a smaller present value than annuity A.8) An ordinary annuity is best defined as:A) increasing payments paid for a definitive period of time.B) increasing payments paid forever.C) equal payments paid at the end of regular intervals over a stated time period.D) equal payments paid at the beginning of regular intervals for a limited time period.E) equal payments that occur at set intervals for an unlimited period of time.9) A perpetuity is defined as:A) a limited number of equal payments paid in even time increments.B) payments of equal amounts that are paid irregularly but indefinitely.C) varying amounts that are paid at even intervals forever.D) unending equal payments paid at equal time intervals.E) unending equal payments paid at either equal or unequal time intervals.10) A Canadian consol is best categorized as a(n):A) ordinary annuity.B) amortized cash flow.C) annuity due.D) discounted loan.E) perpetuity.11) The interest rate that is most commonly quoted by a lender is referred to as the:A) annual percentage rate.B) compound rate.C) effective annual rate.D) simple rate.E) common rate.12) The actual interest rate on a loan that is compounded monthly but expressed as an annual rate is referred to as the ________ rate.A) statedB) discounted annualC) effective annualD) periodic monthlyE) consolidated monthly13) Your credit card charges you .85 percent interest per month. This rate when multiplied by12 is called the ________ rate.A) effective annualB) annual percentageC) periodic interestD) compound interestE) episodic interest14) Which one of the following statements related to loan interest rates is correct?A) The annual percentage rate considers the compounding of interest.B) When comparing loans you should compare the effective annual rates.C) Lenders are most apt to quote the effective annual rate.D) Regardless of the compounding period, the effective annual rate will always be higher than the annual percentage rate.E) The more frequent the compounding period, the lower the effective annual rate given a fixed annual percentage rate.15) Which one of the following statements concerning interest rates is correct?A) Savers would prefer annual compounding over monthly compounding given the same annual percentage rate.B) The effective annual rate decreases as the number of compounding periods per year increases.C) The effective annual rate equals the annual percentage rate when interest is compounded annually.D) Borrowers would prefer monthly compounding over annual compounding given the same annual percentage rate.E) For any positive rate of interest, the annual percentage rate will always exceed the effective annual rate.16) Which one of the following compounding periods will yield the lowest effective annual rate given a stated future value at Year 5 and an annual percentage rate of 10 percent?A) AnnualB) Semi-annualC) MonthlyD) DailyE) Continuous17) A loan where the borrower receives money today and repays a single lump sum on a future date is called a(n) ________ loan.A) amortizedB) continuousC) balloonD) pure discountE) interest-only18) A loan that calls for periodic interest payments and a lump sum principal payment is referred to as a(n) ________ loan.A) amortizedB) modifiedC) balloonD) pure discountE) interest-only19) Amortized loans must have which one of these characteristics over its life?A) Either equal or unequal principal paymentsB) One lump-sum principal paymentC) Increasing paymentsD) Equal interest paymentsE) Declining periodic payments20) A(n) ________ loan has regular payments that include both principal and interest but these payments are insufficient to pay off the loan.A) perpetualB) continuingC) balloonD) pure discountE) interest-only21) The entire repayment of a(n) ________ loan is computed simply by computing one single future value.A) interest-onlyB) balloonC) amortizedD) pure discountE) bullet22) With an interest-only loan the principal is:A) forgiven over the loan period; thus it does not have to be repaid.B) repaid in decreasing increments and included in each loan payment.C) repaid in one lump sum at the end of the loan period.D) repaid in equal annual payments.E) repaid in increasing increments through regular monthly payments.23) An amortized loan:A) requires the principal amount to be repaid in even increments over the life of the loan.B) may have equal or increasing amounts applied to the principal from each loan payment.C) requires that all interest be repaid on a monthly basis while the principal is repaid at the end of the loan term.D) requires that all payments be equal in amount and include both principal and interest.E) repays both the principal and the interest in one lump sum at the end of the loan term.24) You need $25,000 today and have decided to take out a loan at 7 percent interest for five years. Which one of the following loans would be the least expensive for you? Assume all loans require monthly payments and that interest is compounded on a monthly basis.A) Interest-only loanB) Amortized loan with equal principal paymentsC) Amortized loan with equal loan paymentsD) Discount loanE) Balloon loan where 50 percent of the principal is repaid as a balloon payment25) Southern Tours is considering acquiring Holiday Vacations. Management believes Holiday Vacations can generate cash flows of $218,000, $224,000, and $238,000 over the next three years, respectively. After that time, they feel the business will be worthless. If the desired rate of return is 14.5 percent, what is the maximum Southern Tours should pay today to acquire Holiday Vacations?A) $519,799.59B) $538,615.08C) $545,920.61D) $595,170.53E) $538,407.7126) You are considering two savings options. Both options offer a rate of return of 7.6 percent. The first option is to save $2,500, $2,500, and $3,000 at the end of each year for the next three years, respectively. The other option is to save one lump sum amount today. You want to have the same balance in your savings account at the end of the three years, regardless of the savings method you select. If you select the lump sum method, how much do you need to save today?A) $7,414.59B) $6,289.74C) $6,660.00D) $6,890.89E) $6,784.2027) Your parents have made you two offers. The first offer includes annual gifts of $5,000, $6,000, and $8,000 at the end of each of the next three years, respectively. The other offer is the payment of one lump sum amount today. You are trying to decide which offer to accept given the fact that your discount rate is 6.2 percent. What is the minimum amount that you will accept today if you are to select the lump sum offer?A) $16,707.06B) $16,407.78C) $16,360.42D) $17,709.48E) $17,856.4228) You want to start a business that you believe can produce cash flows of $5,600, $48,200, and $125,000 at the end of each of the next three years, respectively. At the end of three years you think you can sell the business for $250,000. At a discount rate of 16 percent, what is this business worth today?A) $258,803.02B) $314,011.33C) $280,894.67D) $325,837.81E) $297,077.1729) You are considering a project with cash flows of $16,500, $25,700, and $18,000 at the end of each year for the next three years, respectively. What is the present value of these cash flows, given a discount rate of 7.9 percent?A) $54,877.02B) $51,695.15C) $55,429.08D) $46,388.78E) $53,566.6730) You just signed a consulting contract that will pay you $38,000, $42,000, and $45,000 annually at the end of the next three years, respectively. What is the present value of this contract given a discount rate of 10.5?A) $102,138.76B) $108,307.67C) $112,860.33D) $92,433.27E) $96,422.1531) You have some property for sale and have received two offers. The first offer is for $89,500 today in cash. The second offer is the payment of $35,000 today and an additional guaranteed $70,000 two years from today. If the applicable discount rate is 11.5 percent, which offer should you accept and why?A) You should accept the $89,500 today because it has the higher net present value.B) You should accept the $89,500 today because it has the lower future value.C) You should accept the first offer as it is a lump sum payment.D) You should accept the second offer because it has the larger net present value.E) It does not matter which offer you accept as they are equally valuable.32) Your anticipated wedding is three years from today. You don't know who your spouse will be but you do know that you are saving $10,000 today and $17,000 one year from today for this purpose. You also plan to pay the final $12,000 of anticipated costs on your wedding day. At a discount rate of 5.5 percent, what is the current cost of your upcoming wedding?A) $36,333.11B) $41,065.25C) $36,895.17D) $38,411.08E) $35,248.1633) One year ago, JK Mfg. deposited $12,000 in an investment account for the purpose of buying new equipment four years from today. Today, it is adding another $15,000 to this account. The company plans on making a final deposit of $10,000 to the account one year from today. How much cash will be available when the company is ready to buy the equipment assuming an interest rate of 5.5 percent?A) $43,609.77B) $45,208.61C) $44,007.50D) $46,008.30E) $47,138.0934) Troy will receive $7,500 at the end of Year 2. At the end of the following two years, he will receive $9,000 and $12,500, respectively. What is the future value of these cash flows at the end of Year 6 if the interest rate is 8 percent?A) $38,418.80B) $32,907.67C) $36,121.08D) $39,010.77E) $33,445.4435) Sue plans to save $4,500, $0, and $5,500 at the end of Years 1 to 3, respectively. What will her investment account be worth at the end of the Year 3 if she earns an annual rate of 4.15 percent?A) $10,583.82B) $10,381.25C) $10,609.50D) $11,526.50E) $10,812.0736) A proposed project has cash flows of $2,000, $?, $1,750, and $1,250 at the end of Years 1 to 4. The discount rate is 7.2 percent and the present value of the four cash flows is $6,669.25. What is the value of the Year 2 cash flow?A) $2,450B) $2,750C) $2,500D) $2,250E) $2,80037) Waldo expects to save the following amounts: Year 1 = $50,000; Year 2 = $28,000; Year 3 = $12,000. If he can earn an average annual return of 10.5 percent, how much will he have saved in this account exactly 25 years from the time of the first deposit?A) $1,172,373B) $935,334C) $806,311D) $947,509E) $1,033,54538) A charity plans to invest annual payments of $60,000, $70,000, $75,000, and $50,000, respectively, over the next four years. The first payment will be invested one year fromtoday. Assuming the investment earns 5.5 percent annually, how much will the charity have available four years from now?A) $263,025B) $236,875C) $277,491D) $328,572E) $285,73739) Your broker is offering 1.2 percent compounded daily on its money market account. If you deposit $7,500 today, how much will you have in your account 15 years from now?A) $8,979.10B) $9,714.06C) $8,204.50D) $9,336.81E) $9,414.1440) Your grandmother will be gifting you $150 at the end of each month for four years while you attend college. At a discount rate of 3.7 percent, what are these payments worth to you on the day you enter college?A) $6,201.16B) $6,682.99C) $6,539.14D) $6,608.87E) $6,870.2341) You just won the grand prize in a national writing contest! As your prize, you will receive $500 a month for 50 months. If you can earn 7 percent on your money, what is this prize worth to you today?A) $21,629.93B) $18,411.06C) $21,338.40D) $20,333.33E) $19,450.2542) Phil can afford $240 a month for five years for a car loan. If the interest rate is 8.5 percent, how much can he afford to borrow to purchase a car?A) $11,750.00B) $12,348.03C) $11,697.88D) $10,266.67E) $10,400.0043) As the beneficiary of a life insurance policy, you have two options for receiving the insurance proceeds. You can receive a lump sum of $200,000 today or receive payments of $1,400 a month for 20 years. If you can earn 6 percent on your money, which option should you take and why?A) You should accept the payments because they are worth $202,414 to you today.B) You should accept the payments because they are worth $201,846 to you today.C) You should accept the payments because they are worth $201,210 to you today.D) You should accept the $200,000 because the payments are only worth $189,311 to you today.E) You should accept the $200,000 because the payments are only worth $195,413 to you today.44) Assume you work for an employer who will contribute $60 a week for the next 20 years intoa retirement plan for your benefit. At a discount rate of 9 percent, what is this employee benefit worth to you today?A) $28,927.38B) $27,618.46C) $29,211.11D) $25,306.16E) $25,987.7445) The Distribution Point plans to save $2,000 a month for the next 3 years for future emergencies. The interest rate is 4.5 percent compounded monthly. The first monthly deposit will be made today. What would today's deposit amount have to be if the firm opted for one lump sum deposit that would yield the same amount of savings as the monthly deposits after 3 years?A) $70,459.07B) $67,485.97C) $69,068.18D) $69,333.33E) $67,233.8446) You need some money today and the only friend you have that has any is a miser. He agrees to loan you the money you need, if you make payments of $30 a month for the next six months. In keeping with his reputation, he requires that the first payment be paid today. He also charges you 2 percent interest per month. How much total interest is he charging?A) $4.50B) $3.60C) $9.50D) $4.68E) $8.6047) Sue just purchased an annuity that will pay $24,000 a year for 25 years, starting today. What was the purchase price if the discount rate is 8.5 percent?A) $241,309B) $245,621C) $251,409D) $258,319E) $266,49848) Marcus is scheduled to receive annual payments of $3,600 for each of the next 12 years. The discount rate is 8 percent. What is the difference in the present value if these payments are paid at the beginning of each year rather than at the end of each year?A) $2,170.39B) $2,511.07C) $2,021.18D) $2,027.94E) $2,304.9649) Two annuities have equal present values and an applicable discount rate of 7.25 percent. One annuity pays $2,500 on the first day of each year for 15 years. How much does the second annuity pay each year for 15 years if it pays at the end of each year?A) $2,331.00B) $2,266.67C) $2,500.00D) $2,390.50E) $2,681.2550) Trish receives $450 on the first of each month. Josh receives $450 on the last day of each month. Both Trish and Josh will receive payments for next four years. At a discount rate of 9.5 percent, what is the difference in the present value of these two sets of payments?A) $141.80B) $151.06C) $154.30D) $159.08E) $162.5051) What is the future value of $1,575 a year for 25 years at 6.3 percent interest, compounded annually?A) $76,919.04B) $72,545.78C) $90,152.04D) $92,006.08E) $91,315.0952) What is the future value of $8,500 a year for 40 years at 10.8 percent interest, compounded annually?A) $3,278,406.16B) $4,681,062.12C) $2,711,414.14D) $3,989,476.67E) $4,021,223.3353) Rosina plans on saving $2,000 a year and expects to earn an annual rate of 6.9 percent. How much will she have in her account at the end of 37 years?A) $406,429.10B) $338,369.09C) $297,407.17D) $313,274.38E) $308,316.6754) Theresa adds $1,500 to her savings account on the first day of each year. Marcus adds $1,500 to his savings account on the last day of each year. They both earn 6.5 percent annual interest. What is the difference in their savings account balances at the end of 35 years?A) $12,093.38B) $12,113.33C) $12,127.04D) $12,211.12E) $12,219.4655) You just obtained a loan of $16,700 with monthly payments for four years at 6.35 percent interest, compounded monthly. What is the amount of each payment?A) $387.71B) $391.40C) $401.12D) $419.76E) $394.8956) You borrowed $185,000 for 30 years to buy a house. The interest rate is 4.35 percent, compounded monthly. If you pay all of your monthly payments as agreed, how much total interest will you pay on this mortgage? (Round the monthly payment to the nearest whole cent.)A) $150,408B) $147,027C) $146,542D) $154,319E) $141,40657) Travis International has a one-time expense of $1.13 million that must be paid two years from today. The firm can earn 4.3 percent, compounded monthly, on its savings. How much must the firm save each month to fund this expense if the firm starts investing equal amounts each month starting at the end of this month?A) $38,416.20B) $45,172.02C) $51,300.05D) $47,411.08E) $53,901.1558) Nadine is retiring today and has $96,000 in her retirement savings. She expects to earn 5.5 percent, compounded monthly. How much can she withdraw from her retirement savings each month if she plans to spend her last penny 18 years from now?A) $809.92B) $847.78C) $919.46D) $616.08E) $701.1059) Island News purchased a piece of property for $1.79 million. The firm paid a down payment of 20 percent in cash and financed the balance. The loan terms require monthly payments for 20 years at an APR of 4.75 percent, compounded monthly. What is the amount of each mortgage payment?A) $9,253.92B) $10,419.97C) $8,607.11D) $11,567.40E) $12,301.1660) You estimate that you will owe $40,200 in student loans by the time you graduate. If you want to have this debt paid in full within 10 years, how much must you pay each month if the interest rate is 4.35 percent, compounded monthly?A) $411.09B) $413.73C) $414.28D) $436.05E) $442.5061) Phil purchased a car today at a price of $8,500. He paid $300 down in cash and financed the balance for 36 months at 5.75 percent, compounded monthly. What is the amount of each monthly loan payment?A) $248.53B) $270.23C) $318.47D) $305.37E) $257.6262) An insurance annuity offers to pay you $1,000 per quarter for 20 years. If you want to earn arate of return of 6.5 percent, compounded quarterly, what is the most you are willing to pay as a lump sum today to obtain this annuity?A) $32,008.24B) $34,208.16C) $44,591.11D) $43,008.80E) $38,927.5963) Your car dealer is willing to lease you a new car for $190 a month for 36 months. Payments are due on the first day of each month starting with the day you sign the lease contract. If your cost of money is 6.5 percent, what is the current value of the lease?A) $10,331.03B) $6,232.80C) $9,197.74D) $7,203.14E) $11,008.3164) Your great aunt left you an inheritance in the form of a trust. The trust agreement states that you are to receive $2,500 on the first day of each year, starting immediately and continuing for 20 years. What is the value of this inheritance today if the applicable discount rate is 4.75 percent?A) $24,890.88B) $31,311.16C) $33,338.44D) $28,909.29E) $29,333.3365) Chris has three options for settling an insurance claim. Option A will provide $1,500 a month for 6 years. Option B will pay $1,025 a month for 10 years. Option C offers $85,000 as a lump sum payment today. The applicable discount rate is 6.8 percent, compounded monthly. Which option should Chris select, and why, if he is only concerned with the financial aspects of the offers?A) Option A: It provides the largest monthly payment.B) Option B: It pays the largest total amount.C) Option C: It is all paid today.D) Option B: It pays the greatest number of payments.E) Option B: It has the largest value today.66) Racing Motors wants to save $825,000 to buy some new equipment three years from now. The plan is to set aside an equal amount of money on the first day of each quarter starting today. How much does the company need to save each quarter to achieve its goal if it can earn 4.45 percent on its savings?A) $63,932.91B) $62,969.70C) $63,192.05D) $62,925.00E) $64,644.1767) Stephanie is going to contribute $160 on the first of each month, starting today, to her retirement account. Her employer will provide a match of 50 percent. In other words, her employer will add $80 to the amount Stephanie saves. If both Stephanie and her employer continue to do this and she can earn a monthly interest rate of .45 percent, how much will she have in her retirement account 35 years from now?A) $336,264.14B) $204,286.67C) $199,312.04D) $268,418.78E) $299,547.9768) An annuity that pays $12,500 a year at an annual interest rate of 5.45 percent costs $150,000 today. What is the length of the annuity time period?A) 25 yearsB) 18 yearsC) 15 yearsD) 20 yearsE) 22 years69) You want to be a millionaire when you retire in 30 years and expect to earn 8.5 percent, compounded monthly. How much more will you have to save each month if you wait 10 years to start saving versus if you start saving at the end of this month?A) $947.22B) $1,046.80C) $808.47D) $841.15E) $989.1070) You are the recipient of a gift that will pay you $25,000 one year from now and every year thereafter for the following 24 years. The payments will increase in value by 2.5 percent each year. If the appropriate discount rate is 8.5 percent, what is the present value of this gift?A) $416,667B) $316,172C) $409,613D) $311,406E) $386,10171) You are preparing to make monthly payments of $100, beginning at the end of this month, into an account that pays 5 percent interest, compounded monthly. How many payments will youhave made when your account balance reaches $10,000?A) 97.30B) 83.77C) 89.46D) 100.00E) 91.1272) You want to borrow $27,500 and can afford monthly payments of $650 for 48 months, but no more. Assume monthly compounding. What is the highest APR rate you can afford?A) 6.33 percentB) 6.67 percentC) 5.82 percentD) 7.01 percentE) 7.18 percent73) Today, you borrowed $3,200 on a credit card that charges an interest rate of 12.9 percent, compounded monthly. How long will it take you to pay off this debt assuming that you do not charge anything else and make regular monthly payments of $60?A) 6.87 yearsB) 6.28 yearsC) 6.64 yearsD) 7.23 yearsE) 7.31 years74) The Rodriquez family is determined to purchase a $250,000 home without incurring any debt. The family plans to save $2,500 a quarter for this purpose and expects to earn 6.65 percent, compounded quarterly. How long will it be until the family can purchase a home?A) 23.09 yearsB) 14.85 yearsC) 35.46 yearsD) 48.82 yearsE) 59.39 years75) Today, you are retiring. You have a total of $289,416 in your retirement savings. You want to withdraw $2,500 at the beginning of every month, starting today and expect to earn 4.6 percent, compounded monthly. How long will it be until you run out of money?A) 29.97 yearsB) 8.56 yearsC) 22.03 yearsD) 12.71 yearsE) 18.99 years。
公司理财精要版原书第12版习题库答案Ross12e_Chapter18_TB
Fundamentals of Corporate Finance, 12e (Ross)Chapter 18 Short-Term Finance and Planning1) Which one of the following actions represents a source of cash?A) Granting credit to a customerB) Purchasing new machineryC) Making a payment on a bank loanD) Purchasing inventoryE) Accepting credit from a supplier2) Which one of these actions represents a use of cash?A) Collecting a receivableB) Paying employee wagesC) Selling inventory for cashD) Obtaining a bank loanE) Purchasing inventory on credit3) Which one of these activities represents a source of cash?A) Increasing accounts receivableB) Decreasing inventoryC) Increasing fixed assetsD) Decreasing accounts payableE) Decreasing common stock4) Which one of the following actions will increase net working capital? Assume the current ratio is greater than 1.0.A) Paying a supplier for a previous purchaseB) Paying off a long-term debtC) Selling inventory at cost for cashD) Purchasing inventory on creditE) Selling inventory at a profit on credit5) Which one of the following will decrease net working capital? Assume the current ratio is greater than 1.0.A) Selling inventory at costB) Collecting payment from a customerC) Paying a dividend to shareholdersD) Selling a fixed asset for less than book valueE) Paying a supplier for prior purchases6) Which one of these actions will increase the operating cycle? Assume all else held constant.A) Decreasing the payables periodB) Decreasing the receivables turnover rateC) Increasing the payables periodD) Decreasing the average inventory levelE) Increasing the inventory turnover rate7) The operating cycle is equal to the:A) cash cycle plus the accounts receivable period.B) inventory period plus the accounts receivable period.C) inventory period plus the accounts payable period.D) accounts payable period minus the cash cycle.E) accounts payable period plus the accounts receivable period.8) Which one of the following will decrease the operating cycle?A) Decreasing the inventory turnover rateB) Decreasing the accounts payable periodC) Increasing the accounts receivable turnover rateD) Increasing the accounts payable periodE) Increasing the accounts receivable period9) The operating cycle describes how a product:A) is priced.B) is sold.C) moves through the current asset accounts.D) moves through the production process.E) generates a profit.10) Which one of these affects the length of the cash cycle but not the operating cycle?A) Inventory periodB) Accounts payable periodC) Both the accounts receivable and inventory periodsD) Accounts receivable periodE) Both the accounts receivable and the accounts payable periods11) Which one of these will decrease the cash cycle, all else held constant?A) Increasing the accounts receivable turnover rateB) Decreasing the accounts payable periodC) Increasing the inventory periodD) Decreasing the inventory turnover rateE) Increasing the accounts receivable period12) A decrease in which one of the following will increase the cash cycle, all else held constant?A) Payables turnoverB) Days sales in inventoryC) Operating cycleD) Inventory turnover rateE) Accounts receivable period13) Metal Designs historically produced products for inventory. Now, they only produce a product when an actual order is received from a customer. All else equal, this change will:A) increase the operating cycle.B) lengthen the accounts receivable period.C) shorten the accounts payable period.D) decrease the cash cycle.E) decrease the inventory turnover rate.14) Which one of these statements is correct? Assume all else held constant.A) A decrease in the accounts receivable turnover rate decreases the cash cycle.B) The cash cycle is equal to the operating cycle minus the inventory period.C) A negative cash cycle is preferable to a positive cash cycle.D) A decrease in the accounts payable period shortens the cash cycle.E) The cash cycle plus the accounts receivable period is equal to the operating cycle.15) Which one of the following statements is correct concerning the cash cycle?A) The longer the cash cycle, the more likely a company will need external financing.B) Increasing the accounts payable period increases the cash cycle.C) Accepting a supplier's discount for early payment decreases the cash cycle.D) The cash cycle can exceed the operating cycle if the payables period is equal to zero.E) Offering early payment discounts to customers will tend to increase the cash cycle.16) Which one of the following actions will tend to increase the inventory period?A) Discontinuing all slow-selling merchandiseB) Selling obsolete inventory below cost just to get rid of itC) Buying raw materials only as needed for the manufacturing processD) Producing goods on demand versus for inventoryE) Increasing inventory selection to attract more customers17) Which one of the following actions will tend to increase the accounts receivable period from its current 14 days?A) Tightening the standards for granting credit to customersB) Refusing to grant additional credit to any customer who pays lateC) Increasing the finance charges applied to all customer balances outstanding over 30 daysD) Granting discounts for cash salesE) Eliminating the discount for early payment by credit customers18) An increase in which one of the following is an indicator that an accounts receivable policy is becoming more restrictive?A) Bad debtsB) Accounts receivable turnover rateC) Accounts receivable periodD) Credit salesE) Operating cycle19) Assume all else held constant. If you pay your suppliers three days sooner, then:A) your payables turnover rate will decrease.B) you may require additional funds from other sources to fund the cash cycle.C) the cash cycle will decrease.D) your operating cycle will decrease.E) the accounts receivable period will decrease.20) Which one of the following will increase the accounts payable period, all else held constant?A) A decrease in the inventory periodB) An increase in the ending accounts payable balanceC) An increase in the cash cycleD) A decrease in the operating cycleE) An increase in the accounts payable turnover rate21) Which one of the following managers determines which customers must pay cash and which can charge their purchases?A) Purchasing managerB) Credit managerC) ControllerD) Production managerE) Payables manager22) Which one of the following managers determines when a supplier will be paid?A) ControllerB) Payables managerC) Credit managerD) Purchasing managerE) Production manager23) The length of time between the purchase of inventory and the receipt of cash from the sale of that inventory is called the:A) operating cycle.B) inventory period.C) accounts receivable period.D) accounts payable period.E) cash cycle.24) The length of time that elapses between the day at item of inventory is purchased and the day that item sells is called the:A) operating cycle.B) inventory period.C) accounts receivable period.D) accounts payable period.E) cash cycle.25) The length of time between the sale of inventory and the collection of the payment for that sale is called the:A) operating cycle.B) inventory period.C) accounts receivable period.D) accounts payable period.E) cash cycle.26) The length of time between the day an item is purchased from a supplier until the day that supplier is paid for that purchase is called the:A) operating cycle.B) inventory period.C) accounts receivable period.D) accounts payable period.E) cash cycle.27) Central Supply paid off an accounts payable for a toboggan it had purchased on credit three weeks ago. The time period between today and the day Central Supply will receive cash from the sale of this toboggan is called the:A) operating cycle.B) inventory period.C) accounts receivable period.D) accounts payable period.E) cash cycle.28) Costs that increase as a firm acquires additional current assets are called ________ costs.A) carryingB) shortageC) orderD) safetyE) trading29) Costs that decrease as a company acquires additional current assets are called ________ costs.A) carryingB) shortageC) debtD) equityE) payables30) A firm with a flexible short-term financial policy will:A) maintain a low balance in accounts receivables.B) only have minimal amounts, if any, invested in marketable securities.C) invest heavily in inventory.D) have low cash balances.E) have tight restrictions on granting credit to customers.31) Which one of these is indicative of a short-term restrictive financial policy?A) Purchasing inventory on an as-needed basisB) Granting credit to all customersC) Investing heavily in marketable securitiesD) Maintaining a large accounts receivable balanceE) Keeping inventory levels high32) If a company adheres to a restrictive short-term financial policy, then they will generally have:A) little, if any, investment in marketable securities.B) low inventory turnover rates.C) liberal credit terms for customers.D) few, if any, stockouts.E) high cash balances.33) The Lumber Mart recently replaced its management team. As a result, they are implementinga restrictive short-term financial policy in place of the flexible policy under which they had been operating. Which one of the following should the employees expect as a result of this policy change?A) Increasing monthly sales as compared to the prior yearB) Greater inventory selectionC) Fewer out-of-stock occurrencesD) Loss of credit customersE) More liberal credit terms34) A flexible short-term financial policy:A) increases the need for long-term financing.B) minimizes net working capital.C) avoids bad debts by only selling items for cash.D) maximizes fixed assets and minimizes current assets.E) is most appropriate when carrying costs are high and shortage costs are low.35) A flexible short-term financial policy:A) maximizes cashouts.B) increases shortage costs due to frequent cash-outs.C) tends to decrease sales as compared to a restrictive policy.D) incurs more carrying costs than a restrictive policy.E) requires only a minimum investment in current assets.36) Shortage costs are least associated with:A) stockouts and cashouts.B) lost customer goodwill.C) disruptions of production schedules.D) inventory ordering costs.E) opportunity costs incurred by high levels of working capital.37) The optimal investment in current assets for an active company occurs at the point where:A) both shortage costs and carrying costs equal zero.B) shortage costs are equal to zero.C) carrying costs are equal to zero.D) carrying costs exceed shortage costs.E) shortage costs and carrying costs are equal.38) A company:A) with a restrictive financing policy secures sufficient long-term financing to fund all its assets.B) with a flexible financing policy frequently invests in marketable securities.C) with a flexible financing policy tends to use short-term financing on an ongoing basis.D) will tend to avoid short-term financing under both restrictive and flexible financing policies.E) with seasonal sales must select flexible financing policies.39) Which one of the following statements is correct?A) Seasonal needs are financed with short-term loans when companies adhere to a flexible financing policy.B) A flexible financing policy tends to increase the risk of encountering financial distress.C) Long-term interest rates tend to be less volatile than short-term rates.D) Most companies tend to finance inventory with long-term debt.E) Short-term interest rates are generally higher than long-term rates.40) Which one of these best describes a characteristic of a flexible financing policy?A) All of a company's assets are financed with long-term debt.B) Only long-term assets are financed with long-term debt.C) Short-term financing will be used to finance seasonal peaks.D) Inventory is purchased with cash.E) Low levels of inventory are maintained.41) With a compromise financial policy companies will:A) borrow only long-term funds and refuse any loans that require compensating balances.B) borrow short-term funds and also invest in marketable securities.C) finance all of their assets with various short-term loans.D) finance their seasonal asset peaks with short-term debt and the remainder of their assets with equity.E) finance half of their fixed assets with long-term debt and half with short-term debt.42) Assume each month has 30 days and a company has a 30-day accounts receivable period. During the second calendar quarter of the year, that company will collect payment for the sales it made during which of the following months?A) February, March, and AprilB) April, May and JuneC) December, January, and FebruaryD) January, February, and MarchE) March, April, and May43) The Harvester collects 55 percent of sales in the month of sale, 40 percent of sales in the month following the month of sale, and 5 percent of sales in the second month following themonth of sale. During the month of April, they will collect:A) 55 percent of February sales.B) 5 percent of April sales.C) 40 percent of March sales.D) 5 percent of March sales.E) 40 percent of February sales.44) Timko has a 90-day collection period and produces seasonal merchandise. Sales are lowest during the first calendar quarter of a year and the highest during the third quarter. The company maintains a relatively steady level of production which means that its cash disbursements are fairly equal in all quarters. This company is most apt to face a cash-out situation in:A) the first quarter.B) the second quarter.C) the third quarter.D) the fourth quarter.E) any quarter with equal probabilities of occurrence.45) Summertime Adventures is a seasonal firm that enjoys its highest sales during July and August. The company purchases inventory one month before it is sold and pays for its purchases 60 days after the invoice date. Which one of the following statements is supported by this information?A) Inventory purchases will be highest during the months of July and August.B) Inventory purchases will be highest during the months of May and June.C) Payments to suppliers will be highest during the months of June and July.D) Payments to suppliers will be highest during the months of July and August.E) Payments to suppliers will be highest during the months of August and September.46) Which one of the following combinations is most apt to cause a company that is generally financially sound to have a negative net cash inflow for a particular quarter?A) Low fixed expenses and level monthly salesB) A one-time asset purchase and approaching high seasonal salesC) Highly seasonal sales and a flexible financing policyD) A flexible financing policy and level monthly salesE) A large cash sale and low fixed expenses47) Which one of the following statements is correct concerning a company's cash balance?A) Most firms attempt to maintain a zero cash balance at all times.B) The cumulative cash surplus shown on a cash budget is equal to the ending cash balance plus the minimum desired cash balance.C) On a cash balance report, the cumulative cash surplus at the end of May is used as June's beginning cash balance.D) A cumulative cash deficit indicates a borrowing need.E) The ending cash balance must equal the minimum desired cash balance.48) A cumulative cash deficit indicates a company:A) has at least a short-term need for external funding.B) is facing long-term financial distress.C) will go out of business within the year.D) is capable of funding all of its needs internally.E) is using its cash wisely.49) Steve has estimated the cash inflows and outflows for his hardware store for next year. The report that he has prepared recapping these cash flows is called a:A) pro forma income statement.B) sales projection.C) cash budget.D) receivables analysis.E) credit analysis.50) Taylor Supply has made an agreement with its bank that allows it to borrow up to $10,000 at any time over the next year. This arrangement is called a(n):A) floor loan.B) open loan.C) compensating balance.D) line of credit.E) bank note.51) Money deposited by a borrower with a bank in a low or non-interest-bearing account as a condition of a loan agreement is called a:A) compensating balance.B) secured credit deposit.C) letter of credit.D) line of cash.E) pledge.52) Brustle's Pottery either factors or assigns all of its receivables to other firms. This is known as:A) accounts receivable financing.B) pledged financing.C) capital funding.D) daily funding.E) capital financing.53) Rose's Gift Shop borrows money on a short-term basis by pledging its inventory as collateral. This is an example of a(n):A) debenture.B) line of credit.C) banker's acceptance.D) working loan.E) inventory loan.54) The most common way to finance a temporary cash deficit is with a:A) long-term secured bank loan.B) short-term secured bank loan.C) short-term issue of corporate bonds.D) long-term unsecured bank loan.E) short-term unsecured bank loan.55) The primary difference between a line of credit and a revolving credit arrangement is the:A) type of collateral used to secure the loan.B) length of the credit period.C) fact that the line of credit is a secured loan and the revolving credit arrangement is unsecured.D) fact that the line of credit is an unsecured loan and the revolving credit arrangement is secured.E) loan's classification as either a committed or a non-committed loan.56) A compensating balance:A) is required when a company acquires any bank financing other than a line of credit.B) is often used by banks as a means of rewarding their best credit customers.C) decreases the cost of short-term bank financing.D) only applies to zero-interest rate loans.E) may be required even if a company never borrows funds.57) High Point Hotel (HPH) has $218,000 in accounts receivable. To finance a major purchase, the company assigns these receivables to Cross Town Bank. Which one of the following statements correctly describes this transaction?A) HPH will immediately receive $218,000 and will have no further obligation related to these receivables.B) HPH will receive some amount of cash immediately while maintaining full responsibility for any uncollected receivables.C) Cross Town Bank accepts full responsibility for the collection of the accounts receivables and, in exchange, immediately pays HPH a discounted value for its receivables.D) Cross Town Bank accepts full responsibility for collecting the accounts receivables and pays HPH a discounted price for the accounts collected after the normal collection period has elapsed.E) HPH receives the full amount of its receivables upon assignment but must reimburse Cross Town Bank for any uncollected account.58) Which one of the following statements is correct?A) The assignment of receivables involves selling accounts receivables at full price.B) Lines of credit frequently require a cleanup period.C) With maturity factoring, the borrower receives the loan amount immediately.D) Commercial paper is short-term financing offered to highly rated corporations by major banks.E) Credit card receivables funding is a relatively inexpensive method of borrowing on a short-term basis.59) Which type of arrangement is a hardware store most apt to use to finance its inventory?A) Accounts receivable assignmentB) Blanket inventory lienC) Trust receiptD) Commercial paperE) Field warehouse financing60) An orange grower is most apt to use which type of financing for its crop?A) Accounts receivable assignmentB) Blanket inventory lienC) Trust receiptD) Commercial paperE) Field warehouse financing61) All of the following are benefits derived from short-term financial planning with the exception of:A) having advance notice of when your firm should require external financing.B) knowing for certain what your cash balance will be six months in advance.C) knowing if excess funds should be available for investing.D) being able to determine the approximate extent of time for which a loan is required.E) having the ability to time capital expenditures in order to place the least financial burden possible on a firm.62) Auto Detailers has a book net worth of $29,700. Long-term debt is $4,800. Net working capital, other than cash, is $3,700 and fixed assets are $27,400. How much cash does the company have?A) $3,900B) $4,800C) $4,300D) $3,400E) $3,70063) New Products has sales of $749,500 and cost of goods sold of $368,600. Beginning inventory is $54,700 and ending inventory is $58,200. What is the length of the inventory period?A) 15.01 daysB) 17.89 daysC) 55.90 daysD) 90.53 daysE) 113.67 days64) Mid-Western Markets has sales of $1,389,400 and costs of goods sold of $892,700. Beginning inventory is $94,300 and ending inventory is $110,200. What is the inventory turnover rate?A) 8.73 timesB) 10.78 timesC) 13.59 timesD) 11.37 timesE) 12.64 times65) North Side Wholesalers has sales of $1,648,900. The cost of goods sold is equal to 71 percent of sales and the average inventory is $75,800. How many days on average does it take to sell the inventory?A) 28.30 daysB) 23.63 daysC) 20.48 daysD) 33.28 daysE) 21.68 days66) The Bear Rug has sales of $647,000. The cost of goods sold is equal to 66 percent of sales. Accounts receivable has a beginning balance of $53,400 and an ending balance of $49,600. How long on average does it take to collect the receivables?A) 12.56 daysB) 29.05 daysC) 18.58 daysD) 20.44 daysE) 19.17 days67) Morning Star has credit sales of $1,032,800, costs of goods sold of $662,350, average accounts receivable of $86,300, and average accounts payable of $92,600. On average, how long does it take Morning Star's credit customers to pay for their purchases?A) 11.97 daysB) 39.24 daysC) 30.50 daysD) 21.88 daysE) 19.56 days68) The Mountain Top Shoppe has sales of $828,000, average accounts receivable of $64,100 and average accounts payable of $72,700. The cost of goods sold is equivalent to 68 percent of sales. How long does it take The Mountain Top Shoppe to pay its suppliers?A) 69.31 daysB) 68.38 daysC) 47.13 daysD) 35.89 daysE) 36.97 days69) HG Livery Supply has a beginning accounts payable balance of $68,800 and an ending accounts payable balance of $72,700. Sales for the period were $942,800 and costs of goods sold were $534,200. What is the payables turnover rate?A) 7.55 timesB) 8.39 timesC) 7.02 timesD) 13.33 timesE) 12.85 times70) Bradley's has an inventory turnover rate of 7.6, a payables turnover rate of 11.4, and a receivables turnover rate of 12.6. How long is the operating cycle?A) 20.20 daysB) 76.99 daysC) 70.63 daysD) 30.13 daysE) 24.11 days71) Meryl Enterprises currently has an operating cycle of 76.4 days. The company is implementing some operational changes that are expected to increase the accounts receivable period by 2.2 days, decrease the inventory period by 5.3 days, and increase the accounts payable period by 1.5 days. What is the new operating cycle expected to be?A) 78.0 daysB) 74.8 daysC) 73.3 daysD) 79.5 daysE) 71.8 days72) On average, Furniture & More is able to sell its inventory in 54.2 days and takes 65.3 days on average to pay for its purchases. Its average customer pays with a credit card which allows the company to collect its receivables in 2.9 days. Given this information, what is the length of operating cycle?A) 57.1 daysB) 88.3 daysC) −8.2 daysD) 116.6 daysE) 122.4 days73) Interior Designs has an inventory period of 84.6 days, an accounts payable period of 43.2 days, and an accounts receivable period of 41.7 days. Management is considering an offer from their suppliers to pay within 10 days and receive a discount of 2 percent. If the new discount is taken, the accounts payable period is expected to decline by 30.4 days. What will be the new operating cycle given the change in the payables period?A) 95.9 daysB) 115.0 daysC) 97.4 daysD) 126.3 daysE) 139.1 days74) Metal Products Co. has an inventory period of 94.2 days, an accounts payable period of 40.4 days, and an accounts receivable turnover rate of 17.6. What is the length of the cash cycle?A) 71.40 daysB) 74.54 daysC) 96.28 daysD) 114.94 daysE) 108.28 days75) West Chester Automation has an inventory turnover of 9.1 and an accounts payable turnover of 10.6. The accounts receivable period is 32.8 days. What is the length of the cash cycle?A) 35.67 daysB) 38.48 daysC) 41.02 daysD) 46.47 daysE) 48.81 days76) Peterson's Antiquities currently has a 32.6-day cash cycle. Assume the company changes its operations such that it decreases its receivables period by 3.1 days, increases its inventory period by 1.8 days, and increases its payables period by 2.2 days. What will the length of the cash cycle be after these changes?A) 33.5 daysB) 36.1 daysC) 30.2 daysD) 29.1 daysE) 27.6 days77) Rossiter's currently has a cash cycle of 43.4 days. Assume the operations are changed such that the receivables period decreases by 2.6 days, the inventory period by increases by 1.3 days, and the payables period increases by 3.4 days. What will be the length of the cash cycle after these changes?A) 39.2 daysB) 45.5 daysC) 38.7 daysD) 41.3 daysE) 48.1 days78) AC Corporation has beginning inventory of $11,062, accounts payable of $8,010, and accounts receivable of $7,844. The end of year values are $11,362 for inventory, $7,898 foraccounts payable, and $8,029 for accounts receivable. Net sales are $109,100 and costs of goods sold are $56,220. How many days are in the cash cycle?A) 47.7 daysB) 80.2 daysC) 55.8 daysD) 97.9 daysE) 67.8 days79) Wake-Up Coffee has projected next year's quarterly sales at $960, $890, $980, and $1,050 for Quarters 1 to 4, respectively. Accounts receivable at the beginning of the year are $212 and the collection period is 18 days. What is the amount of the accounts receivable balance at the end of Quarter 2? Assume a year has 360 days.A) $212B) $207C) $178D) $184E) $16780) Tall Guys Clothing has a 30-day collection period. Sales for the next calendar year are estimated at $1,950, $2,100, $2,650 and $3,200, respectively, by quarter, starting with the first quarter of the year. Given this information, which one of the following statements is correct? Assume a year has 360 days.A) The Quarter 2 collections will be $2,000.B) The accounts receivable balance at the beginning of Quarter 4 will be $940.C) The Quarter 3 collections will be $2,375.D) The end of Quarter 4 accounts receivable balance will be $2,133.E) The Quarter 4 collections will be $3,017.81) Plant Mart has a beginning receivables balance on February 1 of $1,648. Sales for February through May are $2,670, $2,940, $3,820, and $4,450, respectively. The accounts receivable period is 15 days. What is the amount of the April collections? Assume a year has 360 days.A) $3,010B) $3,380C) $2,805D) $3,545E) $3,470。
公司理财精要版原书第12版习题库答案Ross12e_Chapter07_TB
Fundamentals of Corporate Finance, 12e (Ross)Chapter 7 Interest Rates and Bond Valuation1) Allison just received the semiannual payment of $35 on a bond she owns. Which term refers to this payment?A) CouponB) Face valueC) DiscountD) Call premiumE) Yield2) Bert owns a bond that will pay him $45 each year in interest plus $1,000 as a principal payment at maturity. What is the $1,000 called?A) CouponB) Face valueC) DiscountD) YieldE) Dirty price3) A discount bond's coupon rate is equal to the annual interest divided by the:A) call price.B) current price.C) face value.D) clean price.E) dirty price.4) A bond's principal is repaid on the ________ date.A) couponB) yieldC) maturityD) dirtyE) clean5) The bond market requires a return of 9.8 percent on the 5-year bonds issued by JW Industries. The 9.8 percent is referred to as the:A) coupon rate.B) face rate.C) call rate.D) yield to maturity.E) current yield.6) The current yield is defined as the annual interest on a bond divided by the:A) coupon rate.B) face value.C) market price.D) call price.E) par value.7) A $1,000 par value corporate bond that pays $60 annually in interest was issued last year. Which one of these would apply to this bond today if the current price of the bond is $996.20?A) The bond is currently selling at a premium.B) The current yield exceeds the coupon rate.C) The bond is selling at par value.D) The current yield exceeds the yield to maturity.E) The coupon rate has increased to 7 percent.8) Which one of these equations applies to a bond that currently has a market price that exceeds par value?A) Market value < Face valueB) Yield to maturity = Current yieldC) Market value = Face valueD) Current yield > Coupon rateE) Yield to maturity < Coupon rate9) All else constant, a bond will sell at ________ when the coupon rate is ________ the yield to maturity.A) a premium; less thanB) a premium; equal toC) a discount; less thanD) a discount; higher thanE) par; less than10) DLQ Inc. bonds mature in 12 years and have a coupon rate of 6 percent. If the market rate of interest increases, then the:A) coupon rate will also increase.B) current yield will decrease.C) yield to maturity will be less than the coupon rate.D) market price of the bond will decrease.E) coupon payment will increase.11) Which one of the following applies to a premium bond?A) Yield to maturity > Current yield > Coupon rateB) Coupon rate = Current yield = Yield to maturityC) Coupon rate > Yield to maturity > Current yieldD) Coupon rate < Yield to maturity < Current yieldE) Coupon rate > Current yield > Yield to maturity12) Which one of the following relationships applies to a par value bond?A) Yield to maturity > Current yield > Coupon rateB) Coupon rate > Yield to maturity > Current yieldC) Coupon rate = Current yield = Yield to maturityD) Coupon rate < Yield to maturity < Current yieldE) Coupon rate > Current yield > Yield to maturity13) Which one of the following relationships is stated correctly?A) The coupon rate exceeds the current yield when a bond sells at a discount.B) The call price must equal the par value.C) An increase in market rates increases the market price of a bond.D) Decreasing the time to maturity increases the price of a discount bond, all else constant.E) Increasing the coupon rate decreases the current yield, all else constant.14) Round Dot Inns is preparing a bond offering with a coupon rate of 6 percent, paid semiannually, and a face value of $1,000. The bonds will mature in 10 years and will be sold at par. Given this, which one of the following statements is correct?A) The bonds will become discount bonds if the market rate of interest declines.B) The bonds will pay 10 interest payments of $60 each.C) The bonds will sell at a premium if the market rate is 5.5 percent.D) The bonds will initially sell for $1,030 each.E) The final payment will be in the amount of $1,060.15) A newly issued bond has a coupon rate of 7 percent and semiannual interest payments. The bonds are currently priced at par. The effective annual rate provided by these bonds must be:A) 3.5 percent.B) greater than 3.5 percent but less than 7 percent.C) 7 percent.D) greater than 7 percent.E) less than 3.5 percent.16) The price sensitivity of a bond increases in response to a change in the market rate of interest as the:A) coupon rate increases.B) time to maturity decreases.C) coupon rate decreases and the time to maturity increases.D) time to maturity and coupon rate both decrease.E) coupon rate and time to maturity both increase.17) Which one of the following bonds is the least sensitive to interest rate risk?A) 3-year; 4 percent couponB) 3-year; 6 percent couponC) 5-year; 6 percent couponD) 7-year; 6 percent couponE) 7-year; 4 percent coupon18) As a bond's time to maturity increases, the bond's sensitivity to interest rate risk:A) increases at an increasing rate.B) increases at a decreasing rate.C) increases at a constant rate.D) decreases at an increasing rate.E) decreases at a decreasing rate.19) You own a bond that pays an annual coupon of 6 percent that matures five years from now. You purchased this 10-year bond at par value when it was originally issued. Which one of the following statements applies to this bond if the relevant market interest rate is now 5.8 percent?A) The current yield to maturity is greater than 6 percent.B) The current yield is 6 percent.C) The next interest payment will be $30.D) The bond is currently valued at one-half of its issue price.E) You will realize a capital gain on the bond if you sell it today.20) You expect interest rates to decline in the near future even though the bond market is not indicating any sign of this change. Which one of the following bonds should you purchase now to maximize your gains if the rate decline does occur?A) Short-term; low couponB) Short-term; high couponC) Long-term; zero couponD) Long-term; low couponE) Long-term; high coupon21) A premium bond that pays $60 in interest annually matures in seven years. The bond was originally issued three years ago at par. Which one of the following statements is accurate in respect to this bond today?A) The face value of the bond today is greater than it was when the bond was issued.B) The bond is worth less today than when it was issued.C) The yield to maturity is less than the coupon rate.D) The coupon rate is less than the current yield.E) The yield to maturity equals the current yield.22) Which one of these statements is correct?A) Most long-term bond issues are referred to as unfunded debt.B) Bonds often provide tax benefits to issuers.C) The risk of a company financially failing decreases when the company issues bonds.D) All bonds are treated equally in a bankruptcy proceeding.E) A debenture is a senior secured debt.23) Hot Foods has an investment-grade bond issue outstanding that pays $30 semiannual interest payments. The bonds sell at par and are callable at a price equal to the present value of all future interest and principal payments discounted at a rate equal to the comparable Treasury rateplus .50 percent. Which one of the following correctly describes this bond?A) The bond rating is B.B) Market value is less than face value.C) The coupon rate is 3 percent.D) The bond has a "make whole" call price.E) The interest payments are variable.24) Last year, Lexington Homes issued $1 million in unsecured, noncallable debt. This debt pays an annual interest payment of $55 and matures six years from now. The face value is $1,000 and the market price is $1,020. Which one of these terms correctly describes a feature of this debt?A) Semiannual couponB) Discount bondC) NoteD) Trust deedE) Collateralized25) Callable bonds generally:A) grant the bondholder the option to call the bond any time after the deferment period.B) are callable at par as soon as the call-protection period ends.C) are called when market interest rates increase.D) are called within the first three years after issuance.E) have a sinking fund provision.26) An example of a negative covenant that might be found in a bond indenture is a statement that the company:A) shall maintain a current ratio of 1.1 or higher.B) cannot lease any major assets without bondholder approval.C) must maintain the loan collateral in good working order.D) shall provide audited financial statements in a timely manner.E) shall maintain a cash surplus of $100,000 at all times.27) Protective covenants:A) apply to short–term debt issues but not to long–term debt issues.B) only apply to privately issued bonds.C) are a feature found only in government–issued bond indentures.D) only apply to bonds that have a deferred call provision.E) are primarily designed to protect bondholders.28) Which one of these is most apt to be included in a bond's indenture one year after the bond has been issued?A) Current yieldB) Written record of all the current bond holdersC) List of collateral used as bond securityD) Current market priceE) Price at which a bondholder can resell a bond to another bondholder29) Road Hazards has 12-year bonds outstanding. The interest payments on these bonds are sent directly to each of the individual bondholders. These direct payments are a clear indication that the bonds can accurately be defined as being issued:A) at par.B) in registered form.C) in street form.D) as debentures.E) as callable bonds.30) A bond that is payable to whomever has physical possession of the bond is said to be in:A) new–issue condition.B) registered form.C) bearer form.D) debenture status.E) collateral status.31) Jason's Paints just issued 20-year, 7.25 percent, unsecured bonds at par. These bonds fit the definition of which one of the following terms?A) NoteB) DiscountedC) Zero–couponD) CallableE) Debenture32) A note is generally defined as:A) a secured bond with an initial maturity of 10 years or more.B) a secured bond that initially matures in less than 10 years.C) any bond secured by a blanket mortgage.D) an unsecured bond with an initial maturity of 10 years or less.E) any bond maturing in 10 years or more.33) A sinking fund is managed by a trustee for which one of the following purposes?A) Paying bond interest paymentsB) Early bond redemptionC) Converting bonds into equity securitiesD) Paying preferred dividendsE) Reducing bond coupon rates34) A bond that can be paid off early at the issuer's discretion is referred to as being which type of bond?A) Par valueB) CallableC) SeniorD) SubordinatedE) Unsecured35) A $1,000 face value bond can be redeemed early at the issuer's discretion for $1,030, plus any accrued interest. The additional $30 is called the:A) dirty price.B) redemption value.C) call premium.D) original–issue discount.E) redemption discount.36) A deferred call provision:A) requires the bond issuer to pay the current market price, minus any accrued interest, should the bond be called.B) allows the bond issuer to delay repaying a bond until after the maturity date should the issuer so opt.C) prohibits the issuer from ever redeeming bonds prior to maturity.D) prohibits the bond issuer from redeeming callable bonds prior to a specified date.E) requires the bond issuer pay a call premium that is equal to or greater than one year's coupon should the bond be called.37) A call–protected bond is a bond that:A) is guaranteed to be called.B) can never be called.C) is currently being called.D) is callable at any time.E) cannot be called at this point in time.38) The items included in an indenture that limit certain actions of the issuer in order to protect a bondholder's interests are referred to as the:A) trustee relationships.B) bylaws.C) legal bounds.D) trust deed.E) protective covenants.39) Which one of the following statements concerning bond ratings is correct?A) Investment grade bonds are rated BB or higher by Standard & Poor's.B) Bond ratings assess both interest rate risk and default risk.C) Split-rated bonds are called crossover bonds.D) The highest rating issued by Moody's is AAA.E) A "fallen angel" is a term applied to all "junk" bonds.40) A "fallen angel" is a bond that has moved from:A) being publicly traded to being privately traded.B) being a long-term obligation to being a short-term obligation.C) being a premium bond to being a discount bond.D) senior status to junior status for liquidation purposes.E) investment grade to speculative grade.41) Bonds issued by the U.S. government:A) are considered to be free of interest rate risk.B) generally have higher coupons than comparable bonds issued by a corporation.C) are considered to be free of default risk.D) pay interest that is exempt from federal income taxes.E) are called "munis."42) Treasury bonds are:A) issued by any governmental agency in the U.S.B) issued only on the first day of each fiscal year by the U.S. Department of Treasury.C) bonds that offer the best tax benefits of any bonds currently available.D) generally issued as semiannual coupon bonds.E) totally risk free.43) Municipal bonds:A) are totally risk free.B) generally have higher coupon rates than corporate bonds.C) pay interest that is federally tax free.D) are rarely callable.E) are free of default risk.44) The break-even tax rate between a taxable corporate bond yielding 7 percent and a comparable nontaxable municipal bond yielding 5 percent can be expressed as:A) .05/(1 − t*) = .07.B) .05 − (1 − t*) = .07.C) .07 + (1 − t*) = .05.D) .05 (1 − t*) = .07.E) .05 (1 + t*) = .07.45) A zero coupon bond:A) is sold at a large premium.B) pays interest that is tax deductible to the issuer at the time of payment.C) can only be issued by the U.S. Treasury.D) has more interest rate risk than a comparable coupon bond.E) provides no taxable income to the bondholder until the bond matures.46) Which one of the following risks would a floating-rate bond tend to have less of as compared to a fixed-rate coupon bond?A) Real rate riskB) Interest rate riskC) Default riskD) Liquidity riskE) Taxability risk47) The collar of a floating-rate bond refers to the minimum and maximum:A) call periods.B) maturity dates.C) market prices.D) coupon rates.E) yields to maturity.48) Last year, you purchased a TIPS at par. Since that time, both market interest rates and the inflation rate have increased by .25 percent. Your bond has most likely done which one of the following since last year?A) Decreased in value due to the change in inflation ratesB) Experienced an increase in its bond ratingC) Maintained a fixed real rate of returnD) Increased in value in response to the change in market ratesE) Increased in value due to a decrease in time to maturity49) Recently, you discovered a convertible, callable bond with a semiannual coupon of 5 percent. If you purchase this bond you will have the right to:A) force the issuer to repurchase the bond prior to maturity.B) convert the bond into equity shares.C) defer all taxable income until the bond matures.D) convert the bond into a perpetuity paying 5 percent.E) have the principal amount adjusted for inflation.50) Samantha owns a reverse convertible bond. At maturity, the principal amount will be repaid in:A) shares of stock.B) cash while the interest is paid in shares of stock.C) the form of a newly issued bond.D) either shares of stock or a newly issued bond.E) either cash or shares of stock.51) Nadine is a retired widow who is financially dependent upon the interest income produced by her bond portfolio. Which one of the following bonds is the least suitable for her to own?A) 6-year, high-coupon, put bondB) 5-year TIPSC) 10-year AAA coupon bondD) 5-year floating rate bondE) 7-year income bond52) Al is retired and his sole source of income is his bond portfolio. Although he has sufficient principal to live on, he only wants to spend the interest income and thus is concerned about the purchasing power of that income. Which one of the following bonds should best ease Al's concerns?A) 6-year coupon bondsB) 5-year TIPSC) 20-year coupon bondsD) 5-year municipal bondsE) 7-year income bonds53) Kurt has researched T-Tek and believes the firm is poised to vastly increase in value. He has decided to purchase T-Tek bonds as he needs a steady stream of income. However, he still wishes that he could share in the firm's success along with the shareholders. Which one of the following bond features will help him fulfill his wish?A) Put provisionB) Positive covenantC) WarrantD) Crossover ratingE) Call provision54) A bond that has only one payment, which occurs at maturity, defines which one of these types of bonds?A) DebentureB) CallableC) Floating-rateD) JunkE) Zero coupon55) A highly illiquid bond that pays no interest but might entitle its holder to rental income from an asset is most apt to be a:A) NoNo bond.B) put bond.C) contingent callable bond.D) structured note.E) sukuk.56) Which one of the following is the price at which a dealer will sell a bond?A) Call priceB) Asked priceC) Bid priceD) Bid–ask spreadE) Par value57) If you sell a bond with a coupon of 6 percent to a dealer when the market rate is 7 percent, which one of the following prices will you receive?A) Call priceB) Par valueC) Bid priceD) Asked priceE) Bid–ask spread58) The difference between the price that a dealer is willing to pay and the price at which he or she will sell is called the:A) equilibrium.B) premium.C) discount.D) call price.E) spread.59) A bond is quoted at a price of $1,011. This price is referred to as the:A) call price.B) face value.C) clean price.D) dirty price.E) maturity price.60) Rosita paid a total of $1,189, including accrued interest, to purchase a bond that has 7 of its initial 20 years left until maturity. This price is referred to as the:A) quoted price.B) spread price.C) clean price.D) dirty price.E) call price.61) U. S. Treasury bonds:A) are highly illiquid.B) are quoted as a percentage of par.C) are quoted at the dirty price.D) pay interest that is federally tax-exempt.E) must be held until maturity.62) A six-year, $1,000 face value bond issued by Taylor Tools pays interest semiannually on February 1 and August 1. Assume today is October 1. What will be the difference, if any, between this bond's clean and dirty prices today?A) No differenceB) One months' interestC) Two months' interestD) Four months' interestE) Five months' interest63) Today, June 15, you want to buy a bond with a quoted price of 98.64. The bond pays interest on January 1 and July 1. Which one of the following prices represents your total cost of purchasing this bond today?A) Clean priceB) Dirty priceC) Asked priceD) Quoted priceE) Bid price64) Which one of the following rates represents the change, if any, in your purchasing power as a result of owning a bond?A) Risk-free rateB) Realized rateC) Nominal rateD) Real rateE) Current rate65) Which one of the following statements is correct?A) The risk-free rate represents the change in purchasing power.B) Any return greater than the inflation rate represents the risk premium.C) Historical real rates of return must be positive.D) Nominal rates exceed real rates by the amount of the risk-free rate.E) The real rate must be less than the nominal rate given a positive rate of inflation.66) The Fisher effect primarily emphasizes the effects of ________ on an investor's rate of return.A) defaultB) market movementsC) interest rate changesD) inflationE) the time to maturity67) You are trying to compare the present values of two separate streams of cash flows that have equivalent risks. One stream is expressed in nominal values and the other stream is expressed in real values. You decide to discount the nominal cash flows using a nominal annual rate of 8 percent. What rate should you use to discount the real cash flows?A) 8 percentB) EAR of 8 percent compounded monthlyC) Comparable risk-free rateD) Comparable real rateE) Nominal rate minus the risk-free rate68) Real rates are defined as nominal rates that have been adjusted for which of the following?A) InflationB) Default riskC) Accrued interestD) Interest rate riskE) Both inflation and interest rate risk69) Interest rates that include an inflation premium are referred to as:A) annual percentage rates.B) stripped rates.C) effective annual rates.D) real rates.E) nominal rates.70) The Fisher effect is defined as the relationship between which of the following variables?A) Default risk premium, inflation risk premium, and real ratesB) Nominal rates, real rates, and interest rate risk premiumC) Interest rate risk premium, real rates, and default risk premiumD) Real rates, inflation rates, and nominal ratesE) Real rates, interest rate risk premium, and nominal rates71) The pure time value of money is known as the:A) liquidity effect.B) Fisher effect.C) term structure of interest rates.D) inflation factor.E) interest rate factor.72) Which one of the following premiums is compensation for the possibility that a bond issuer may not pay a bond's interest or principal payments as expected?A) Default riskB) TaxabilityC) LiquidityD) InflationE) Interest rate risk73) The interest rate risk premium is the:A) additional compensation paid to investors to offset rising prices.B) compensation investors demand for accepting interest rate risk.C) difference between the yield to maturity and the current yield.D) difference between the market interest rate and the coupon rate.E) difference between the coupon rate and the current yield.74) A Treasury yield curve plots Treasury interest rates relative to:A) market rates.B) comparable corporate bond rates.C) the risk-free rate.D) inflation rates.E) time to maturity.75) Which one of the following risk premiums compensates for the inability to easily resell a bond prior to maturity?A) Default riskB) TaxabilityC) LiquidityD) InflationE) Interest rate risk76) The taxability risk premium compensates bondholders for which one of the following?A) Yield decreases in response to market changesB) Lack of coupon paymentsC) Possibility of defaultD) A bond's unfavorable tax statusE) Decrease in a municipality's credit rating77) Which bond would you generally expect to have the highest yield?A) Risk-free Treasury bondB) Nontaxable, highly liquid bondC) Long-term, high-quality, tax-free bondD) Short-term, inflation-adjusted bondE) Long-term, taxable junk bond78) Which one of the following statements is false concerning the term structure of interest rates?A) Expectations of lower inflation rates in the future tend to lower the slope of the term structure of interest rates.B) The term structure of interest rates includes both an inflation premium and an interest rate risk premium.C) The term structure of interest rates and the time to maturity are always directly related.D) The real rate of return has minimal, if any, effect on the slope of the term structure of interest rates.E) The interest rate risk premium increases as the time to maturity increases.79) The yields on a corporate bond differ from those on a comparable Treasury security primarily because of:A) interest rate risk and taxes.B) taxes and default risk.C) default and interest rate risks.D) liquidity and inflation rate risks.E) default, inflation, and interest rate risks.80) The 7 percent bonds issued by Modern Kitchens pay interest semiannually, mature in eight years, and have a $1,000 face value. Currently, the bonds sell for $987. What is the yield to maturity?A) 6.97 percentB) 6.92 percentC) 6.88 percentD) 7.22 percentE) 7.43 percent81) You own a bond that pays $64 in interest annually. The face value is $1,000 and the current market price is $1,021.61. The bond matures in 11 years. What is the yield to maturity?A) 6.12 percentB) 6.22 percentC) 6.46 percentD) 6.71 percentE) 5.80 percent82) New Homes has a bond issue with a coupon rate of 5.5 percent that matures in 8.5 years. The bonds have a par value of $1,000 and a market price of $1,022. Interest is paid semiannually. What is the yield to maturity?A) 6.36 percentB) 6.42 percentC) 5.61 percentD) 5.74 percentE) 5.18 percent83) Oil Wells offers 5.65 percent coupon bonds with semiannual payments and a yield to maturity of 6.94 percent. The bonds mature in seven years. What is the market price per bond if the face value is $1,000?A) $949.70B) $929.42C) $936.48D) $902.60E) $913.4884) Roadside Markets has 8.45 percent coupon bonds outstanding that mature in 10.5 years. The bonds pay interest semiannually. What is the market price per bond if the face value is $1,000 and the yield to maturity is 7.2 percent?A) $1,199.80B) $999.85C) $903.42D) $1,091.00E) $1,007.5285) Luxury Properties offers bonds with a coupon rate of 8.8 percent paid semiannually. The yield to maturity is 11.2 percent and the maturity date is 11 years from today. What is the market price of this bond if the face value is $1,000?A) $850.34B) $896.67C) $841.20D) $846.18E) $863.3086) Redesigned Computers has 6.5 percent coupon bonds outstanding with a current market price of $548. The yield to maturity is 13.2 percent and the face value is $1,000. Interest is paid annually. How many years is it until these bonds mature?A) 17.84 yearsB) 14.19 yearsC) 17.41 yearsD) 16.16 yearsE) 18.32 years87) World Travel has 7 percent, semiannual, coupon bonds outstanding with a current market price of $1,023.46, a par value of $1,000, and a yield to maturity of 6.72 percent. How many years is it until these bonds mature?A) 12.26 yearsB) 12.53 yearsC) 18.49 yearsD) 24.37 yearsE) 25.05 years88) A 13-year, 6 percent coupon bond pays interest semiannually. The bond has a face value of $1,000. What is the percentage change in the price of this bond if the market yield to maturity rises to 5.7 percent from the current rate of 5.5 percent?A) −1.79 percentB) −1.38 percentC) −1.64 percentD) 1.79 percent。
罗斯《公司理财》英文习题答案DOCchap012
公司理财习题答案第十二章Chapter 12: Risk, Return, and Capital Budgeting12.1 Cost of equity R S = 5 + 0.95 (9) = 13.55% NPV of the project= -$1.2 million + $340,.0001135515tt =∑= -$20,016.52Do not undertake the project. 12.2 a. R D= (-0.05 + 0.05 + 0.08 + 0.15 + 0.10) / 5 = 0.066 R M = (-0.12 + 0.01 + 0.06 + 0.10 + 0.05) / 5 = 0.02b.DR- D R M R -R M(M R -M R )2 (D R -R D )(M R -R M )-0.116 -0.14 0.0196 0.01624 -0.016 -0.01 0.0001 0.00016 0.014 0.04 0.0016 0.00056 0.084 0.08 0.0064 0.00672 0.034 0.03 0.0009 0.001020.02860.02470Beta of Douglas = 0.02470 / 0.0286 = 0.86412.3 R S = 6% + 1.15 ⨯ 10% = 17.5% R B = 6% + 0.3 ⨯ 10% = 9% a. Cost of equity = R S = 17.5% b. B / S = 0.25 B / (B + S) = 0.2 S / (B + S) = 0.8WACC = 0.8 ⨯ 17.5% + 0.2 ⨯ 9% (1 - 0.35)= 15.17%12.4 C σ = ()2104225.0 = 0.065M σ = ()2101467.0 = 0.0383Beta of ceramics craftsman = CM ρC σ M σ / M σ2 = CM ρC σ/ M σ = (0.675) (0.065) / 0.0383 = 1.146 12.5a. To compute the beta of Mercantile Manufacturing’s stock, you need the product of the deviations of Mercantile’s returns from their mean and the deviations of the market’s returns from their mean. You also need the squares of the deviations ofthe market’s returns from their mean.The mechanics of computing the means and the deviations were presented in an earlier chapter.R T = 0.196 / 12 = 0.016333 R M = 0.236 / 12 = 0.019667 E(T R -R T ) (M R -R M ) = 0.038711 E(M R -R M )2 = 0.038588 β = 0.038711 / 0.038588= 1.0032b.The beta of the average stock is 1. Mercantile’s beta is close to 1, indicating that its stock has average risk.12.6 a.R M can have three values, 0.16, 0.18 or 0.20. The probability that M R takes one of these values is the sum of the joint probabilities of the return pair that include theparticular value of M R . For example, if M R is 0.16, R J will be 0.16, 0.18 or 0.22. The probability that M R is 0.16 and R J is 0.16 is 0.10. The probability that R M is 0.16 and R J is 0.18 is 0.06. The probability that M R is 0.16 and R J is 0.22 is 0.04. The probability that M R is 0.16 is, therefore, 0.10 + 0.06 + 0.04 = 0.20. The same procedure is used to calculate the probability that M R is 0.18 and the probability that M R is 0.20. Remember, the sum of the probability must be one.M RProbability 0.16 0.20 0.18 0.60 0.20 0.20 b. i.RM= 0.16 (0.20) + 0.18 (0.60) + 0.20 (0.20) = 0.18ii. 2M σ = (0.16 - 0.18) 2 (0.20) + (0.18 - 0.18) 2 (0.60) + (0.20 - 0.18) 2 (0.20)= 0.00016iii. M σ = ()2100016.0 = 0.01265c. R J Probability .18 .20 .20 .40 .22 .20 .24.10d. i. E j = .16 (.10) + .18 (.20) + .20 (.40) + .22 (.20) + .24(.10) = .20 ii. σj 2 = (.16 - .20)2 (.10) + (.18 - .20)2 (.20) + (.20 - .20)2 (.40)+ (.22 - .20)2 (.20) + (.24 - .20)2 (.10) = .00048公司理财习题答案第十二章iii. σj = ()21.0 = .0219100048e. Cov mj= (.16 - .18) (.16 - .20) (.10) + (.16 - .18) (.18 - .20) (.06)+ (.16 - .18) (.22 - .20) (.04) + (.20 - .18) (.18 - .20) (.02)+ (.20 - .18) (.22 - .20) (.04) + (.20 - .18) (.24 - .20) (.10)= .000176Corr mj = (0.000176) / (0.01265) (0.02191) = 0.635f. βj = (.635) (.02191) / (.01265) = 1.1012.7 i. The risk of the new project is the same as the risk of the firm without the project.ii. The firm is financed entirely with equity.12.8 a. Pacific Cosmetics should use its stock beta in the evaluation of the project only ifthe risk of the perfume project is the same as the risk of Pacific Cosmetics.b. If the risk of the project is the same as the risk of the firm, use the firm’s stock beta.If the risk differs, then use the beta of an all-equity firm with similar risk as theperfume project. A good way to estimate the beta of the project would be toaverage the betas of many perfume producing firms.12.9 E(R S) = 0.1 ⨯ 3 + 0.3 ⨯ 8 + 0.4 ⨯ 20 + 0.2 ⨯ 15 = 13.7%E(R B) = 0.1 ⨯ 8 + 0.3 ⨯ 8 + 0.4 ⨯ 10 + 0.2 ⨯ 10 = 9.2%E(R M) = 0.1 ⨯ 5 + 0.3 ⨯ 10 + 0.4 ⨯ 15 + 0.2 ⨯ 20 = 13.5%State {R S - E(R S)}{R M - E(R M)}Pr {R B - E(R B)}{R M - E(R M)}Pr1 (0.03-0.137)(0.05-0.135)⨯0.1 (0.08-0.092)(0.05-0.135)⨯0.12 (0.08-0.137)(0.10-0.135)⨯0.3 (0.08-0.092)(0.10-0.135)⨯0.33 (0.20-0.137)(0.15-0.135)⨯0.4 (0.10-0.092)(0.15-0.135)⨯0.44 (0.15-0.137)(0.20-0.135)⨯0.2 (0.10-0.092)(0.20-0.135)⨯0.2Sum 0.002056 0.00038= Cov(R S, R M) = Cov(R B, R M)σM 2= 0.1 (0.05 - 0.135)2 + 0.3 (0.10-0.135)2+ 0.4 (0.15-0.135)2 + 0.2 (0.20-0.135)2= 0.002025a. Beta of debt = Cov(R B, R M) / σM2 = 0.00038 / 0.002025= 0.188b. Beta of stock = Cov(R S, R M) / σM2 = 0.002055 / 0.002025= 1.015c. B / S = 0.5Thus, B / (S + B) = 1 / 3 = 0.3333S / (S + B) = 2 / 3 = 0.6667Beta of asset = 0.188 ⨯ 0.3333 + 1.015 ⨯ 0.6667= 0.73912.10 The discount rate for the project should be lower than the rate implied by the use ofthe Security Market Line. The appropriate discount rate for such projects is theweighted average of the interest rate on debt and the cost of equity. Since theinterest rate on the debt of a given firm is generally less than the firm’s cost ofequity, using only the stock’s beta yields a discount rate that is too high. Theconcept and practical uses of a weighted average discount rate will be in a laterchapter.12.11i. RevenuesThe gross income of the firm is an important factor in determining beta. Firmswhose revenues are cyclical (fluctuate with the business cycle) generally have highbetas. Firms whose revenues are not cyclical tend to have lower betas.ii. Operating leverageOperating leverage is the percentage change in earnings before interest and taxes(EBIT) for a percentage change in sales, [(Change in EBIT / EBIT) (Sales / Changein sales)]. Operating leverage indicates the ability of the firm to service its debt andpay stockholders.iii. Financial leverageFinancial leverage arises from the use of debt. Financial leverage indicates theability of the firm to pay stockholders. Since debt holders must be paid beforestockholders, the higher the financial leverage of the firm, the riskier its stock.The beta of common stock is a function of all three of these factors. Ultimately, theriskiness of the stock, of which beta captures a portion, is determined by thefluctuations in the income available to the stockholders. (As was discussed in thechapter, whether income is paid to the stockholders in the form of dividends or it isretained to finance projects are irrelevant as long as the projects are of similar riskas the firm.) The income available to common stock, the net income of the firm,depends initially on the revenues or sales of the firm. The operating leverageindicates how much of each dollar of revenue will become EBIT. Financialleverage indicates how much of each dollar of EBIT will become net income.12.12 a. Cost of equity for National Napkin= 7 + 1.29 (13 - 7)= 14.74%b. B / (S + B) = S / (S + B) = 0.5WACC = 0.5 ⨯ 7 ⨯ 0.65 + 0.5 ⨯ 14.74= 9.645%12.13 B = $60 million ⨯ 1.2 = $72 millionS = $20 ⨯ 5 million = $100 millionB / (S + B) = 72 / 172 = 0.4186S / (S + B) = 100 / 172 = 0.5814WACC = 0.4186 ⨯ 12% ⨯ 0.75 + 0.5814 ⨯ 18%= 14.23%12.14 S = $25 ⨯ 20 million = $500 millionB = 0.95 ⨯ $180 million = $171 million公司理财习题答案第十二章B / (S + B) = 0.2548 S / (S + B) = 0.7452 WACC = 0.7452 ⨯ 20% + 0.2548 ⨯ 10%⨯ 0.60 = 16.43%12.15 B / S = 0.75 B / (S + B) = 3 / 7 S / (S + B) = 4 / 7 WACC = (4 / 7) ⨯ 15% + (3 / 7) ⨯ 9%⨯ (1 - 0.35) = 11.08%NPV = -$25 million + $7(.)m illion tt 10110815+=∑= $819,299.04 Undertake the project.12.16 WACC = (0.5) x 28% + (0.5) x 10% x (1 - 0.35)= 17.25%NPV = - $1,000,000 + (1 - 0.35) $600,000 51725.0A = $240,608.50Mini Case: Allied ProductsAssumptionsPP&E Investment 42,000,000 Useful life of PP&E Investment (years) 7NEW GPWS price/unit (Year 1) 70,000 NEW GPWS variable cost/unit (Year 1) 50,000 UPGRADE GPWS price/unit (Year 1) 35,000 UPGRADE GPWS variable cost/unit (Year 1) 22,000Year 1 marketing and admin costs 3,000,000 Annual inflation rate 3.00% Corporate Tax rate 40.00%Beta (9/27 Valueline) 1.20 Rf (30 year U.S. Treasury Bond) 6.20%NEW GPWS Market Growth (Strong Growth) 15.00%NEW GPWS Market Growth (Moderate Growth) 10.00%NEW GPWS Market Growth (Mild Recession) 6.00%NEW GPWS Market Growth (Severe Recession state of economy) 3.00%Total Annual Market for UPGRADE GPWS (units) 2,500Allied Signal Market Share in each market 45.00%公司理财习题答案第十二章Year 0 1 2 3 4 5 SalesNEWUnits 97 107 118 130 144 Price 70,000 72,100 74,263 76,491 78,786 Total NEW 6,772,500 7,688,654 8,736,317 9,935,345 11,308,721 UPGRADEUnits 1,125 1,125 1,125 1,125 1,125 Price 35,000 36,050 37,132 38,245 39,393 Total UPGRADE 39,375,000 40,556,250 41,772,938 43,026,126 44,316,909 Total Sales 46,147,500 48,244,904 50,509,254 52,961,470 55,625,630 Variable CostsNEW 4,837,500 5,491,896 6,240,226 7,096,675 8,077,658 UPGRADE 24,750,000 25,492,500 26,257,275 27,044,993 27,856,343 Total Variable Costs 29,587,500 30,984,396 32,497,501 34,141,668 35,934,001SG&A 3,000,000 3,090,000 3,182,700 3,278,181 3,376,526 Depreciation 6,001,800 10,285,800 7,345,800 5,245,800 3,750,600EBIT 7,558,200 3,884,708 7,483,253 10,295,821 12,564,503 Interest 0 0 0 0 0 Tax 3,023,280 1,553,883 2,993,301 4,118,329 5,025,801 Net Income 4,534,920 2,330,825 4,489,952 6,177,493 7,538,702EBIT + Dep - Taxes 10,536,720 12,616,625 11,835,752 11,423,293 11,289,302 Less: Change in NWC 2,000,000 307,375 104,870 113,218 122,611 (2,648,074) Less: Captial Spending 42,000,000 (10,948,080) CF from Assets: (44,000,000) 10,229,345 12,511,755 11,722,534 11,300,682 24,885,455 Discounted CF from Assets 9,304,480 10,351,583 8,821,741 7,735,381 15,494,120Total Discounted CF from Assets 51,707,305Results。
公司理财精要版原书第12版习题库答案Ross12e_Chapter02_TB
公司理财精要版原书第12版习题库答案Ross12e_Chapter02_TBFundamentals of Corporate Finance, 12e (Ross)Chapter 2 Financial Statements, Taxes, and Cash Flow1) Which one of the following is classified as a tangible fixed asset?A) Accounts receivableB) Production equipmentC) CashD) PatentE) Inventory2) Which one of the following is a current asset?A) Accounts payableB) TrademarkC) Accounts receivableD) Notes payableE) Equipment3) Which one of the following is included in a firm's market value but yet is excluded from the firm's accounting value?A) Real estate investmentB) Good reputation of the companyC) Equipment owned by the firmD) Money due from a customerE) An item held by the firm for future sale4) Which one of the following is a current liability?A) Note payable to a supplier in 13 monthsB) Amount due from a customer in two weeksC) Account payable to a supplier that is due next weekD) Loan payable to the bank in 18 monthsE) Amount due from a customer that is past due5) Which one of the following will decrease the value of a firm's net working capital?A) Using cash to pay a supplierB) Depreciating an assetC) Collecting an accounts receivableD) Purchasing inventory on creditE) Selling inventory at a loss6) Which one of the following statements concerning net working capital is correct?A) Net working capital increases when inventory is purchased with cash.B) Net working capital excludes inventory.C) Total assets must increase if net working capital increases.D) Net working capital may be a negative value.E) Net working capital is the amount of cash a firm currently has available for spending.7) Which one of the following statements concerning net working capital is correct?A) A firm's ability to meet its current obligations increases as the firm's net working capital decreases.B) An increase in net working capital must also increase current assets.C) Net working capital increases when inventory is sold for cash at a profit.D) Firms with equal amounts of net working capital are also equally liquid.E) Net working capital is a part of the operating cash flow.8) Which one of the following accounts is the most liquid?A) InventoryB) BuildingC) Accounts ReceivableD) EquipmentE) Land9) Which one of the following represents the most liquid asset?A) $100 account receivable that is discounted and collected for $96 todayB) $100 of inventory that is sold today on credit for $103C) $100 of inventory that is discounted and sold for $97 cash todayD) $100 of inventory that is sold today for $100 cashE) $100 of accounts receivable that will be collected in full next week10) Which one of the following statements related to liquidity is correct?A) Liquid assets tend to earn a high rate of return.B) Liquid assets are valuable to a firm.C) Liquid assets are defined as assets that can be sold quickly regardless of the price obtained.D) Inventory is more liquid than accounts receivable because inventory is tangible.E) Any asset that can be sold is considered liquid.11) Shareholders' equity:A) is referred to as a firm's financial leverage.B) is equal to total assets plus total liabilities.C) decreases whenever new shares of stock are issued.D) includes patents, preferred stock, and common stock.E) represents the residual value of a firm.12) As the degree of financial leverage increases, the:A) probability a firm will encounter financial distress increases.B) amount of a firm's total debt decreases.C) less debt a firm has per dollar of total assets.D) number of outstanding shares of stock increases.E) accounts payable balance decreases.13) The book value of a firm is:A) equivalent to the firm's market value provided that the firm has some fixed assets.B) based on historical cost.C) generally greater than the market value when fixed assets are included.D) more of a financial than an accounting valuation.E) adjusted to the market value whenever the market value exceeds the stated book value.14) The value of which one of the following is included in the market value of a firm but is excluded from the firm's book value?A) Office equipmentB) CopyrightC) Distribution warehouseD) Employee's experienceE) Land acquired over 25 years ago15) You recently purchased a grocery store. At the time of the purchase, the store's market value and its book value were equal. The purchase included the building, fixtures, and inventory. Which one of the following is most apt to cause the market value of this store to be less than its book value?A) A sudden and unexpected increase in inflationB) The replacement of old inventory items with more desirable productsC) Improvements to the surrounding area by other store ownersD) Construction of a new restricted access highway located between the store and the surrounding residential areasE) Addition of a stop light at the main entrance to the store's parking lot16) Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date?A) Income statementB) Creditor's statementC) Balance sheetD) Statement of cash flowsE) Dividend statement17) Net working capital is defined as:A) total liabilities minus shareholders' equity.B) current liabilities minus shareholders' equity.C) fixed assets minus long-term liabilities.D) total assets minus total liabilities.E) current assets minus current liabilities.18) Which one of these sets forth the common set of standards and procedures by which audited financial statements are prepared?A) Matching principleB) Cash flow identityC) Generally Accepted Accounting PrinciplesD) Financial Accounting Reporting PrinciplesE) Standard Accounting Value Guidelines19) Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?A) Income statementB) Balance sheetC) Statement of cash flowsD) Tax reconciliation statementE) Market value report20) Noncash items refer to:A) fixed expenses.B) inventory items purchased using credit.C) the ownership of intangible assets such as patents.D) expenses that do not directly affect cash flows.E) sales that are made using store credit.21) Which one of the following is true according to generally accepted accounting principles?A) Depreciation is recorded based on the market value principle.B) Income is recorded based on the realization principle.C) Costs are recorded based on the realization principle.D) Depreciation is recorded based on the recognition principle.E) Costs of goods sold are recorded based on the recognition principle.22) Which one of these is most apt to be a fixed cost?A) Raw materialsB) Manufacturing wagesC) Management bonusesD) Office salariesE) Shipping and freight23) Which one of the following statements is correct assuming accrual accounting is used?A) The addition to retained earnings is equal to net incomeplus dividends paid.B) Credit sales are recorded on the income statement when the cash from the sale is collected.C) The labor costs for producing a product are expensed when the product is sold.D) Interest is a non-cash expense.E) Depreciation increases the marginal tax rate.24) The percentage of the next dollar you earn that must be paid in taxes is referred to as the________ tax rate.A) meanB) residualC) totalD) averageE) marginal25) The ________ tax rate is equal to total taxes divided by total taxable income.A) deductibleB) residualC) totalD) averageE) marginal26) Which one of the following statements related to corporate taxes is correct?A) A company's marginal tax rate must be equal to or lower than its average tax rate.B) The tax for a company is computed by multiplying the marginal tax rate times the taxable income.C) Additional income is taxed at a firm's average tax rate.D) The marginal tax rate will always exceed a company'saverage tax rate.E) The marginal tax rate for a company can be either higher than or equal to the average tax rate.27) Which one of the following statements concerning corporate income taxes is correct for 2018?A) All corporations are exempt from federal taxation.B) Corporations pay no tax on their first $50,000 of income.C) The federal income tax on corporations is a flat-rate tax with the same rate applying to all levels of taxable income.D) The marginal tax rate will always be lower than the average tax rate.E) The first 25 percent of corporate income is exempt from taxation.28) The cash flow that is available for distribution to a corporation's creditors and stockholders is called the:A) operating cash flow.B) net capital spending.C) net working capital.D) cash flow from assets.E) cash flow to stockholders.29) Which term relates to the cash flow that results from a company's ongoing, normal business activities?A) Operating cash flowB) Capital spendingC) Net working capitalD) Cash flow from assetsE) Cash flow to creditors30) Cash flow from assets is also known as the firm's:A) capital structure.B) equity structure.C) hidden cash flow.D) free cash flow.E) historical cash flow.31) The cash flow related to interest payments less any net new borrowing is called the:A) operating cash flow.B) capital spending cash flow.C) net working capital.D) cash flow from assets.E) cash flow to creditors.32) Cash flow to stockholders is defined as:A) the total amount of interest and dividends paid during the past year.B) the change in total equity over the past year.C) cash flow from assets plus the cash flow to creditors.D) operating cash flow minus the cash flow to creditors.E) dividend payments less net new equity raised.33) Which one of the following is an expense for accounting purposes but is not an operating cash flow for financial purposes?A) Interest expenseB) TaxesC) Cost of goods soldD) Labor costsE) Administrative expenses34) Depreciation for a tax-paying firm:A) increases expenses and lowers taxes.B) increases the net fixed assets as shown on the balance sheet.C) reduces both the net fixed assets and the costs of a firm.D) is a noncash expense that increases the net income.E) decreases net fixed assets, net income, and operating cash flows.35) Which one of the following statements related to an income statement is correct?A) Interest expense increases the amount of tax due.B) Depreciation does not affect taxes since it is a non-cash expense.C) Net income is distributed to dividends and paid-in surplus.D) Taxes reduce both net income and operating cash flow.E) Interest expense is included in operating cash flow.36) Which one of the following statements is correct concerning a corporation with taxable income of $125,000?A) Taxable income minus dividends paid will equal the ending retained earnings for the year.B) An increase in depreciation will increase the operating cash flow.C) Net income divided by the number of shares outstanding will equal the dividends per share.D) Interest paid will be included in both net income and operating cash flow.E) An increase in the tax rate will increase both net income and operating cash flow.37) Which one of the following will increase the cash flow from assets, all else equal?A) Decrease in cash flow to stockholdersB) Decrease in operating cash flowC) Decrease in the change in net working capitalD) Decrease in cash flow to creditorsE) Increase in net capital spending38) For a tax-paying firm, an increase in ________ will causethe cash flow from assets to increase.A) depreciationB) net capital spendingC) the change in net working capitalD) taxesE) production costs39) Which one of the following must be true if a firm had a negative cash flow from assets?A) The firm borrowed money.B) The firm acquired new fixed assets.C) The firm had a net loss for the period.D) The firm utilized outside funding.E) Newly issued shares of stock were sold.40) An increase in the interest expense for a firm with a taxable income of $123,000 will:A) increase net income.B) increase gross income.C) increase the cash flow from assets.D) decrease the cash flow from equity.E) decrease the operating cash flow.41) Which one of the following is excluded from the cash flow from assets?A) Accounts payableB) InventoryC) SalesD) Interest expenseE) Cost of goods sold42) Net capital spending:A) is equal to ending net fixed assets minus beginning net fixed assets.B) is equal to zero if the decrease in the net fixed assets is equal to the depreciation expense.C) reflects the net changes in total assets over a stated period of time.D) is equivalent to the cash flow from assets minus the operating cash flow minus the change in net working capital.E) is equal to the net change in the current accounts.43) Which one of the following statements related to the cash flow to creditors must be correct?A) If the cash flow to creditors is positive, then the firm must have borrowed more money than it repaid.B) If the cash flow to creditors is negative, then the firm must have a negative cash flow from assets.C) A positive cash flow to creditors represents a net cash outflow from the firm.D) A positive cash flow to creditors means that a firm has increased its long-term debt.E) If the cash flow to creditors is zero, then a firm has no long-term debt.44) A positive cash flow to stockholders indicates which one of the following with certainty?A) The dividends paid exceeded the net new equity raised.B) The amount of the sale of common stock exceeded the amount of dividends paid.C) No dividends were distributed, but new shares of stock were sold.D) Both the cash flow to assets and the cash flow to creditors must be negative.E) Both the cash flow to assets and the cash flow to creditors must be positive.45) A firm has $680 in inventory, $2,140 in fixed assets, $210 in accounts receivables, $250 in accounts payable, and $80 in cash. What is the amount of the net working capital?A) $970B) $720C) $640D) $3,110E) $2,86046) A firm has net working capital of $560. Long-term debt is $3,970, total assets are $7,390, and fixed assets are $3,910. What is the amount of the total liabilities?A) $2,050B) $2,920C) $4,130D) $7,950E) $6,89047) A firm has common stock of $6,200, paid-in surplus of $9,100, total liabilities of $8,400,current assets of $5,900, and fixed assets of $21,200. What is the amount of the shareholders' equity?A) $6,900B) $15,300C) $18,700D) $23,700E) $35,50048) Your firm has total assets of $4,900, fixed assets of $3,200, long-term debt of $2,900, and short-term debt of $1,400. What is the amount of net working capital?A) ?$100B) $300C) $600D) $1,700E) $1,80049) Bonner Automotive has shareholders' equity of $218,700. The firm owes a total of $141,000 of which 40 percent is payable within the next year. The firm has net fixed assets of $209,800. What is the amount of the net working capital?A) $149,900B) $93,500C) $125,600D) ?$47,500E) $56,50050) Four years ago, Ship Express purchased a mailing machine at a cost of $218,000. This equipment is currently valued at $97,400 on today's balance sheet but could actually be sold for $92,900. This is the only fixed asset the firm owns. Net working capital is $41,300 and long-term debt is $102,800. What is the book value of shareholders' equity?A) $31,400B) $47,700C) $35,900D) $249,400E) $253,90051) The What-Not Shop owns the building in which it is located. This building initially cost $647,000 and is currently appraised at $819,000. The fixtures originally cost $148,000 and are currently valued at $65,000. The inventory has a book value of $319,000 and a market value equal to 1.1 times the book value. The shop expects to collect 96 percent of the $21,700 in accounts receivable. The shop has $26,800 in cash and total debt of$414,700. What is the market value of the shop's equity?A) $867,832B) $900,166C) $695,832D) $775,632E) $1,190,33252) The Widget Co. purchased all of its fixed assets three years ago for $4 million. These assets can be sold today for $2 million. The current balance sheet shows net fixed assets of $2,500,000, current liabilities of $1,375,000, and net working capital of $725,000. If all the current assets were liquidated today, the company would receive $1.9 million in cash. The book value of the total assets today is ________ and the market value of those assets is ________.A) $4,600,000; $3,900,000B) $4,600,000; $3,125,000C) $5,000,000; $3,125,000D) $5,000,000; $3,900,000E) $6,500,000; $3,900,00053) JJ Enterprises has inventory of $11,600, fixed assets of $22,400, total liabilities of $12,900, cash of $1,900, accounts receivable of $8,700, and long-term debt of $6,500. What is the net working capital?A) $44,600B) $15,700C) $12,600D) $15,800E) $9,30054) The River Side Stop has a current market value of $26,400 and owes its creditors $31,300. What is the market value of theshareholders' equity?A) ?$4,900B) ?$5,200C) $0D) $4,900E) $5,20055) Jensen Enterprises paid $700 in dividends and $320 in interest this past year. Common stock remained constant at $6,800 and retained earnings decreased by $180. What is the net income for the year?A) $180B) $520C) $1,020D) $880E) $1,20056) Andre's Bakery has sales of $487,000 with costs of $263,000. Interest expense is $26,000 and depreciation is $42,000. The tax rate is 21 percent. What is the net income?A) $142,750B) $123,240C) $109,000D) $128,700E) $134,55057) Hayes Bakery has sales of $30,600, costs of $15,350, an addition to retained earnings of $4,221, dividends paid of $469, interest expense of $1,300, and a tax rate of 21 percent. What is the amount of the depreciation expense?A) $4,820.13B) $5,500.89C) $8,013.29D) $8,180.01E) $9,500.0058) Last year, Kaylor Equipment had $15,900 of sales, $500 of net new equity, dividend payments of $75, an addition to retained earnings of $418, depreciation of $680, and $511 of interest expense. What are the earnings before interest and taxes at a tax rate of 21 percent?A) $589.46B) $1,135.05C) $1,331.54D) $1,560.85E) $949.4659) Galaxy Interiors income statement shows depreciation of $1,611, sales of $21,415, interest paid of $1,282, net income of $1,374, and costs of goods sold of $16,408. What is the amount of the noncash expenses?A) $2,893B) $1,282C) $740D) $1,611E) $2,35160) Beach Front Industries has sales of $546,000, costs of $295,000, depreciation expense of $37,000, interest expense of $15,000, and a tax rate of 21 percent. The firm paid $59,000 in cash dividends. What is the addition to retained earnings?A) $98,210B) $81,700C) $95,200D) $103,460E) $121,68061) Keisler's has cost of goods sold of $11,518, interest expense of $315, dividends of $420, depreciation of $811, and a change in retained earnings of $296. What is the taxable income given a tax rate of 21 percent?A) $955.38B) $967.78C) $906.33D) $776.41E) $646.1562) What is the average tax rate for a firm with taxable income of $118,740 in 2017?Taxable Income Tax Rate$ 0 - 50,000 15 %50,001 - 75,000 2575,001 - 100,000 34100,001 - 335,000 39A) 26.68 percentB) 34.87 percentC) 24.89 percentD) 36.67 percentE) 39.00 percent63) For 2017, Nevada Mining had projected taxable income of $94,800. Its actual taxable income exceeded this projection by $21,000. How much additional tax did the firm owe due to the $21,000 increase in taxable income?Taxable Income Tax Rate$ 0 - 50,000 15 %50,001 - 75,000 2575,001 - 100,000 34100,001 - 335,000 39A) $7,930B) $8,036C) $8,150D) $7,682E) $8,19764) In 2017, Boyer Enterprises had $76,700 in taxable income. What was the firm's average tax rate for the year?Taxable Income Tax Rate$ 0 - 50,000 15 %50,001 - 75,000 2575,001 - 100,000 34100,001 - 335,000 39A) 28.25 percentB) 18.68 percentC) 26.48 percentD) 20.14 percentE) 29.03 percent65) Winston Industries had sales of $843,800 and costs of $609,900. The company paid $38,200 in interest and $35,000 in dividends. The depreciation was $76,400. The firm has a combined tax rate of 24 percent. What was the addition to retained earnings for the year?A) $55,668B) $57,240C) $61,060D) $56,200E) $68,40066) RTF Oil has total sales of $911,400 and costs of $787,300. Depreciation is $52,600 and the tax rate is 21 percent. The firm is all-equity financed. What is the operating cash flow?A) $108,410B) $108,320C) $109,924D) $106,417E) $109,08567) Nielsen Auto Parts had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411. During the year, assets with a book value of $6,943 were sold. Depreciation for the year was $42,822. What is the amount of net capital spending?A) $33,763B) $40,706C) $58,218D) $65,161E) $67,40868) At the beginning of the year, a firm had current assets of $121,306 and current liabilities of $124,509. At the end of the year, the current assets were $122,418 and the current liabilities were $103,718. What is the change in net working capital?A) ?$19,679B) ?$11,503C) $19,387D) $15,497E) $21,90369) At the beginning of the year, the long-term debt of a firm was $72,918 and total debt was $138,407. At the end of the year, long-term debt was $68,219 and total debt was $145,838. The interest paid was $6,430. What is the amount of the cash flow to creditors?A) $1,731C) $11,129D) $13,861E) $19,17270) Ernie's Home Repair had beginning long-term debt of $51,207 and ending long-term debt of $36,714. The beginning and ending total debt balances were $59,513 and $42,612, respectively. The interest paid was $2,808. What is the amount of the cash flow to creditors?A) ?$11,685B) ?$11,272C) $17,301D) $17,418E) $11,17471) The Daily News has projected annual net income of $272,600, of which 28 percent will be distributed as dividends. Assume the company will have net sales of $75,000 worth of common stock. What will be the cash flow to stockholders if the tax rate is 21 percent?A) ?$75,000B) $1,328C) $24,623.52D) $76,328E) $151,32872) The Lakeside Inn had operating cash flow of $48,450. Depreciation was $6,700 and interest paid was $2,480. A net total of $2,620 was paid on long-term debt. The firm spent $24,000 on fixed assets and decreased net working capital by $1,330. What was the amount of the cash flow to stockholders?A) $5,100C) $18,020D) $19,998E) $20,68073) For the past year, Galaxy Interiors had depreciation of $2,419, beginning total assets of $23,616, and ending total assets of $21,878. Current assets decreased by $1,356. What was the amount of net capital spending for the year?A) ?$382B) $2,037C) $2,801D) $1,993E) $1,17274) Carlisle Express paid $1,282 in interest and $975 in dividends last year. Current assets increased by $2,700, current liabilities decreased by $420, and long-term debt increased by $2,200. What was the cash flow to creditors?A) ?$530B) ?$918C) $1,839D) 2,132E) $3,09475) CBC Industries has sales of $21,415, interest paid of $1,282, costs of $9,740, and depreciation of $1,480. What is the operating cash flow if the tax rate is 22 percent?A) $10,114.14B) $9,900.86C) $8,985.86D) $8,536.67E) $9,714.1476) Williamsburg Markets has an operating cash flow of $4,267 and depreciation of $1,611. Current assets decreased by $1,356 while current liabilities decreased by $2,662, and net fixed assets decreased by $382 during the year. What is free cash flow for the year?A) $1,732B) $2,247C) $2,961D) $3,915E) $4,26777) Up Towne Cleaners has taxable income of $48,900 and a tax rate of 21 percent. What is the change in retained earnings if the firm pays $20,200 in dividends for the year?A) $18,942B) $19,948C) $19,374D) $18,431E) $18,57478) For the year, B&K United increased current liabilities by $1,400, decreased cash by $1,200, increased net fixed assets by $340, increased accounts receivable by $200, and decreased inventory by $150. What is the annual change in net working capital?A) ?$2,550B) ?$70C) $590D) $550E) ?$2,21079) TJH, Inc. purchased $145,000 in new equipment and sold equipment with a net book value of $68,400 during the year.What is the amount of net capital spending if the depreciation was $38,600?A) $115,200B) $76,600C) $94,200D) $38,000E) ?$38,00080) Nu Furniture has sales of $241,000, depreciation of $32,200, interest expense of $35,700, costs of $103,400, and taxes of $14,637. What is the operating cash flow for the year?A) $108,229B) $121,367C) $122,963D) $117,766E) $128,03781) HiWay Furniture has sales of $316,000, depreciation of $47,200, interest expense of $41,400, costs of $148,200, and taxes of $16,632. The firm has net capital spending of $36,400 and a decrease in net working capital of $14,300. What is the cash flow from assets for the year?A) $145,985B) $129,068C) $119,655D) $120,810E) $134,58582) At the beginning of the year, Trees Galore had current liabilities of $15,932 and total debt of $68,847. By year end, current liabilities were $13,870 and total debt was $72,415. What is the amount of net new borrowing for the year?A) $5,630B) ?$2,480C) $3,568D) $4,677E) ?$2,06283) JJ Enterprises has current assets of $10,406, long-term debt of $4,780, and current liabilities of $9,822 at the beginning of the year. At year end, current assets are $11,318, long-term debt is $5,010, and current liabilities are $9,741. The firm paid $277 in interest and $320 in dividends during the year. What is the cash flow to creditors for the year?A) ?$47B) ?$507C) ?$97D) $47E) $50784) BK Enterprises neither sold nor repurchased any shares of stock during the year. The firm had annual sales of $7,202, depreciation of $1,196, cost of goods sold of $4,509, interest expense of $318, taxes of $248, beginning-of-year shareholders' equity of $4,808, and end-of-year shareholders' equity of $4,922. What is the amount of dividends paid during the year?A) $817B) $1,009C) $864D) $709E) $51585) Carlisle Carpets has cost of goods sold of $92,511, interest expense of $4,608, dividends paid of $3,200, depreciation of $14,568, an increase in retained earnings of $11,920, and a tax rate of 21 percent. What is the operating cash flow?A) $34,296.00B) $42,122.42C) $36,462.58D) $31,543.10E) $36,741.4286) Webster World has sales of $13,800, costs of $5,800, depreciation expense of $1,100, and interest expense of $700. What is the operating cash flow if the tax rate is 23 percent?A) $6,016B) $5,969C) $6,574D) $7,036E) $7,10087) Webster's has beginning net fixed assets of $684,218, ending net fixed assets of $679,426, and depreciation expense of $48,859. What is the net capital spending for the year if the tax rate is 25 percent?A) $42,920B) $53,651C) $44,067D) $35,255E) $48,60088) Global Tours has beginning current assets of $1,360, beginning current liabilities of $940, ending current assets of $1,720, and ending current liabilities of $1,080. What is the change in net working capital?A) $220B) $170C) $190D) $940。
公司理财精要版原书第12版习题库答案Ross12e_Chapter02_TB
Fundamentals of Corporate Finance, 12e (Ross)Chapter 2 Financial Statements, Taxes, and Cash Flow1) Which one of the following is classified as a tangible fixed asset?A) Accounts receivableB) Production equipmentC) CashD) PatentE) Inventory2) Which one of the following is a current asset?A) Accounts payableB) TrademarkC) Accounts receivableD) Notes payableE) Equipment3) Which one of the following is included in a firm's market value but yet is excluded from the firm's accounting value?A) Real estate investmentB) Good reputation of the companyC) Equipment owned by the firmD) Money due from a customerE) An item held by the firm for future sale4) Which one of the following is a current liability?A) Note payable to a supplier in 13 monthsB) Amount due from a customer in two weeksC) Account payable to a supplier that is due next weekD) Loan payable to the bank in 18 monthsE) Amount due from a customer that is past due5) Which one of the following will decrease the value of a firm's net working capital?A) Using cash to pay a supplierB) Depreciating an assetC) Collecting an accounts receivableD) Purchasing inventory on creditE) Selling inventory at a loss6) Which one of the following statements concerning net working capital is correct?A) Net working capital increases when inventory is purchased with cash.B) Net working capital excludes inventory.C) Total assets must increase if net working capital increases.D) Net working capital may be a negative value.E) Net working capital is the amount of cash a firm currently has available for spending.7) Which one of the following statements concerning net working capital is correct?A) A firm's ability to meet its current obligations increases as the firm's net working capital decreases.B) An increase in net working capital must also increase current assets.C) Net working capital increases when inventory is sold for cash at a profit.D) Firms with equal amounts of net working capital are also equally liquid.E) Net working capital is a part of the operating cash flow.8) Which one of the following accounts is the most liquid?A) InventoryB) BuildingC) Accounts ReceivableD) EquipmentE) Land9) Which one of the following represents the most liquid asset?A) $100 account receivable that is discounted and collected for $96 todayB) $100 of inventory that is sold today on credit for $103C) $100 of inventory that is discounted and sold for $97 cash todayD) $100 of inventory that is sold today for $100 cashE) $100 of accounts receivable that will be collected in full next week10) Which one of the following statements related to liquidity is correct?A) Liquid assets tend to earn a high rate of return.B) Liquid assets are valuable to a firm.C) Liquid assets are defined as assets that can be sold quickly regardless of the price obtained.D) Inventory is more liquid than accounts receivable because inventory is tangible.E) Any asset that can be sold is considered liquid.11) Shareholders' equity:A) is referred to as a firm's financial leverage.B) is equal to total assets plus total liabilities.C) decreases whenever new shares of stock are issued.D) includes patents, preferred stock, and common stock.E) represents the residual value of a firm.12) As the degree of financial leverage increases, the:A) probability a firm will encounter financial distress increases.B) amount of a firm's total debt decreases.C) less debt a firm has per dollar of total assets.D) number of outstanding shares of stock increases.E) accounts payable balance decreases.13) The book value of a firm is:A) equivalent to the firm's market value provided that the firm has some fixed assets.B) based on historical cost.C) generally greater than the market value when fixed assets are included.D) more of a financial than an accounting valuation.E) adjusted to the market value whenever the market value exceeds the stated book value.14) The value of which one of the following is included in the market value of a firm but is excluded from the firm's book value?A) Office equipmentB) CopyrightC) Distribution warehouseD) Employee's experienceE) Land acquired over 25 years ago15) You recently purchased a grocery store. At the time of the purchase, the store's market value and its book value were equal. The purchase included the building, fixtures, and inventory. Which one of the following is most apt to cause the market value of this store to be less than its book value?A) A sudden and unexpected increase in inflationB) The replacement of old inventory items with more desirable productsC) Improvements to the surrounding area by other store ownersD) Construction of a new restricted access highway located between the store and the surrounding residential areasE) Addition of a stop light at the main entrance to the store's parking lot16) Which one of the following is the financial statement that shows the accounting value of a firm's equity as of a particular date?A) Income statementB) Creditor's statementC) Balance sheetD) Statement of cash flowsE) Dividend statement17) Net working capital is defined as:A) total liabilities minus shareholders' equity.B) current liabilities minus shareholders' equity.C) fixed assets minus long-term liabilities.D) total assets minus total liabilities.E) current assets minus current liabilities.18) Which one of these sets forth the common set of standards and procedures by which audited financial statements are prepared?A) Matching principleB) Cash flow identityC) Generally Accepted Accounting PrinciplesD) Financial Accounting Reporting PrinciplesE) Standard Accounting Value Guidelines19) Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?A) Income statementB) Balance sheetC) Statement of cash flowsD) Tax reconciliation statementE) Market value report20) Noncash items refer to:A) fixed expenses.B) inventory items purchased using credit.C) the ownership of intangible assets such as patents.D) expenses that do not directly affect cash flows.E) sales that are made using store credit.21) Which one of the following is true according to generally accepted accounting principles?A) Depreciation is recorded based on the market value principle.B) Income is recorded based on the realization principle.C) Costs are recorded based on the realization principle.D) Depreciation is recorded based on the recognition principle.E) Costs of goods sold are recorded based on the recognition principle.22) Which one of these is most apt to be a fixed cost?A) Raw materialsB) Manufacturing wagesC) Management bonusesD) Office salariesE) Shipping and freight23) Which one of the following statements is correct assuming accrual accounting is used?A) The addition to retained earnings is equal to net income plus dividends paid.B) Credit sales are recorded on the income statement when the cash from the sale is collected.C) The labor costs for producing a product are expensed when the product is sold.D) Interest is a non-cash expense.E) Depreciation increases the marginal tax rate.24) The percentage of the next dollar you earn that must be paid in taxes is referred to as the________ tax rate.A) meanB) residualC) totalD) averageE) marginal25) The ________ tax rate is equal to total taxes divided by total taxable income.A) deductibleB) residualC) totalD) averageE) marginal26) Which one of the following statements related to corporate taxes is correct?A) A company's marginal tax rate must be equal to or lower than its average tax rate.B) The tax for a company is computed by multiplying the marginal tax rate times the taxable income.C) Additional income is taxed at a firm's average tax rate.D) The marginal tax rate will always exceed a company's average tax rate.E) The marginal tax rate for a company can be either higher than or equal to the average tax rate.27) Which one of the following statements concerning corporate income taxes is correct for 2018?A) All corporations are exempt from federal taxation.B) Corporations pay no tax on their first $50,000 of income.C) The federal income tax on corporations is a flat-rate tax with the same rate applying to all levels of taxable income.D) The marginal tax rate will always be lower than the average tax rate.E) The first 25 percent of corporate income is exempt from taxation.28) The cash flow that is available for distribution to a corporation's creditors and stockholders is called the:A) operating cash flow.B) net capital spending.C) net working capital.D) cash flow from assets.E) cash flow to stockholders.29) Which term relates to the cash flow that results from a company's ongoing, normal business activities?A) Operating cash flowB) Capital spendingC) Net working capitalD) Cash flow from assetsE) Cash flow to creditors30) Cash flow from assets is also known as the firm's:A) capital structure.B) equity structure.C) hidden cash flow.D) free cash flow.E) historical cash flow.31) The cash flow related to interest payments less any net new borrowing is called the:A) operating cash flow.B) capital spending cash flow.C) net working capital.D) cash flow from assets.E) cash flow to creditors.32) Cash flow to stockholders is defined as:A) the total amount of interest and dividends paid during the past year.B) the change in total equity over the past year.C) cash flow from assets plus the cash flow to creditors.D) operating cash flow minus the cash flow to creditors.E) dividend payments less net new equity raised.33) Which one of the following is an expense for accounting purposes but is not an operating cash flow for financial purposes?A) Interest expenseB) TaxesC) Cost of goods soldD) Labor costsE) Administrative expenses34) Depreciation for a tax-paying firm:A) increases expenses and lowers taxes.B) increases the net fixed assets as shown on the balance sheet.C) reduces both the net fixed assets and the costs of a firm.D) is a noncash expense that increases the net income.E) decreases net fixed assets, net income, and operating cash flows.35) Which one of the following statements related to an income statement is correct?A) Interest expense increases the amount of tax due.B) Depreciation does not affect taxes since it is a non-cash expense.C) Net income is distributed to dividends and paid-in surplus.D) Taxes reduce both net income and operating cash flow.E) Interest expense is included in operating cash flow.36) Which one of the following statements is correct concerning a corporation with taxable income of $125,000?A) Taxable income minus dividends paid will equal the ending retained earnings for the year.B) An increase in depreciation will increase the operating cash flow.C) Net income divided by the number of shares outstanding will equal the dividends per share.D) Interest paid will be included in both net income and operating cash flow.E) An increase in the tax rate will increase both net income and operating cash flow.37) Which one of the following will increase the cash flow from assets, all else equal?A) Decrease in cash flow to stockholdersB) Decrease in operating cash flowC) Decrease in the change in net working capitalD) Decrease in cash flow to creditorsE) Increase in net capital spending38) For a tax-paying firm, an increase in ________ will cause the cash flow from assets to increase.A) depreciationB) net capital spendingC) the change in net working capitalD) taxesE) production costs39) Which one of the following must be true if a firm had a negative cash flow from assets?A) The firm borrowed money.B) The firm acquired new fixed assets.C) The firm had a net loss for the period.D) The firm utilized outside funding.E) Newly issued shares of stock were sold.40) An increase in the interest expense for a firm with a taxable income of $123,000 will:A) increase net income.B) increase gross income.C) increase the cash flow from assets.D) decrease the cash flow from equity.E) decrease the operating cash flow.41) Which one of the following is excluded from the cash flow from assets?A) Accounts payableB) InventoryC) SalesD) Interest expenseE) Cost of goods sold42) Net capital spending:A) is equal to ending net fixed assets minus beginning net fixed assets.B) is equal to zero if the decrease in the net fixed assets is equal to the depreciation expense.C) reflects the net changes in total assets over a stated period of time.D) is equivalent to the cash flow from assets minus the operating cash flow minus the change in net working capital.E) is equal to the net change in the current accounts.43) Which one of the following statements related to the cash flow to creditors must be correct?A) If the cash flow to creditors is positive, then the firm must have borrowed more money than it repaid.B) If the cash flow to creditors is negative, then the firm must have a negative cash flow from assets.C) A positive cash flow to creditors represents a net cash outflow from the firm.D) A positive cash flow to creditors means that a firm has increased its long-term debt.E) If the cash flow to creditors is zero, then a firm has no long-term debt.44) A positive cash flow to stockholders indicates which one of the following with certainty?A) The dividends paid exceeded the net new equity raised.B) The amount of the sale of common stock exceeded the amount of dividends paid.C) No dividends were distributed, but new shares of stock were sold.D) Both the cash flow to assets and the cash flow to creditors must be negative.E) Both the cash flow to assets and the cash flow to creditors must be positive.45) A firm has $680 in inventory, $2,140 in fixed assets, $210 in accounts receivables, $250 in accounts payable, and $80 in cash. What is the amount of the net working capital?A) $970B) $720C) $640D) $3,110E) $2,86046) A firm has net working capital of $560. Long-term debt is $3,970, total assets are $7,390, and fixed assets are $3,910. What is the amount of the total liabilities?A) $2,050B) $2,920C) $4,130D) $7,950E) $6,89047) A firm has common stock of $6,200, paid-in surplus of $9,100, total liabilities of $8,400,current assets of $5,900, and fixed assets of $21,200. What is the amount of the shareholders' equity?A) $6,900B) $15,300C) $18,700D) $23,700E) $35,50048) Your firm has total assets of $4,900, fixed assets of $3,200, long-term debt of $2,900, and short-term debt of $1,400. What is the amount of net working capital?A) −$100B) $300C) $600D) $1,700E) $1,80049) Bonner Automotive has shareholders' equity of $218,700. The firm owes a total of $141,000 of which 40 percent is payable within the next year. The firm has net fixed assets of $209,800. What is the amount of the net working capital?A) $149,900B) $93,500C) $125,600D) −$47,500E) $56,50050) Four years ago, Ship Express purchased a mailing machine at a cost of $218,000. This equipment is currently valued at $97,400 on today's balance sheet but could actually be sold for $92,900. This is the only fixed asset the firm owns. Net working capital is $41,300 and long-term debt is $102,800. What is the book value of shareholders' equity?A) $31,400B) $47,700C) $35,900D) $249,400E) $253,90051) The What-Not Shop owns the building in which it is located. This building initially cost $647,000 and is currently appraised at $819,000. The fixtures originally cost $148,000 and are currently valued at $65,000. The inventory has a book value of $319,000 and a market value equal to 1.1 times the book value. The shop expects to collect 96 percent of the $21,700 in accounts receivable. The shop has $26,800 in cash and total debt of $414,700. What is the market value of the shop's equity?A) $867,832B) $900,166C) $695,832D) $775,632E) $1,190,33252) The Widget Co. purchased all of its fixed assets three years ago for $4 million. These assets can be sold today for $2 million. The current balance sheet shows net fixed assets of $2,500,000, current liabilities of $1,375,000, and net working capital of $725,000. If all the current assets were liquidated today, the company would receive $1.9 million in cash. The book value of the total assets today is ________ and the market value of those assets is ________.A) $4,600,000; $3,900,000B) $4,600,000; $3,125,000C) $5,000,000; $3,125,000D) $5,000,000; $3,900,000E) $6,500,000; $3,900,00053) JJ Enterprises has inventory of $11,600, fixed assets of $22,400, total liabilities of $12,900, cash of $1,900, accounts receivable of $8,700, and long-term debt of $6,500. What is the net working capital?A) $44,600B) $15,700C) $12,600D) $15,800E) $9,30054) The River Side Stop has a current market value of $26,400 and owes its creditors $31,300. What is the market value of the shareholders' equity?A) −$4,900B) −$5,200C) $0D) $4,900E) $5,20055) Jensen Enterprises paid $700 in dividends and $320 in interest this past year. Common stock remained constant at $6,800 and retained earnings decreased by $180. What is the net income for the year?A) $180B) $520C) $1,020D) $880E) $1,20056) Andre's Bakery has sales of $487,000 with costs of $263,000. Interest expense is $26,000 and depreciation is $42,000. The tax rate is 21 percent. What is the net income?A) $142,750B) $123,240C) $109,000D) $128,700E) $134,55057) Hayes Bakery has sales of $30,600, costs of $15,350, an addition to retained earnings of $4,221, dividends paid of $469, interest expense of $1,300, and a tax rate of 21 percent. What is the amount of the depreciation expense?A) $4,820.13B) $5,500.89C) $8,013.29D) $8,180.01E) $9,500.0058) Last year, Kaylor Equipment had $15,900 of sales, $500 of net new equity, dividend payments of $75, an addition to retained earnings of $418, depreciation of $680, and $511 of interest expense. What are the earnings before interest and taxes at a tax rate of 21 percent?A) $589.46B) $1,135.05C) $1,331.54D) $1,560.85E) $949.4659) Galaxy Interiors income statement shows depreciation of $1,611, sales of $21,415, interest paid of $1,282, net income of $1,374, and costs of goods sold of $16,408. What is the amount of the noncash expenses?A) $2,893B) $1,282C) $740D) $1,611E) $2,35160) Beach Front Industries has sales of $546,000, costs of $295,000, depreciation expense of $37,000, interest expense of $15,000, and a tax rate of 21 percent. The firm paid $59,000 in cash dividends. What is the addition to retained earnings?A) $98,210B) $81,700C) $95,200D) $103,460E) $121,68061) Keisler's has cost of goods sold of $11,518, interest expense of $315, dividends of $420, depreciation of $811, and a change in retained earnings of $296. What is the taxable income given a tax rate of 21 percent?A) $955.38B) $967.78C) $906.33D) $776.41E) $646.1562) What is the average tax rate for a firm with taxable income of $118,740 in 2017?Taxable Income Tax Rate$ 0 - 50,000 15 %50,001 - 75,000 2575,001 - 100,000 34100,001 - 335,000 39A) 26.68 percentB) 34.87 percentC) 24.89 percentD) 36.67 percentE) 39.00 percent63) For 2017, Nevada Mining had projected taxable income of $94,800. Its actual taxable income exceeded this projection by $21,000. How much additional tax did the firm owe due to the $21,000 increase in taxable income?Taxable Income Tax Rate$ 0 - 50,000 15 %50,001 - 75,000 2575,001 - 100,000 34100,001 - 335,000 39A) $7,930B) $8,036C) $8,150D) $7,682E) $8,19764) In 2017, Boyer Enterprises had $76,700 in taxable income. What was the firm's average tax rate for the year?Taxable Income Tax Rate$ 0 - 50,000 15 %50,001 - 75,000 2575,001 - 100,000 34100,001 - 335,000 39A) 28.25 percentB) 18.68 percentC) 26.48 percentD) 20.14 percentE) 29.03 percent65) Winston Industries had sales of $843,800 and costs of $609,900. The company paid $38,200 in interest and $35,000 in dividends. The depreciation was $76,400. The firm has a combined tax rate of 24 percent. What was the addition to retained earnings for the year?A) $55,668B) $57,240C) $61,060D) $56,200E) $68,40066) RTF Oil has total sales of $911,400 and costs of $787,300. Depreciation is $52,600 and the tax rate is 21 percent. The firm is all-equity financed. What is the operating cash flow?A) $108,410B) $108,320C) $109,924D) $106,417E) $109,08567) Nielsen Auto Parts had beginning net fixed assets of $218,470 and ending net fixed assets of $209,411. During the year, assets with a book value of $6,943 were sold. Depreciation for the year was $42,822. What is the amount of net capital spending?A) $33,763B) $40,706C) $58,218D) $65,161E) $67,40868) At the beginning of the year, a firm had current assets of $121,306 and current liabilities of $124,509. At the end of the year, the current assets were $122,418 and the current liabilities were $103,718. What is the change in net working capital?A) −$19,679B) −$11,503C) $19,387D) $15,497E) $21,90369) At the beginning of the year, the long-term debt of a firm was $72,918 and total debt was $138,407. At the end of the year, long-term debt was $68,219 and total debt was $145,838. The interest paid was $6,430. What is the amount of the cash flow to creditors?A) $1,731B) −$1,001C) $11,129D) $13,861E) $19,17270) Ernie's Home Repair had beginning long-term debt of $51,207 and ending long-term debt of $36,714. The beginning and ending total debt balances were $59,513 and $42,612, respectively. The interest paid was $2,808. What is the amount of the cash flow to creditors?A) −$11,685B) −$11,272C) $17,301D) $17,418E) $11,17471) The Daily News has projected annual net income of $272,600, of which 28 percent will be distributed as dividends. Assume the company will have net sales of $75,000 worth of common stock. What will be the cash flow to stockholders if the tax rate is 21 percent?A) −$75,000B) $1,328C) $24,623.52D) $76,328E) $151,32872) The Lakeside Inn had operating cash flow of $48,450. Depreciation was $6,700 and interest paid was $2,480. A net total of $2,620 was paid on long-term debt. The firm spent $24,000 on fixed assets and decreased net working capital by $1,330. What was the amount of the cash flow to stockholders?A) $5,100B) $7,830C) $18,020D) $19,998E) $20,68073) For the past year, Galaxy Interiors had depreciation of $2,419, beginning total assets of $23,616, and ending total assets of $21,878. Current assets decreased by $1,356. What was the amount of net capital spending for the year?A) −$382B) $2,037C) $2,801D) $1,993E) $1,17274) Carlisle Express paid $1,282 in interest and $975 in dividends last year. Current assets increased by $2,700, current liabilities decreased by $420, and long-term debt increased by $2,200. What was the cash flow to creditors?A) −$530B) −$918C) $1,839D) 2,132E) $3,09475) CBC Industries has sales of $21,415, interest paid of $1,282, costs of $9,740, and depreciation of $1,480. What is the operating cash flow if the tax rate is 22 percent?A) $10,114.14B) $9,900.86C) $8,985.86D) $8,536.67E) $9,714.1476) Williamsburg Markets has an operating cash flow of $4,267 and depreciation of $1,611. Current assets decreased by $1,356 while current liabilities decreased by $2,662, and net fixed assets decreased by $382 during the year. What is free cash flow for the year?A) $1,732B) $2,247C) $2,961D) $3,915E) $4,26777) Up Towne Cleaners has taxable income of $48,900 and a tax rate of 21 percent. What is the change in retained earnings if the firm pays $20,200 in dividends for the year?A) $18,942B) $19,948C) $19,374D) $18,431E) $18,57478) For the year, B&K United increased current liabilities by $1,400, decreased cash by $1,200, increased net fixed assets by $340, increased accounts receivable by $200, and decreased inventory by $150. What is the annual change in net working capital?A) −$2,550B) −$70C) $590D) $550E) −$2,21079) TJH, Inc. purchased $145,000 in new equipment and sold equipment with a net book value of $68,400 during the year. What is the amount of net capital spending if the depreciation was $38,600?A) $115,200B) $76,600C) $94,200D) $38,000E) −$38,00080) Nu Furniture has sales of $241,000, depreciation of $32,200, interest expense of $35,700, costs of $103,400, and taxes of $14,637. What is the operating cash flow for the year?A) $108,229B) $121,367C) $122,963D) $117,766E) $128,03781) HiWay Furniture has sales of $316,000, depreciation of $47,200, interest expense of $41,400, costs of $148,200, and taxes of $16,632. The firm has net capital spending of $36,400 and a decrease in net working capital of $14,300. What is the cash flow from assets for the year?A) $145,985B) $129,068C) $119,655D) $120,810E) $134,58582) At the beginning of the year, Trees Galore had current liabilities of $15,932 and total debt of $68,847. By year end, current liabilities were $13,870 and total debt was $72,415. What is the amount of net new borrowing for the year?A) $5,630B) −$2,480C) $3,568D) $4,677E) −$2,06283) JJ Enterprises has current assets of $10,406, long-term debt of $4,780, and current liabilities of $9,822 at the beginning of the year. At year end, current assets are $11,318, long-term debt is $5,010, and current liabilities are $9,741. The firm paid $277 in interest and $320 in dividends during the year. What is the cash flow to creditors for the year?A) −$47B) −$507C) −$97D) $47E) $50784) BK Enterprises neither sold nor repurchased any shares of stock during the year. The firm had annual sales of $7,202, depreciation of $1,196, cost of goods sold of $4,509, interest expense of $318, taxes of $248, beginning-of-year shareholders' equity of $4,808, and end-of-year shareholders' equity of $4,922. What is the amount of dividends paid during the year?A) $817B) $1,009C) $864D) $709E) $51585) Carlisle Carpets has cost of goods sold of $92,511, interest expense of $4,608, dividends paid of $3,200, depreciation of $14,568, an increase in retained earnings of $11,920, and a tax rate of 21 percent. What is the operating cash flow?A) $34,296.00B) $42,122.42C) $36,462.58D) $31,543.10E) $36,741.42。
公司理财精要版原书第12版习题库答案Ross12e_Chapter24_TB
Fundamentals of Corporate Finance, 12e (Ross)Chapter 24 Option Valuation1) Travis owns a stock that is currently valued at $45.80 a share. He is concerned that the stock price may decline so he just purchased a put option on the stock with an exercise price of $45. Which one of the following terms applies to this strategy?A) Put-call parityB) Covered callC) Protective putD) StraddleE) Strangle2) According to put-call parity, the present value of the exercise price is equal to the:A) stock price plus the call premium minus the put premium.B) call premium plus the put premium minus the stock price.C) stock price minus the put premium minus the call premium.D) put premium plus the call premium minus the stock price.E) stock price plus the put premium minus the call premium.3) In the put-call parity formula, the present value of the exercise price is computed using the:A) nominal market rate.B) real market rate.C) real inflation rate.D) nominal inflation rate.E) risk-free rate.4) Which one of the following provides the option of selling a stock at a specified price on a stated date even if the market price of the stock declines to zero?A) American callB) European callC) American putD) European putE) Either an American or European put5) The primary purpose of a protective put is to:A) ensure a maximum purchase price in the future.B) offset an equivalent call option.C) limit the downside risk of asset ownership.D) lock in a risk-free rate of return on a financial asset.E) increase the upside potential return on an investment.6) Which one of the following can be used to replicate a protective put strategy?A) Riskless investment and stock purchaseB) Stock purchase and call optionC) Call option and riskless investmentD) Riskless investment and writing a putE) Call option, stock purchase, and riskless investment7) Which one of these is most equivalent to e− Rt?A) −2.71828RtB) −1/2.71828RtC) 1/2.71828RtD) 1 − 2.71828RtE) 1/2.71828R t8) Under European put-call parity, the present value of the strike price is equivalent to the present value of:A) the current value of the stock minus the call premium.B) the market value of the stock plus the put premium.C) a U.S. Treasury coupon bond with a face value equal to the strike price.D) a U.S. Treasury bill with a face value equal to the strike price.E) any risk-free security with a face value equal to the strike price and a coupon rate equal to the risk-free rate of return.9) In the Black-Scholes option pricing formula, N(d1) is the probability that a standardized, normally distributed random variable is:A) less than or equal to N(d2).B) less than 1.C) equal to 1.D) equal to d1.E) less than or equal to d1.10) In the Black-Scholes option pricing model, the symbol "σ" is used to represent the standard deviation of the:A) option premium on a call with a specified exercise price.B) rate of return on the underlying asset.C) volatility of the risk-free rate of return.D) rate of return on a risk-free asset.E) option premium on a put with a specified exercise price.11) All of the following affect the value of a call option except the:A) strike price.B) stock price.C) standard deviation of the returns on a risk-free asset.D) continuously compounded risk-free rate.E) time to maturity.12) To compute the value of a put using the Black-Scholes option pricing model, you:A) assume the equivalent call is worthless and then apply the put-call parity formula.B) have to compute the value of the put as if it is a call and then apply the put-call parity formula.C) subtract the value of an equivalent call from 1.0.D) subtract the value of an equivalent call from the market price of the stock.E) multiply the value of an equivalent call by e−rt.13) Which one of the following statements is correct?A) The price of an American put is equal to the stock price minus the exercise price.B) The value of a European call is greater than the value of a comparable American call.C) The value of a put is equal to one minus the value of an equivalent call.D) The value of a put minus the value of a comparable call is equal to the value of the stock minus the exercise price.E) The value of an American put will equal or exceed the value of a comparable European put.14) Which one of the following cannot be either used by or calculated by the Black-Scholes option pricing model?A) Risk-free rate of returnB) Premium on an American call optionC) Time to maturity greater than one yearD) Underlying asset valueE) An exercise price equal to the face value of a firm's debt15) When computing the value of a call option using the Black-Scholes option pricing model, d2 is calculated as:A) σt.5− 1.B) 1 − σt.5.C) d1− σt.5.D) 1 + σt.5.E) d1+ σt.5.16) Which one of the following statements related to options is correct?A) American stock options can be exercised but not resold.B) A European call is either equal to or less valuable than a comparable American call.C) European puts can be resold but can never be exercised.D) European options can be exercised on any dividend payment date.E) American options are valued using the Black-Scholes option pricing model.17) Assume all stocks are non-dividend paying. Given this assumption, which one of these statements is correct regarding stock options?A) European put options are more valuable than comparable American put options.B) Exercising a well-into-the-money American put option is generally not a good idea.C) It is never optimal to exercise an American call option early.D) You should wait to exercise a put option if the stock price falls to zero.E) You are better off exercising an in-the-money call option than selling it.18) Assume the risk-free rate increases by one percent. Which one of the following measures the effect this change will have on the value of a firm's stock options?A) ThetaB) VegaC) DeltaD) RhoE) Gamma19) Which one of the following defines the relationship between the value of an option and the option's time to expiration?A) ThetaB) VegaC) RhoD) DeltaE) Gamma20) Assume the standard deviation of the returns on ABC stock increases. This change will________ the value of the call options and ________ the value of the put options on ABC stock.A) increase; decreaseB) increase; increaseC) decrease; decreaseD) decrease; increaseE) not effect; not effect21) Assume the risk-free rate increases. This change will ________ the value of call options and ________ the value of put options on shares of stock.A) increase; decreaseB) increase; increaseC) decrease; decreaseD) decrease; increaseE) not affect; not affect22) The estimate of the future volatility of the returns on the underlying asset that is computed using the Black-Scholes option pricing model is referred to as the:A) residual error.B) implied mean return.C) derived case volatility.D) forecast rho.E) implied standard deviation.23) The value of a call option delta is best defined as a value that is:A) between zero and one.B) less than zero.C) greater than zero.D) greater than or equal to zero.E) less than or equal to zero.24) Given a small change in the value of the underlying stock, the change in an option's price is approximately equal to the change in stock value:A) divided by delta.B) divided by (1 − Delta).C) divided by (1 + Delta).D) multiplied by (1 − Delta).E) multiplied by delta.25) If the price of the underlying stock decreases, then the value of the call options ________ and the value of the put options ________.A) decrease; decreaseB) decrease; increaseC) increase; decreaseD) increase; increaseE) increase; remain unchanged26) Which one of the following statements is correct?A) Increasing the time to maturity may not increase the value of a European put.B) An increase in time decreases the value of a call option.C) Exercising an American option is always more valuable than selling the option.D) Call options tend to be less sensitive to the passage of time than are put options.E) Vega measures the sensitivity of an option's value to the passage of time.27) Theta measures an option's:A) intrinsic value.B) volatility.C) rate of time decay.D) sensitivity to changes in the value of the underlying asset.E) sensitivity to changes in the risk-free rate.28) Selling a call option is generally more valuable than exercising the option because of the option's:A) riskless value.B) intrinsic value.C) standard deviation.D) exercise price.E) time premium.29) Which one of the following statements is correct?A) The value of a call option decreases as the time to expiration increases.B) A decrease in the risk-free rate decreases the value of a put option.C) Increasing the risk-free rate decreases the value of a call option.D) The value of a put option increases when the standard deviation of the returns on the underlying stock increase.E) Increasing the strike price decreases the value of a put option.30) A decrease in which of the following will increase the value of a put option on a stock?A) Strike price and standard deviation of the returns on the underlying stockB) Stock price and risk-free rateC) Time to expiration and strike priceD) Risk-free rate and standard deviation of the returns on the underlying stockE) Time to expiration and stock price31) Which one of the five factors included in the Black-Scholes option pricing model cannot be directly observed?A) Risk-free rateB) Strike priceC) Standard deviationD) Stock priceE) Life of the option32) Which one of the following statements related to the implied standard deviation (ISD) is correct?A) The ISD is an estimate of the historical standard deviation of the underlying security.B) ISD is equal to (1 − d1).C) The ISD estimates the volatility of an option's price over the option's lifespan.D) The value of ISD is dependent upon both the risk-free rate and the time to option expiration.E) ISD confirms the observable volatility of the return on the underlying security.33) The implied standard deviation used in the Black-Scholes option pricing model is:A) based on historical performance.B) a prediction of the volatility of the return on the underlying asset over the life of the option.C) a measure of the time decay of an option.D) an estimate of the future value of an option given a strike price e.E) a measure of the historical intrinsic value of an option.34) The value of an option is equal to the:A) intrinsic value minus the time premium.B) time premium plus the intrinsic value.C) implied standard deviation plus the intrinsic value.D) summation of the intrinsic value, the time premium, and the implied standard deviation.E) summation of delta, theta, vega, and rho.35) For the equity of a firm to be considered a call option on the firm's assets, the firm must:A) be in default.B) be leveraged.C) pay dividends.D) have a negative cash flow from operations.E) have a negative cash flow from assets.36) Paying off a firm's debt is comparable to ________ on the assets of the firm.A) purchasing a put optionB) purchasing a call optionC) exercising an in-the-money put optionD) exercising an in-the-money call optionE) writing a put option37) The shareholders of a firm will benefit the most from a positive net present value project when the delta of the call option on the firm's assets is:A) equal to one.B) between zero and one.C) equal to zero.D) between zero and minus one.E) equal to minus one.38) The value of the risky debt of a firm is equal to the value of:A) a call option plus the value of a risk-free bond.B) a risk-free bond plus a put option.C) the equity of the firm minus a put.D) the equity of the firm plus a call option.E) a risk-free bond minus a put option.39) A firm has assets of $16.4 million and 2-year, zero-coupon, risky bonds with a total face value of $7.4 million. The bonds have a total current market value of $7.1 million. The shareholders of this firm can change these risky bonds into risk-free bonds by purchasing a ________ option with a 2-year life and a strike price of ________ million.A) call; $7.1B) call; $7.4C) put; $16.4D) put; $7.1E) put; $7.440) Purely financial mergers:A) are beneficial to stockholders.B) are beneficial to both stockholders and bondholders.C) are detrimental to stockholders.D) add value to both the total assets and the total equity of a firm.E) reduce both the total assets and the total equity of a firm.41) A purely financial merger:A) increases the risk that the merged firm will default on its debt obligations.B) has no effect on the risk level of the firm's debt.C) reduces the value of the option to go bankrupt.D) has no effect on the equity value of a firm.E) reduces the risk level of the firm thereby increasing the value of the firm's equity.42) Which one of the following statements is correct?A) Mergers benefit shareholders but not creditors.B) Positive NPV projects will automatically benefit both creditors and shareholders.C) There may be conflicts between the interests of bondholders and shareholders.D) Creditors prefer negative NPV projects while shareholders prefer positive NPV projects.E) Mergers rarely affect bondholders.43) If the risk-free rate is 6.5 percent compounded annually, what is the continuously compounded risk-free rate equal to?A) 1/ln1.065B) 6.10%C) ln1.065D) 6.24%E) e1.065− 144) This morning, Kate put a European protective put strategy in place when the cost of ABC stock was $29.15 per share and the 1-year $30 ABC put was priced at $1.05 per share. How much profit per share will she earn from this strategy if the stock is worth $28 a share on the put expiration date?A) $7.80B) −$1.05C) −$.20D) $8.85E) $1.2545) You need $15,400 in three years. How much do you need to deposit today to fund this need if you can earn 5 percent per year, compounded continuously? Assume this is the only deposit you make.A) $13,506B) $13,049C) $14,179D) $13,255E) $12,91646) A stock is selling for $62 per share. A call option with an exercise price of $65 sells for $3.85 and expires in three months. The risk-free rate of interest is 2.8 percent per year, compounded continuously. What is the price of a put option with the same exercise price and expiration date?A) $6.74B) $6.23C) $6.67D) $6.40E) $6.9547) A put option that expires in eight months with an exercise price of $55 sells for $7.34. The stock is currently priced at $52, and the risk-free rate is 3.1 percent per year, compounded continuously. What is the price of a call option with the same exercise price and expiration date?A) $5.67B) $5.47C) $5.34D) $4.71E) $4.9248) Today, you purchased 300 shares of Lazy Z stock for $49.80 per share. You also bought three 1-year, $50 put options on Lazy Z stock at a cost of $.55 per share. What is the maximum total amount you can lose over the next year on these purchases?A) −$15,105B) −$11,050C) −$160D) −$105E) $049) Today, Ted purchased 500 shares of ABC stock at a price of $42.20 per share. He also purchased five put option contracts on ABC at a price of $.10 per share, an exercise price of $40 and a 1-year term. What is the maximum loss Ted can realize on his investments over the next year?A) −$1,105B) −$1,050C) −$1,115D) −$1,150E) $050) Webster United stock is priced at $35.79 per share. The 6-month $35 call options are pricedat $1.40 and the risk-free rate is 3.2 percent, compounded continuously. What is the per share value of the 6-month put option?A) $.15B) $.05C) $0D) $.20E) $.2551) Day's End stock is selling for $43 a share. The 6-month call with a strike price of $45 is priced at $.30. Risk-free assets are currently returning 4.1 percent per year, compounded continuously. What is the price of a 6-month put with a strike price of $45?A) $1.39B) $1.46C) $1.28D) $1.51E) $1.3252) The one-year call on TLM stock with a strike price of $65 is priced at $2.20 while the one-year put with a strike price of $65 is priced at $11.18. The annual risk-free rate is 3.8 percent, compounded continuously. What is the current price of TLM stock?A) $53.60B) $48.90C) $56.70D) $50.10E) $47.6553) Grocery Express stock is selling for $22 a share. A three-month, $20 call on this stock is priced at $2.85. Risk-free assets are currently returning .2 percent per month. What is the price of a three-month put on Grocery Express stock with a strike price of $20?A) $.37B) $.73C) $.87D) $1.10E) $1.1854) J&N stock has a current market price of $51.97 a share and the annual risk-free rate is 4.2 percent, compounded continuously. The 1-year call on this stock with a strike price of $55 is priced at $2.30. What is the price of the one-year put with a strike price of $55?A) $3.07B) $2.86C) $3.22D) $2.94E) $2.9955) You invest $2,500 today at 5.5 percent, compounded continuously. How much will this investment be worth 12 years from now?A) $3,728B) $4,837C) $4,311D) $3,422E) $3,79156) Todd invested $12,000 in an account today at 4.5 percent, compounded continuously. What will this investment be worth in 15 years?A) $26,203B) $25,845C) $24,287D) $25,941E) $23,56857) WT Foods stock is selling for $38 a share. The 6-month $40 call on this stock is selling for $2.01 while the 6-month $40 put is priced at $3.60. What is the continuously compounded risk-free rate of return?A) 2.7 percentB) 2.4 percentC) 1.8 percentD) 1.5 percentE) 2.1 percent58) The stock of EHI has a current market value of $21.50 a share. The 3-month call with a strike price of $20 is selling for $2.07 while the 3-month put with a strike price of $20 is priced at $.41. What is the continuously compounded risk-free rate of return?A) 2.9 percentB) 3.0 percentC) 4.1 percentD) 3.7 percentE) 3.2 percent59) A call option with an exercise price of $25 and 9 months to expiration has a price of $4.92. The stock is currently priced at $26.90, and the risk-free rate is 4.1 percent per year, compounded continuously. What is the price of a put option with the same exercise price and expiration date?A) $3.89B) $1.57C) $1.24D) $2.69E) $2.2660) What is the value of a 6-month put with a strike price of $27.50 if the stock price is $22.60, the 6-month $27.50 call is priced at $1.46, and the risk-free rate is 3.5 percent, compounded continuously?A) $4.71B) $5.43C) $5.24D) $5.88E) $6.6261) A stock is priced at $52.90 a share, the 3-month $45 call is priced at $9.31 a share, and the risk-free rate is 4.5 percent, compounded continuously. What is the value of the 3-month put with a strike price of $45?A) $.57B) $.63C) $.91D) $1.36E) $1.5462) A stock is currently priced at $38. A call option with an expiration of one year has an exercise price of $40. The risk-free rate is 4.2 percent per year, compounded continuously, and the standard deviation of the stock's return is infinitely large. What is the price of the call option?A) $2.47B) $34.80C) $38.00D) $5.63E) $40.0063) Assume a stock price of $21.80, an exercise price of $20, three months to expiration, a risk-free rate of 3.40 percent, standard deviation of 46 percent, and a d1 value of .52664. What is the value of d2 as it is used in the Black-Scholes option pricing model?A) .31218B) .31225C) .29664D) .29535E) .3134064) Assume a stock price of $34.80, an exercise price of $35, nine months to expiration, risk-free rate of 2.40 percent, standard deviation of 57 percent, and a d1 value of .27167. What is the value of d2 as it is used in the Black-Scholes option pricing model?A) −.22196B) −.18657C) −.18241D) −.27427E) −.2223865) Assume a stock price of $31.18, risk-free rate of 3.6 percent, standard deviation of 44 percent, N(d1) value of .62789, and an N(d2) value of .54232. What is the value of a 3-month call option with a strike price of $30 given the Black-Scholes option pricing model?A) $3.38B) $3.99C) $3.68D) $1.76E) $3.4566) Assume a stock price of $16.80, risk-free rate of 2.7 percent, standard deviation of 59 percent, N(d1) value of .93116, and an N(d2) value of .85708. What is the value of a 6-month call with a strike price of $10 given the Black-Scholes option pricing model?A) $7.62B) $7.19C) $8.06D) $7.85E) $6.9767) A stock is currently selling for $39 a share. The risk-free rate is 2.5 percent and the standard deviation is 26 percent. What is the value of d1 of a 9-month call option with a strike price of $40?A) −.01506B) .08341C) .07746D) .06420E) −.0675268) A stock is currently selling for $34 a share. The risk-free rate is 3.1 percent and the standard deviation is 33 percent. What is the value of d1 of a 3-month call option with a strike price of $35?A) −.01872B) −.04621C) −.05047D) −.02950E) −.2035669) Use the information below to answer the following question.Assume a stock price of $42; a risk-free rate of 3.5 percent per year, compounded continuously;a six-month maturity; and a standard deviation of 64 percent per year. If a six-month call with an exercise price of $45 is priced at $6.66, what is the price of the six-month $45 put?A) $8.57B) $7.93C) $8.88D) $9.07E) $8.7470) Use the information below to answer the following question.You own a lot in Key West, Florida, that you are considering selling. Similar lots have recently sold for $1.2 million. Over the past five years, the price of land in the area has varied with a standard deviation of 19 percent. A potential buyer wants an option to buy the land in the next 9 months for $1,310,000. The risk-free rate of interest is 7 percent per year, compounded continuously. How much should you charge for the option? Round your answer to the nearest $100.A) $62,000B) $68,900C) $63,700D) $62,500E) $60,40071) Use the information below to answer the following question.Assume a stock price of $88; risk-free rate of 4 percent per year, compounded continuously; time to maturity of five months; standard deviation of 48 percent per year; and a put and call exercise price of $85. What is the delta of the put option?A) −.6850B) −.3742C) −.3158D) −.0525E) −.468572) A call option matures in six months. The underlying stock price is $37 and the stock's return has a standard deviation of 27 percent per year. The annual risk-free rate is 3.4 percent, compounded continuously. The exercise price is $0. What is the price of the call option?A) $39.65B) $32.14C) $36.37D) $32.23E) $37.0073) The delta of a call option on a firm's assets is .624. How much will a project valued at $48,000 increase the value of equity?A) $18,048B) $45,336C) $29,952D) $76,923E) $32,18974) The delta of a call option on a firm's assets is .408. By how much will a $220,000 project increase the value of equity?A) $89,760B) $71,622C) $309,760D) $130,240E) $539,21675) The current market value of the assets of AMN Co. is $47 million, with a standard deviation of 21 percent per year. The firm has zero-coupon bonds outstanding with a total face value of $35 million. These bonds mature in two years. The risk-free rate is 3.6 percent per year, compounded continuously. What is the value of d1 as it applies to the Black-Scholes option pricing model?A) 1.32471B) 1.48002C) 1.60067D) 1.38357E) .8900676) Use the information below to answer the following question.Upside Down has a zero coupon bond issue outstanding with a $10,000 face value that matures in one year. The current market value of the firm's assets is $12,400 while the standard deviation of the returns on those assets is 22 percent annually. The annual risk-free rate is 4.6 percent, compounded continuously. What is the market value of the firm's debt based on the Black-Scholes model?A) $8,415B) $8,900C) $9,413D) $8,962E) $9,31177) Use the information below to answer the following question.S&C Co. has a zero coupon bond issue outstanding with a face value of $20,000 that matures in one year. The current market value of the firm's assets is $23,000. The standard deviation of the return on the firm's assets is 52 percent per year, and the annual risk-free rate is 6 percent per year, compounded continuously. What is the firm's continuously compounded cost of debt?A) 11.24 percentB) 20.32 percentC) 16.48 percentD) 18.69 percentE) 17.09 percent78) Use the information below to answer the following question.Alpha is considering a purely financial merger with Beta. Alpha currently has a market value of $14 million, an asset return standard deviation of 55 percent, and pure discount debt of $6 million that matures in four years. Beta has a market value of $6 million, an asset return standard deviation of 60 percent, and pure discount debt of $2 million that matures in four years. The risk free rate, continuously compounded, is 3.5 percent. The combined equity value of the two separate firms is $14,180,806. By what amount will the combined equity value change if the merger occurs and the asset return standard deviation of the merged firm is 45 percent?A) −$548,285B) −$314,007C) $0D) $99,087E) $286,403。
公司理财精要版原书第12版习题库答案Ross12e_Chapter12_TB
Fundamentals of Corporate Finance, 12e (Ross)Chapter 12 Some Lessons from Capital Market History1) Stacy purchased a stock last year and sold it today for $4 a share more than her purchase price. She received a total of $1.15 per share in dividends. Which one of the following statements is correct in relation to this investment?A) The dividend yield is expressed as a percentage of the par value.B) The capital gain would have been less had Stacy not received the dividends.C) The total dollar return per share is $2.85.D) The capital gains yield is positive.E) The dividend yield is greater than the capital gains yield.2) Which one of the following correctly describes the dividend yield?A) Next year's annual dividend divided by today's stock priceB) This year's annual dividend divided by today's stock priceC) This year's annual dividend divided by next year's expected stock priceD) Next year's annual dividend divided by this year's annual dividendE) The increase in next year's dividend over this year's dividend divided by this year's dividend3) Bayside Marina just announced it is decreasing its annual dividend from $1.48 per share to $1.45 per share effective immediately. If the dividend yield remains at its pre-announcement level, then you know the stock price:A) was unaffected by the announcement.B) increased proportionately with the dividend decrease.C) decreased proportionately with the dividend decrease.D) decreased by $.03 per share.E) increased by $.03 per share.4) Which one of the following statements related to capital gains is correct?A) The capital gains yield includes only realized capital gains.B) An increase in an unrealized capital gain will increase the capital gains yield.C) The capital gains yield must be either positive or zero.D) The capital gains yield is expressed as a percentage of a security's total return.E) The capital gains yield represents the total return earned by an investor.5) Which of the following yields on a stock can be negative?A) Dividend yieldB) Capital gains yieldC) Capital gains yield and total returnD) Dividend yield, capital gains yield, and total returnE) Dividend yield and total return6) Small-company stocks, as the term is used in the textbook, are best defined as the:A) 500 newest corporations in the U.S.B) companies whose stock trades OTC.C) smallest 20 percent of the companies listed on the NYSE.D) smallest 25 percent of the companies listed on NASDAQ.E) companies whose stock is listed on NASDAQ.7) The historical record for the period 1926–2016 supports which one of the following statements?A) When large-company stocks have a negative return, they will have a negative return for at least two consecutive years.B) The return on U.S. Treasury bills exceeds the inflation rate by at least .5 percent each year.C) There was only one year during the period when double-digit inflation occurred.D) Small-company stocks have lost as much as 50 percent and gained as much as 100 percent in a single year.E) The inflation rate was positive each year throughout the period.8) Which one of the following time periods is associated with low rates of inflation?A) 1941–1942B) 1973–1974C) 2014–2015D) 1979–1980E) 1946–19479) For the period 1926–2016, U.S. Treasury bills always:A) provided an annual rate of return that exceeded the annual inflation rate.B) had an annual rate of return in excess of 1.2 percent.C) provided a positive annual rate of return.D) earned a higher annual rate of return than long-term government bonds.E) had a greater variation in returns year-over-year than did long-term government bonds.10) Which one of the following statements is a correct reflection of the U.S. financial markets for the period 1926–2016?A) U.S. Treasury bill returns never exceeded a return of 9 percent in any one year.B) U.S. Treasury bills had an annual return in excess of 10 percent in three or more years.C) Inflation equaled or exceeded the return on U.S. Treasury bills every year during the period.D) Long-term government bonds outperformed U.S. Treasury bills every year during the period.E) National deflation occurred in at least one year during every decade during the period.11) For the period 2009–2016, U.S. Treasury bills had an annual rate of return that was:A) between .5 and 1 percent.B) between 1 and 2 percent.C) negative in at least one year.D) negative for two or more years.E) between 0 and .25 percent.12) Which one of the following categories of securities had the highest average annual return for the period 1926–2016?A) U.S. Treasury billsB) Large-company stocksC) Small-company stocksD) Long-term corporate bondsE) Long-term government bonds13) Which one of the following categories of securities had the lowest average risk premium for the period 1926–2016?A) Long-term government bondsB) Small-company stocksC) Large-company stocksD) Long-term corporate bondsE) U.S. Treasury bills14) The rate of return on which type of security is normally used as the risk-free rate of return?A) Long-term Treasury bondsB) Long-term corporate bondsC) Treasury billsD) Intermediate-term Treasury bondsE) Intermediate-term corporate bonds15) For the period 1926–2016, the average risk premium on large-company stocks was about:A) 12.7 percent.B) 10.4 percent.C) 8.6 percent.D) 6.9 percent.E) 7.3 percent.16) Assume that last year T-bills returned 2.8 percent while your investment in large-company stocks earned an average of 7.6 percent. Which one of the following terms refers to the difference between these two rates of return?A) Risk premiumB) Geometric average returnC) Arithmetic average returnD) Standard deviationE) Variance17) Which one of the following statements correctly applies to the period 1926–2016?A) Large-company stocks earned a higher average risk premium than did small-company stocks.B) The average inflation rate exceeded the average return on U.S. Treasury bills.C) Large-company stocks had an average annual return of 14.7 percent.D) Inflation averaged 2.6 percent for the period.E) Long-term corporate bonds outperformed long-term government bonds.18) The excess return is computed as the:A) return on a security minus the inflation rate.B) return on a risky security minus the risk-free rate.C) risk premium on a risky security minus the risk-free rate.D) risk-free rate plus the inflation rate.E) risk-free rate minus the inflation rate.19) Which one of the following earned the highest risk premium over the period 1926–2016?A) Long-term corporate bondsB) U.S. Treasury billsC) Small-company stocksD) Large-company stocksE) Long-term government bonds20) What was the average rate of inflation over the period of 1926–2016?A) Less than 2.0 percentB) Between 2.0 and 2.4 percentC) Between 2.4 and 2.8 percentD) Between 2.8 and 3.2 percentE) Greater than 3.2 percent21) Assume you invest in a portfolio of long-term corporate bonds. Based on the period 1926–2016, what average annual rate of return should you expect to earn?A) Less than 5 percentB) Between 5 and 6 percentC) Between 6 and 7 percentD) Between 7 and 8 percentE) More than 8 percent22) The average annual return on small-company stocks was about ________ percent greater than the average annual return on large-company stocks over the period 1926–2016.A) 3B) 5C) 7D) 9E) 1123) Based on the period 1926-2016, the actual real return on large-company stocks has been around:A) 9 percent.B) 10 percent.C) 6 percent.D) 7 percent.E) 8 percent.24) To convince investors to accept greater volatility, you must:A) decrease the risk premium.B) increase the risk premium.C) decrease the real return.D) decrease the risk-free rate.E) increase the risk-free rate.25) Which one of the following best defines the variance of an investment's annual returns over a number of years?A) The average squared difference between the arithmetic and the geometric average annual returnsB) The squared summation of the differences between the actual returns and the average geometric returnC) The average difference between the annual returns and the average return for the periodD) The difference between the arithmetic average and the geometric average return for the periodE) The average squared difference between the actual returns and the arithmetic average return26) Which one of the following categories of securities had the most volatile annual returns over the period 1926–2016?A) Long-term corporate bondsB) Large-company stocksC) Intermediate-term government bondsD) U.S. Treasury billsE) Small-company stocks27) If the variability of the returns on large-company stocks were to decrease over the long-term, you would expect which one of the following as related to large-company stocks to occur as a result?A) Increase in the risk premiumB) Increase in the average long-term rate of returnC) Decrease in the 68 percent probability range of returnsD) Increase in the standard deviationE) Increase in the geometric average rate of return28) Which one of the following statements is correct based on the historical record for the period 1926–2016?A) The standard deviation of returns for small-company stocks was double that of large-company stocks.B) U.S. Treasury bills had a zero standard deviation of returns because they are considered to be risk-free.C) Long-term government bonds had a lower return but a higher standard deviation on average than did long-term corporate bonds.D) Inflation was less volatile than the returns on U.S. Treasury bills.E) Long-term government bonds were less volatile than intermediate-term government bonds.29) What is the probability that small-company stocks will produce an annual return that is more than one standard deviation below the average?A) 1.0 percentB) 2.5 percentC) 5.0 percentD) 16 percentE) 32 percent30) Which one of the following is a correct ranking of securities based on the volatility of their annual returns over the period of 1926–2016? Rank from highest to lowest.A) Large-company stocks, U.S. Treasury bills, long-term government bondsB) Small-company stocks, long-term corporate bonds, large-company stocksC) Long-term government bonds, long-term corporate bonds, intermediate-term government bondsD) Large-company stocks, small-company stocks, long-term government bondsE) Intermediate-term government bonds, long-term corporate bonds, U.S. Treasury bills31) Which one of the following had the least volatile annual returns over the period of 1926–2016?A) Large-company stocksB) InflationC) Long-term corporate bondsD) U.S. Treasury billsE) Intermediate-term government bonds32) Which one of the following statements is correct based on the period 1926–2016?A) Long-term government bonds had more volatile annual returns than did the long-term corporate bonds.B) The standard deviation of the annual rate of inflation was less than 3 percent.C) U.S Treasury bills have a zero variance in returns because they are risk-free.D) The risk premium on small-company stocks was less than 10 percent.E) The risk premium on all U.S. government securities is 0 percent.33) Generally speaking, which of the following best correspond to a wide frequency distribution?A) High standard deviation, low rate of returnB) Low rate of return, large risk premiumC) Small risk premium, high rate of returnD) Small risk premium, low standard deviationE) High standard deviation, large risk premium34) Standard deviation is a measure of which one of the following?A) Average rate of returnB) VolatilityC) ProbabilityD) Risk premiumE) Real returns35) Which one of the following is defined by its mean and its standard deviation?A) Arithmetic nominal returnB) Geometric real returnC) Normal distributionD) VarianceE) Risk premium36) Which of the following statements are true based on the historical record for 1926–2016?A) Risk-free securities produce a positive real rate of return each year.B) Bonds are generally a safer, or less risky, investment than are stocks.C) Risk and potential reward are inversely related.D) The normal distribution curve for large-company stocks is narrower than the curve for small-company stocks.E) Returns are more predictable over the short term than they are over the long term.37) Estimates of the rate of return on a security based on the historical arithmetic average will probably tend to ________ the expected return for the long-term and estimates using the historical geometric average will probably tend to ________ the expected return for the short-term.A) overestimate; overestimateB) overestimate; underestimateC) underestimate; overestimateD) underestimate; underestimateE) accurately estimate; accurately estimate38) The primary purpose of Blume's formula is to:A) compute an accurate historical rate of return.B) determine a stock's true current value.C) consider compounding when estimating a rate of return.D) determine the actual real rate of return.E) project future rates of return.39) The average compound return earned per year over a multiyear period is called the ________ average return.A) arithmeticB) standardC) variantD) geometricE) real40) The return earned in an average year over a multiyear period is called the ________ average return.A) arithmeticB) standardC) variantD) geometricE) real41) Assume all stock prices fairly reflect all of the available information on those stocks. Which one of the following terms best defines the stock market under these conditions?A) Riskless marketB) Evenly distributed marketC) Zero volatility marketD) Blume's marketE) Efficient capital market42) Which one of the following statements best defines the efficient market hypothesis?A) Efficient markets limit competition.B) Security prices in efficient markets remain steady as new information becomes available.C) Mispriced securities are common in efficient markets.D) All securities in an efficient market are zero net present value investments.E) All securities provide the same positive rate of return when the market is efficient.43) Which one of the following is the most likely reason why a stock price might not react at all on the day that new information related to the stock's issuer is released? Assume the market is semistrong form efficient.A) Company insiders were aware of the information prior to the announcement.B) Investors do not pay attention to daily news.C) Investors tend to overreact.D) The news was positive.E) The information was expected.44) Which one of the following is most indicative of a totally efficient stock market?A) Extraordinary returns earned on a routine basisB) Positive net present values on stock investments over the long-termC) Zero net present values for all stock investmentsD) Arbitrage opportunities which develop on a routine basisE) Realizing negative returns on a routine basis45) 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 issues new shares of stock if the market is efficient.E) New information will gradually be reflected in a stock's price to avoid any sudden price changes in an efficient market.46) Efficient financial markets fluctuate continuously because:A) the markets are continually reacting to old information as that information is absorbed.B) the markets are continually reacting to new information.C) arbitrage trading is limited.D) current trading systems require human intervention.E) investments produce varying levels of net present values.47) Inside information has the least value when financial markets are:A) weak form efficient.B) semiweak form efficient.C) semistrong form efficient.D) strong form efficient.E) inefficient.48) Evidence seems to support the view that studying public information to identify mispriced stocks is:A) effective as long as the market is only semistrong form efficient.B) effective provided the market is only weak form efficient.C) ineffective.D) effective only in strong form efficient markets.E) ineffective only in strong form efficient markets.49) Which one of the following statements related to market efficiency tends to be supported by current evidence?A) It is easy for investors to earn abnormal returns.B) Short-run price movements are easy to predict.C) Markets are most likely only weak form efficient.D) Mispriced stocks are easy to identify.E) Markets tend to respond quickly to new information.50) Which form of market efficiency would most likely offer the greatest profit potential to an outstanding professional stock analyst?A) WeakB) SemiweakC) SemistrongD) StrongE) Perfect51) You are aware that your neighbor trades stocks based on confidential information he overhears at his workplace. This information is not available to the general public. This neighborcontinually brags to you about the profits he earns on these trades. Given this, you would tend to argue that the financial markets are at best ________ form efficient.A) weakB) semiweakC) semistrongD) strongE) perfect52) The U.S. Securities and Exchange Commission periodically charges individuals with insider trading and claims those individuals have made unfair profits. Given this, you would be most apt to argue that the markets are less than ________ form efficient.A) weakB) semiweakC) semistrongD) strongE) perfect53) Individual investors who continually monitor the financial markets seeking mispriced securities:A) earn excess profits on all of their investments.B) make the markets increasingly more efficient.C) are never able to find a security that is temporarily mispriced.D) are overwhelmingly successful in earning abnormal profits.E) are always quite successful using only historical price information as their basis of evaluation.54) One year ago, you purchased a stock at a price of $43.20 per share. The stock pays quarterly dividends of $.18 per share. Today, the stock is selling for $45.36 per share. What is your capital gain on this investment?A) $1.44B) $2.16C) $2.80D) $1.74E) $2.3455) Six months ago, you purchased 300 shares of stock in Global Trading at a price of $26.19 a share. The stock pays a quarterly dividend of $.12 a share. Today, you sold all of your shares for $27.11 per share. What is the total amount of your dividend income on this investment?A) $36B) $72C) $348D) $144E) $20456) One year ago, you purchased 200 shares of SL Industries stock at a price of $18.97 a share. The stock pays an annual dividend of $1.42 per share. Today, you sold all of your shares for $17.86 per share. What is your total dollar return on this investment?A) $50B) $91C) $58D) $62E) $8257) You own 850 shares of Western Feed Mills stock valued at $53.15 per share. What is the dividend yield if your total annual dividend income is $1,256?A) 2.67 percentB) 2.78 percentC) 1.83 percentD) 2.13 percentE) 2.54 percent58) West Wind Tours stock is currently selling for $52.30 a share. The stock has a dividend yield of 2.48 percent. How much dividend income will you receive per year if you purchase 600 shares of this stock?A) $824.96B) $836.20C) $724.80D) $762.00E) $778.2259) One year ago, you purchased a stock at a price of $38.22 a share. Today, you sold the stock and realized a total loss of 11.09 percent on your investment. Your capital gain was –$4.68 a share. What was your dividend yield?A) 1.15 percentB) .88 percentC) 1.02 percentD) .67 percentE) .38 percent60) You just sold 427 shares of stock at a price of $19.07 a share. You purchased the stock for $18.83 a share and have received total dividends of $614. What is the total capital gain on this investment?A) $716.48B) $511.52C) $102.48D) $618.48E) $476.5261) Last year, you purchased 400 shares of Analog stock for $12.92 a share. You have received a total of $136 in dividends and $4,301 in proceeds from selling the shares. What is your capital gains yield on this stock?A) 9.09 percentB) 6.73 percentC) −16.78 percentD) −14.14 percentE) −11.02 percent62) Today, you sold 540 shares of stock and realized a total return of 7.3 percent. You purchased the shares one year ago at a price of $24 a share and have received a total of $86 in dividends. What is your capital gains yield on this investment?A) 5.68 percentB) 6.64 percentC) 6.39 percentD) 7.26 percentE) 7.41 percent63) Four months ago, you purchased 900 shares of LBM stock for $7.68 a share. Last month, you received a dividend payment of $.12 a share. Today, you sold the shares for $9.13 a share. What is your total dollar return on this investment?A) $1,305B) $1,413C) $1,512D) $1,394E) $1,08064) One year ago, you purchased 100 shares of Best Wings stock at a price of $38.19 a share. The company pays an annual dividend of $.46 per share. Today, you sold for the shares for $37.92 a share. What is your total percentage return on this investment?A) 2.62 percentB) 1.93 percentC) 2.72 percentD) 1.08 percentE) .50 percent65) Suppose a stock had an initial price of $76 per share, paid a dividend of $1.42 per share during the year, and had an ending share price of $81. What was the capital gains yield?A) 6.17 percentB) 6.69 percentC) 7.05 percentD) 6.58 percentE) 5.44 percent66) Suppose you bought a $1,000 face value bond with a coupon rate of 5.6 percent one year ago. The purchase price was $987.50. You sold the bond today for $994.20. If the inflation rate last year was 2.6 percent, what was your exact real rate of return on this investment?A) 4.88 percentB) 5.32 percentC) 3.65 percentD) 3.78 percentE) 4.47 percent67) Leo purchased a stock for $63.80 a share, received a dividend of $2.68 a share and sold the shares for $59.74 each. During the time he owned the stock, inflation averaged 2.8 percent. What is his approximate real rate of return on this investment?A) −.64 percentB) −4.96 percentC) −2.16 percentD) 2.16 percentE) 4.96 percent68) Christina purchased 500 shares of stock at a price of $62.30 a share and sold the shares for $64.25 each. She also received $738 in dividends. If the inflation rate was 3.9 percent, what was her exact real rate of return on this investment?A) 4.20 percentB) 1.54 percentC) 1.60 percentD) 3.95 percentE) 5.50 percent69) What is the amount of the risk premium on a U.S. Treasury bill if the risk-free rate is 3.1 percent, the inflation rate is 2.6 percent, and the market rate of return is 7.4 percent?A) 0 percentB) 2.8 percentC) .5 percentD) 1.7 percentE) 4.3 percent70) You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 7 percent, 13 percent, 19 percent, −8 percent, and 15 percent. Suppose the average inflation rate over this time period was 2.6 percent and the average T-bill rate was 3.1 percent. Based on this information, what was the average nominal risk premium?A) 6.6 percentB) 6.1 percentC) 9.2 percentD) 1.2 percentE) 3.5 percent71) You bought one of Shark Repellant's 6 percent coupon bonds one year ago for $867. These bonds pay annual payments, have a face value of $1,000, and mature 12 years from now. Suppose you decide to sell your bonds today when the required return on the bonds is 7.4 percent. The inflation rate over the past year was 2.9 percent. What was your total real return on this investment?A) 6.48 percentB) 6.61 percentC) 8.18 percentD) 7.44 percentE) 9.70 percent72) You find a certain stock that had returns of 8 percent, −3 percent, 12 percent, and 17 percent for four of the last five years. The average return of the stock for the past five-year period was 6 percent. What is the standard deviation of the stock's returns for the five-year period?A) 10.39 percentB) 4.98 percentC) 7.16 percentD) 9.25 percentE) 5.38 percent73) A stock had returns of 5 percent, 14 percent, 11 percent, −8 percent, and 6 percent over the past five years. What is the standard deviation of these returns?A) 7.74 percentB) 8.21 percentC) 9.68 percentD) 8.44 percentE) 7.49 percent74) The common stock of Air Express had annual returns of 11.7 percent, 8.8 percent,16.7 percent, and −7.9 percent over the last four years, respectively. What is thestandard deviation of these returns?A) 8.29 percentB) 9.14 percentC) 11.54 percentD) 7.78 percentE) 10.66 percent75) A stock had annual returns of 5.3 percent, −2.7 percent, 16.2 percent, and 13.6 percentover the past four years. Which one of the following best describes the probability that this stock will produce a return of 20 percent or more in a single year?A) Less than 2.5 percent but more than .5 percentB) More than 16 percentC) Less than .5 percentD) Less than 1 percent but more than .5 percentE) Less than 16 percent but more than 2.5 percent76) A stock has an expected rate of return of 9.8 percent and a standard deviation of 15.4 percent. Which one of the following best describes the probability that this stock will lose at leasthalf of its value in any one given year?A) less than 16 percentB) less than .5 percentC) less than 1.0 percentD) less than 2.5 percentE) less than 5.0 percent77) A stock had annual returns of 11.3 percent, 9.8 percent, −7.3 percent, and 14.6percent for the past four years. Based on this information, what is the 95 percentprobability range of returns for any one given year?A) −2.4 to 17.5 percentB) −2.60 to 11.80 percentC) −12.5 to 26.7 percentD) −10.4 to 12.3 percentE) −10.9 to 25.1 percent78) Aimee is the owner of a stock with annual returns of 17.6 percent, −11.7 percent, 5.6 percent, and 9.7 percent for the past four years. She thinks the stock may achieve a returnof 17 percent again this coming year. What is the probability that your friend is correct?A) Less than .5 percentB) Greater than .5 percent but less than 1 percentC) Greater than 1 percent but less than 2.5 percentD) Greater than 2.5 percent but less than 16 percentE) Greater than 16 percent79) A stock had returns of 3 percent, 12 percent, 26 percent, −14 percent, and −1 percent for the past five years. Based on these returns, what is the approximate probability that this stock will return at least 20 percent in any one given year?A) Approximately .1 percentB) Approximately 5 percentC) Approximately 2.5 percentD) Approximately .5 percentE) Approximately 16 percent80) A stock had returns of 14 percent, 13 percent, −10 percent, and 7 percent for thepast four years. Which one of the following best describes the probability that this stockwill lose no more than 10 percent in any one year?A) Greater than .5 but less than 1.0 percentB) Greater than 1 percent but less than 2.5 percentC) Greater than 2.5 percent but less than 16 percentD) Greater than 84 percent but less than 97.5 percentE) Greater than 95 percent。
公司理财精要版原书第12版习题库答案Ross12e_Chapter12_TB
公司理财精要版原书第12版习题库答案Ross12e_Chapter12_TBFundamentals of Corporate Finance, 12e (Ross)Chapter 12 Some Lessons from Capital Market History1) Stacy purchased a stock last year and sold it today for $4a share more than her purchase price. She received a total of $1.15 per share in dividends. Which one of the following statements is correct in relation to this investment?A) The dividend yield is expressed as a percentage of the par value.B) The capital gain would have been less had Stacy not received the dividends.C) The total dollar return per share is $2.85.D) The capital gains yield is positive.E) The dividend yield is greater than the capital gains yield.2) Which one of the following correctly describes the dividend yield?A) Next year's annual dividend divided by today's stock priceB) This year's annual dividend divided by today's stock priceC) This year's annual dividend divided by next year's expected stock priceD) Next year's annual dividend divided by this year's annual dividendE) The increase in next year's dividend over this year's dividend divided by this year's dividend3) Bayside Marina just announced it is decreasing its annual dividend from $1.48 per share to $1.45 per share effective immediately. If the dividend yield remains at its pre-announcement level, then you know the stock price:A) was unaffected by the announcement.B) increased proportionately with the dividend decrease.C) decreased proportionately with the dividend decrease.D) decreased by $.03 per share.E) increased by $.03 per share.4) Which one of the following statements related to capital gains is correct?A) The capital gains yield includes only realized capital gains.B) An increase in an unrealized capital gain will increase the capital gains yield.C) The capital gains yield must be either positive or zero.D) The capital gains yield is expressed as a percentage of a security's total return.E) The capital gains yield represents the total return earned by an investor.5) Which of the following yields on a stock can be negative?A) Dividend yieldB) Capital gains yieldC) Capital gains yield and total returnD) Dividend yield, capital gains yield, and total returnE) Dividend yield and total return6) Small-company stocks, as the term is used in the textbook, are best defined as the:A) 500 newest corporations in the U.S.B) companies whose stock trades OTC.C) smallest 20 percent of the companies listed on the NYSE.D) smallest 25 percent of the companies listed on NASDAQ.E) companies whose stock is listed on NASDAQ.7) The historical record for the period 1926–2016 supports which one of the following statements?A) When large-company stocks have a negative return, they will have a negative return for at least two consecutive years.B) The return on U.S. Treasury bills exceeds the inflation rate by at least .5 percent each year.C) There was only one year during the period when double-digit inflation occurred.D) Small-company stocks have lost as much as 50 percent and gained as much as 100 percent in a single year.E) The inflation rate was positive each year throughout the period.8) Which one of the following time periods is associated with low rates of inflation?A) 1941–1942B) 1973–1974C) 2014–2015D) 1979–1980E) 1946–19479) For the period 1926–2016, U.S. Treasury bills always:A) provided an annual rate of return that exceeded the annual inflation rate.B) had an annual rate of return in excess of 1.2 percent.C) provided a positive annual rate of return.D) earned a higher annual rate of return than long-term government bonds.E) had a greater variation in returns year-over-year than did long-term government bonds.10) Which one of the following statements is a correct reflection of the U.S. financial markets for the period 1926–2016?A) U.S. Treasury bill returns never exceeded a return of 9 percent in any one year.B) U.S. Treasury bills had an annual return in excess of 10 percent in three or more years.C) Inflation equaled or exceeded the return on U.S. Treasury bills every year during the period.D) Long-term government bonds outperformed U.S. Treasury bills every year during the period.E) National deflation occurred in at least one year during every decade during the period.11) For the period 2009–2016, U.S. Treasury bills had an annual rate of return that was:A) between .5 and 1 percent.B) between 1 and 2 percent.C) negative in at least one year.D) negative for two or more years.E) between 0 and .25 percent.12) Which one of the following categories of securities had the highest average annual return for the period 1926–2016?A) U.S. Treasury billsB) Large-company stocksC) Small-company stocksD) Long-term corporate bondsE) Long-term government bonds13) Which one of the following categories of securities had the lowest average risk premium for the period 1926–2016?A) Long-term government bondsB) Small-company stocksC) Large-company stocksD) Long-term corporate bondsE) U.S. Treasury bills14) The rate of return on which type of security is normallyused as the risk-free rate of return?A) Long-term Treasury bondsB) Long-term corporate bondsC) Treasury billsD) Intermediate-term Treasury bondsE) Intermediate-term corporate bonds15) For the period 1926–2016, the average risk premium on large-company stocks was about:A) 12.7 percent.B) 10.4 percent.C) 8.6 percent.D) 6.9 percent.E) 7.3 percent.16) Assume that last year T-bills returned 2.8 percent while your investment in large-company stocks earned an average of 7.6 percent. Which one of the following terms refers to the difference between these two rates of return?A) Risk premiumB) Geometric average returnC) Arithmetic average returnD) Standard deviationE) Variance17) Which one of the following statements correctly applies to the period 1926–2016?A) Large-company stocks earned a higher average risk premium than did small-company stocks.B) The average inflation rate exceeded the average return on U.S. Treasury bills.C) Large-company stocks had an average annual return of14.7 percent.D) Inflation averaged 2.6 percent for the period.E) Long-term corporate bonds outperformed long-term government bonds.18) The excess return is computed as the:A) return on a security minus the inflation rate.B) return on a risky security minus the risk-free rate.C) risk premium on a risky security minus the risk-free rate.D) risk-free rate plus the inflation rate.E) risk-free rate minus the inflation rate.19) Which one of the following earned the highest risk premium over the period 1926–2016?A) Long-term corporate bondsB) U.S. Treasury billsC) Small-company stocksD) Large-company stocksE) Long-term government bonds20) What was the average rate of inflation over the period of 1926–2016?A) Less than 2.0 percentB) Between 2.0 and 2.4 percentC) Between 2.4 and 2.8 percentD) Between 2.8 and 3.2 percentE) Greater than 3.2 percent21) Assume you invest in a portfolio of long-term corporate bonds. Based on the period 1926–2016, what average annual rate of return should you expect to earn?A) Less than 5 percentB) Between 5 and 6 percentC) Between 6 and 7 percentD) Between 7 and 8 percentE) More than 8 percent22) The average annual return on small-company stocks was about ________ percent greater than the average annual return on large-company stocks over the period 1926–2016.A) 3B) 5C) 7D) 9E) 1123) Based on the period 1926-2016, the actual real return on large-company stocks has been around:A) 9 percent.B) 10 percent.C) 6 percent.D) 7 percent.E) 8 percent.24) To convince investors to accept greater volatility, you must:A) decrease the risk premium.B) increase the risk premium.C) decrease the real return.D) decrease the risk-free rate.E) increase the risk-free rate.25) Which one of the following best defines the variance of an investment's annual returns over a number of years?A) The average squared difference between the arithmetic and the geometric average annual returnsB) The squared summation of the differences between the actual returns and the average geometric returnC) The average difference between the annual returns andthe average return for the periodD) The difference between the arithmetic average and the geometric average return for the periodE) The average squared difference between the actual returns and the arithmetic average return26) Which one of the following categories of securities had the most volatile annual returns over the period 1926–2016?A) Long-term corporate bondsB) Large-company stocksC) Intermediate-term government bondsD) U.S. Treasury billsE) Small-company stocks27) If the variability of the returns on large-company stocks were to decrease over the long-term, you would expect which one of the following as related to large-company stocks to occur as a result?A) Increase in the risk premiumB) Increase in the average long-term rate of returnC) Decrease in the 68 percent probability range of returnsD) Increase in the standard deviationE) Increase in the geometric average rate of return28) Which one of the following statements is correct based on the historical record for the period 1926–2016?A) The standard deviation of returns for small-company stocks was double that of large-company stocks.B) U.S. Treasury bills had a zero standard deviation of returns because they are considered to be risk-free.C) Long-term government bonds had a lower return but a higher standard deviation on average than did long-term corporate bonds.D) Inflation was less volatile than the returns on U.S. Treasury bills.E) Long-term government bonds were less volatile than intermediate-term government bonds.29) What is the probability that small-company stocks will produce an annual return that is more than one standard deviation below the average?A) 1.0 percentB) 2.5 percentC) 5.0 percentD) 16 percentE) 32 percent30) Which one of the following is a correct ranking of securities based on the volatility of their annual returns over the period of 1926–2016? Rank from highest to lowest.A) Large-company stocks, U.S. Treasury bills, long-term government bondsB) Small-company stocks, long-term corporate bonds, large-company stocksC) Long-term government bonds, long-term corporate bonds, intermediate-term government bondsD) Large-company stocks, small-company stocks, long-term government bondsE) Intermediate-term government bonds, long-term corporate bonds, U.S. Treasury bills31) Which one of the following had the least volatile annual returns over the period of 1926–2016?A) Large-company stocksB) InflationC) Long-term corporate bondsD) U.S. Treasury billsE) Intermediate-term government bonds32) Which one of the following statements is correct based on the period 1926–2016?A) Long-term government bonds had more volatile annual returns than did the long-term corporate bonds.B) The standard deviation of the annual rate of inflation was less than 3 percent.C) U.S Treasury bills have a zero variance in returns because they are risk-free.D) The risk premium on small-company stocks was less than10 percent.E) The risk premium on all U.S. government securities is 0 percent.33) Generally speaking, which of the following best correspond to a wide frequency distribution?A) High standard deviation, low rate of returnB) Low rate of return, large risk premiumC) Small risk premium, high rate of returnD) Small risk premium, low standard deviationE) High standard deviation, large risk premium34) Standard deviation is a measure of which one of the following?A) Average rate of returnB) VolatilityC) ProbabilityD) Risk premiumE) Real returns35) Which one of the following is defined by its mean and its standard deviation?A) Arithmetic nominal returnB) Geometric real returnC) Normal distributionD) VarianceE) Risk premium36) Which of the following statements are true based on the historical record for 1926–2016?A) Risk-free securities produce a positive real rate of return each year.B) Bonds are generally a safer, or less risky, investment than are stocks.C) Risk and potential reward are inversely related.D) The normal distribution curve for large-company stocks is narrower than the curve for small-company stocks.E) Returns are more predictable over the short term than they are over the long term.37) Estimates of the rate of return on a security based on the historical arithmetic average will probably tend to ________ the expected return for the long-term and estimates using the historical geometric average will probably tend to ________ the expected return for the short-term.A) overestimate; overestimateB) overestimate; underestimateC) underestimate; overestimateD) underestimate; underestimateE) accurately estimate; accurately estimate38) The primary purpose of Blume's formula is to:A) compute an accurate historical rate of return.B) determine a stock's true current value.C) consider compounding when estimating a rate of return.D) determine the actual real rate of return.E) project future rates of return.39) The average compound return earned per year over a multiyear period is called the ________ average return.A) arithmeticB) standardC) variantD) geometricE) real40) The return earned in an average year over a multiyear period is called the ________ average return.A) arithmeticB) standardC) variantD) geometricE) real41) Assume all stock prices fairly reflect all of the available information on those stocks. Which one of the following terms best defines the stock market under these conditions?A) Riskless marketB) Evenly distributed marketC) Zero volatility marketD) Blume's marketE) Efficient capital market42) Which one of the following statements best defines the efficient market hypothesis?A) Efficient markets limit competition.B) Security prices in efficient markets remain steady as new information becomes available.C) Mispriced securities are common in efficient markets.D) All securities in an efficient market are zero net present value investments.E) All securities provide the same positive rate of return when the market is efficient.43) Which one of the following is the most likely reason whya stock price might not react at all on the day that new information related to the stock's issuer is released? Assume the market is semistrong form efficient.A) Company insiders were aware of the information prior to the announcement.B) Investors do not pay attention to daily news.C) Investors tend to overreact.D) The news was positive.E) The information was expected.44) Which one of the following is most indicative of a totally efficient stock market?A) Extraordinary returns earned on a routine basisB) Positive net present values on stock investments over the long-termC) Zero net present values for all stock investmentsD) Arbitrage opportunities which develop on a routine basisE) Realizing negative returns on a routine basis45) 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 issues new shares of stock if the market is efficient.E) New information will gradually be reflected in a stock's price to avoid any sudden price changes in an efficient market.46) Efficient financial markets fluctuate continuously because:A) the markets are continually reacting to old information as that information is absorbed.B) the markets are continually reacting to new information.C) arbitrage trading is limited.D) current trading systems require human intervention.E) investments produce varying levels of net present values.47) Inside information has the least value when financial markets are:A) weak form efficient.B) semiweak form efficient.C) semistrong form efficient.D) strong form efficient.E) inefficient.48) Evidence seems to support the view that studying public information to identify mispriced stocks is:A) effective as long as the market is only semistrong form efficient.B) effective provided the market is only weak form efficient.C) ineffective.D) effective only in strong form efficient markets.E) ineffective only in strong form efficient markets.49) Which one of the following statements related to market efficiency tends to be supported by current evidence?A) It is easy for investors to earn abnormal returns.B) Short-run price movements are easy to predict.C) Markets are most likely only weak form efficient.D) Mispriced stocks are easy to identify.E) Markets tend to respond quickly to new information.50) Which form of market efficiency would most likely offer the greatest profit potential to an outstanding professional stock analyst?A) WeakB) SemiweakC) SemistrongD) StrongE) Perfect51) You are aware that your neighbor trades stocks based on confidential information he overhears at his workplace. This information is not available to the general public. This neighbor continually brags to you about the profits he earns on these trades. Given this, you would tend to argue that the financial markets are at best ________ form efficient.A) weakB) semiweakC) semistrongD) strongE) perfect52) The U.S. Securities and Exchange Commission periodically charges individuals with insider trading and claims those individuals have made unfair profits. Given this, you would be most apt to argue that the markets are less than ________ form efficient.A) weakB) semiweakC) semistrongD) strongE) perfect53) Individual investors who continually monitor the financial markets seeking mispriced securities:A) earn excess profits on all of their investments.B) make the markets increasingly more efficient.C) are never able to find a security that is temporarily mispriced.D) are overwhelmingly successful in earning abnormal profits.E) are always quite successful using only historical price information as their basis of evaluation.54) One year ago, you purchased a stock at a price of $43.20 per share. The stock pays quarterly dividends of $.18 per share. Today, the stock is selling for $45.36 per share. What is your capital gain on this investment?A) $1.44B) $2.16C) $2.80D) $1.74E) $2.3455) Six months ago, you purchased 300 shares of stock in Global Trading at a price of $26.19 a share. The stock pays a quarterly dividend of $.12 a share. Today, you sold all of your shares for $27.11 per share. What is the total amount of your dividend income on this investment?A) $36B) $72C) $348D) $144E) $20456) One year ago, you purchased 200 shares of SL Industries stock at a price of $18.97 a share. The stock pays an annual dividend of $1.42 per share. Today, you sold all of your shares for $17.86 per share. What is your total dollar return on this investment?A) $50B) $91C) $58D) $62E) $8257) You own 850 shares of Western Feed Mills stock valued at $53.15 per share. What is the dividend yield if your total annual dividend income is $1,256?A) 2.67 percentB) 2.78 percentC) 1.83 percentD) 2.13 percentE) 2.54 percent58) West Wind Tours stock is currently selling for $52.30 a share. The stock has a dividend yield of 2.48 percent. How much dividend income will you receive per year if you purchase 600 shares of this stock?A) $824.96B) $836.20C) $724.80D) $762.00E) $778.2259) One year ago, you purchased a stock at a price of $38.22a share. Today, you sold the stock and realized a total loss of 11.09 percent on your investment. Your capital gain was –$4.68 a share.What was your dividend yield?A) 1.15 percentB) .88 percentC) 1.02 percentD) .67 percentE) .38 percent60) You just sold 427 shares of stock at a price of $19.07 a share. You purchased the stock for $18.83 a share and have received total dividends of $614. What is the total capital gain on this investment?A) $716.48B) $511.52C) $102.48D) $618.48E) $476.5261) Last year, you purchased 400 shares of Analog stock for $12.92 a share. You have received a total of $136 in dividends and $4,301 in proceeds from selling the shares. What is your capital gains yield on this stock?A) 9.09 percentB) 6.73 percentC) ?16.78 percentD) ?14.14 percentE) ?11.02 percent62) Today, you sold 540 shares of stock and realized a total return of 7.3 percent. You purchased the shares one year ago at a price of $24 a share and have received a total of $86 in dividends. What is your capital gains yield on this investment?A) 5.68 percentB) 6.64 percentC) 6.39 percentD) 7.26 percentE) 7.41 percent63) Four months ago, you purchased 900 shares of LBM stock for $7.68 a share. Last month, you received a dividend payment of $.12 a share. Today, you sold the shares for $9.13 a share. What is your total dollar return on this investment?A) $1,305B) $1,413C) $1,512D) $1,394E) $1,08064) One year ago, you purchased 100 shares of Best Wings stock at a price of $38.19 a share. The company pays an annual dividend of $.46 per share. Today, you sold for the shares for $37.92 a share. What is your total percentage return on this investment?A) 2.62 percentB) 1.93 percentC) 2.72 percentD) 1.08 percentE) .50 percent65) Suppose a stock had an initial price of $76 per share, paida dividend of $1.42 per share during the year, and had an ending share price of $81. What was the capital gains yield?A) 6.17 percentB) 6.69 percentC) 7.05 percentD) 6.58 percentE) 5.44 percent66) Suppose you bought a $1,000 face value bond with a coupon rate of 5.6 percent one year ago. The purchase price was $987.50. You sold the bond today for $994.20. If the inflation rate last year was 2.6 percent, what was your exact real rate of return on this investment?A) 4.88 percentB) 5.32 percentC) 3.65 percentD) 3.78 percentE) 4.47 percent67) Leo purchased a stock for $63.80 a share, received a dividend of $2.68 a share and sold the shares for $59.74 each. During the time he owned the stock, inflation averaged 2.8 percent. What is his approximate real rate of return on this investment?A) ?.64 percentB) ?4.96 percentC) ?2.16 percentD) 2.16 percentE) 4.96 percent68) Christina purchased 500 shares of stock at a price of $62.30 a share and sold the shares for $64.25 each. She also received $738 in dividends. If the inflation rate was 3.9 percent, what was her exact real rate of return on this investment?A) 4.20 percentB) 1.54 percentC) 1.60 percentD) 3.95 percentE) 5.50 percent69) What is the amount of the risk premium on a U.S.Treasury bill if the risk-free rate is 3.1 percent, the inflation rate is2.6 percent, and the market rate of return is 7.4 percent?A) 0 percentB) 2.8 percentC) .5 percentD) 1.7 percentE) 4.3 percent70) You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 7 percent, 13 percent, 19 percent, ?8 percent, and 15 percent. Suppose the average inflation rate over this time period was 2.6 percent and the average T-bill rate was 3.1 percent. Based on this information, what was the average nominal risk premium?A) 6.6 percentB) 6.1 percentC) 9.2 percentD) 1.2 percentE) 3.5 percent71) You bought one of Shark Repellant's 6 percent coupon bonds one year ago for $867. These bonds pay annual payments, have a face value of $1,000, and mature 12 years from now. Suppose you decide to sell your bonds today when the required return on the bonds is 7.4 percent. The inflation rate over the past year was 2.9 percent. What was your total real return on this investment?A) 6.48 percentB) 6.61 percentC) 8.18 percentD) 7.44 percentE) 9.70 percent72) You find a certain stock that had returns of 8 percent, ?3 percent, 12 percent, and 17 percent for four of the last five years. The average return of the stock for the past five-year period was 6 percent. What is the standard deviation of the stock's returns for the five-year period?A) 10.39 percentB) 4.98 percentC) 7.16 percentD) 9.25 percentE) 5.38 percent73) A stock had returns of 5 percent, 14 percent, 11 percent, ?8 percent, and 6 percent over the past five years. What is the standard deviation of these returns?A) 7.74 percentB) 8.21 percentC) 9.68 percentD) 8.44 percentE) 7.49 percent74) The common stock of Air Express had annual returns of 11.7 percent, 8.8 percent,16.7 percent, and ?7.9 percent over the last four years, respectively. What is thestandard deviation of these returns?A) 8.29 percentB) 9.14 percentC) 11.54 percentD) 7.78 percentE) 10.66 percent75) A stock had annual returns of 5.3 percent, ?2.7 percent, 16.2 percent, and 13.6 percentover the past four years. Which one of the following best describes the probability that this stock will produce a return of20 percent or more in a single year?A) Less than 2.5 percent but more than .5 percentB) More than 16 percentC) Less than .5 percentD) Less than 1 percent but more than .5 percentE) Less than 16 percent but more than 2.5 percent76) A stock has an expected rate of return of 9.8 percent anda standard deviation of 15.4 percent. Which one of the following best describes the probability that this stock will lose at least half of its value in any one given year?A) less than 16 percentB) less than .5 percentC) less than 1.0 percentD) less than 2.5 percentE) less than 5.0 percent77) A stock had annual returns of 11.3 percent, 9.8 percent, ?7.3 percent, and 14.6percent for the past four years. Based on this information, what is the 95 percentprobability range of returns for any one given year?A) ?2.4 to 17.5 percentB) ?2.60 to 11.80 percentC) ?12.5 to 26.7 percentD) ?10.4 to 12.3 percentE) ?10.9 to 25.1 percent78) Aimee is the owner of a stock with annual returns of 17.6 percent, ?11.7 percent, 5.6 percent, and 9.7 percent for the past four years. She thinks the stock may achieve a returnof 17 percent again this coming year. What is the probability that your friend is correct?A) Less than .5 percentB) Greater than .5 percent but less than 1 percentC) Greater than 1 percent but less than 2.5 percentD) Greater than 2.5 percent but less than 16 percentE) Greater than 16 percent79) A stock had returns of 3 percent, 12 percent, 26 percent, ?14 percent, and ?1 percent for the past five years. Based on these returns, what is the approximate probability that this stock will return at least 20 percent in any one given year?A) Approximately .1 percentB) Approximately 5 percentC) Approximately 2.5 percentD) Approximately .5 percentE) Approximately 16 percent80) A stock had returns of 14 percent, 13 percent, ?10 percent, and 7 percent for thepast four years. Which one of the following best describes the probability that this stockwill lose no more than 10 percent in any one year?A) Greater than .5 but less than 1.0 percentB) Greater than 1 percent but less than 2.5 percentC) Greater than 2.5 percent but less than 16 percentD) Greater than 84 percent but less than 97.5 percentE) Greater than 95 percent81) Over the past five years, a stock produced returns of 11 percent, 14 percent, 4percent, ?9 percent, and 5 percent. What is the probability that an investor in this stock。