公司金融选择题

第一章1 A secondary market transaction can occur in either a dealer market or an auction market.A) TrueB) False2 Control of a firm ultimately rests with the stockholders.A) TrueB) False3 It is generally easier to form a sole proprietorship than it is to form a corporation.A) TrueB) False4 One advantage of the corporate form of organization is that you can buy shares ina corporation such as Wal-Mart without worrying about being held personally liable for the corporation's liabilities.A) TrueB) False5 A financial manager must be concerned with three basic areas: Capital budgeting, capital structure, and working capital.A) TrueB) False6 Which of the following responses best completes the following: The duties of a working capital manager includeA) Deciding how to raise the money required to fund a projectB) Choosing how much inventory a firm should invest inC) Deciding the amount of dividends a firm should pay outD) Deciding which projects a firm should undertakeE) Deciding what fixed assets to purchase7 In a ____________, none of the owners are offered the protection of limited liability.A) sole proprietorshipB) limited liability companyC) corporationD) limited partnershipE) S corporation8 Which of the following is the BEST description of the goal of the financial manager in a corporation where shares are publicly traded?A) Maximize salesB) Maximize profitsC) Avoid financial distressD) Maintain steady earnings growthE) Maximize the current value per share of the existing stock9 Which of the following is an answer to "What are the duties of a financial manager?"I. Deciding how much interest to pay the holders of the corporation's bondsII. Deciding the mix of long-term debt and equityIII. Deciding which projects a firm should undertakeIV. Deciding how much short-term debt to useA) I and II onlyB) I, II, and III onlyC) II and III onlyD) II, III, and IV onlyE) I, II, III, and IV第二章1 If a firm has operating cash flow of $12,000, has a change in net working capital of $8,000, has net capital spending of $12,000, and has cash flow to creditors of $5,000, then cash flow to stockholders must be -$13,000.A) TrueB) False2 If a firm has cash flow from assets of $12,000, dividends paid of $4,000 and net new equity sales of $4,000, then cash flow to creditors must be $4,000.A) TrueB) False3 Which of the following assets would most likely be considered the least liquid?A) A share of common stock in IBMB) A bond issued by MicrosoftC) A share of preferred stock in K-Mart Corp.D) A Custer, South Dakota municipal bondE) A U.S. Treasury bill4 You are to determine the level of net capital spending made by a firm during 1996. If you have the balance sheet and income statements for the years 1995 and 1996 how would you go about your task?A) Ending net fixed assets - beginning net fixed assets + depreciation for 1996B) Beginning net fixed assets + ending net fixed assets - depreciation for 1995C) Ending net fixed assets - beginning net fixed assets - depreciation + taxes for 1996D) Ending net fixed assets - beginning net fixed assets + depreciation - taxes for 1996E) Beginning net fixed assets - ending net fixed assets + depreciation for 19965 Consider the following statement: A firm that earns negative net income will quickly find itself in financial distress.I. This statement is false because it is possible for a firm to have negative profits but still have positive cash flowsII. This statement is false because accounting profits do not generally equal cash flow and it is a lack of cash, not profits, that causes financial distressIII. This statement is true because negative profits mean negative cash flowsA) I onlyB) II onlyC) III onlyD) I and II onlyE) I and III only6 As an investor how would you determine the total market value of a publicly traded corporation such as General Motors?I. The values of debt and equity as they appear on the most recent financial statementsII. The value of debt as it appears on the most recent financial statements plus the current market value of GM's common stockIII. The current market value of GM's stock plus the market value of GM's debtA) I onlyB) II onlyC) III onlyD) I and II onlyE) II and III only7 Balance sheet assetsI. always have a value equal to total liabilities minus shareholders' equityII. are listed in order of increasing liquidityIII. represent items acquired with the use of liabilities and equityA) I onlyB) II and III onlyC) III onlyD) I and II onlyE) I, II, and III8 Which of the following represents a use of the matching principle in accounting?I. The cost purchasing a good on account is recorded when the account payable is paidII. Revenues from a sale on account are recorded when the payment on the account receivable is receivedIII. The costs of producing inventory are recognized along with the revenues from the sale when the sale is madeA) I onlyB) II onlyC) III onlyD) I and II onlyE) I and III only9 Which of the following is considered a noncash expense on the income statement?A) Income taxesB) DepreciationC) Interest expenseD) Wages and salariesE) Cost of goods sold10 Which of the following is/are true about the balance sheet and incomestatement?I. The income statement reflects a summary of activity that occurs over some period of time while the balance sheet is a snapshot taken at a single point in timeII. Both represent a summary of activity that occurs over some period of timeIII. The two, combined, give a reasonable estimate of the firm's cash flows and market valuesA) I onlyB) II onlyC) III onlyD) I and III onlyE) I, II, and III第三章1：Which of the following is generally considered one of the major categories on a typical statement of cash flows?A) Subsidiary activitiesB) Notes payable activitiesC) Operating activitiesD) Income statement activitiesE) Division activities2 Comparison of the financial statements of two firms in the same general industry may be difficult ifI. the size of the two firms' operations are differentII. the firms have identical product lines and operationsIII. the firms' financial statements are prepared using different fiscal year-endsA) I onlyB) III onlyC) I and II onlyD) I and III onlyE) I, II and III3 In a common size statement, the balance sheet is expressed as a percentage of ____________ while the income statement is expressed as a percentage of ____________.A) liabilities plus equity; net incomeB) assets; net incomeC) sales; liabilities plus equityD) liabilities plus equity; salesE) liabilities; sales4 You are comparing two companies by looking at financial ratios they publish in their annual reports. You know thatI. you must be careful because not all financial statement ratios are computed the same wayII. the financial ratios of a large firm and a medium size firm cannot be compared III. these financial ratios will capture the relevant differences between the two firms,leaving you with no need to look at the rest of the reportsA) I onlyB) II onlyC) III onlyD) I and II onlyE) I and III only5 The interval measure is an example of a ____________ ratio.A) short-term solvencyB) financial leverageC) asset managementD) profitabilityE) market value6 Which of the following statements about the current ratio is accurate?A) Use of book values in calculation of this ratio is unacceptable because the market values of these assets and liabilities tend to deviate from book valuesB) This ratio is computed by dividing current liabilities by current assetsC) It will always be greater than the quick ratio in companies that carry inventoryD) This ratio is intended to indicate the long run liquidity position of the firmE) The higher the current ratio the higher the level of cash in a firm7 ____________ is considered to be a liquidity ratio.A) The return on assetsB) The fixed asset turnoverC) The cash ratioD) The times interest earned ratioE) The profit margin8 ____________ are designed to determine a firm's long-run ability to meet its obligations.A) Liquidity ratiosB) Asset-utilization ratiosC) Profitability ratiosD) Financial leverage ratiosE) Market value ratios9 Which of the following is NOT incorporated into calculation of the Du Pont identity?A) Return on assetsB) Equity multiplierC) Total asset turnoverD) Profit marginE) Receivables turnover10 What does the fixed asset turnover ratio measure?A) How well total assets are utilized during a yearB) The length of time it takes a firm to completely replace its fixed assetsC) The amount of EBIT a firm generates per dollar of fixed assetsD) The percent of total assets that are invested in fixed assetsE) The amount of sales each dollar of fixed assets generates第四章1 Aggregation refers to the process by which a firm first projects its aggregate investment requirement, then it breaks that total up and allocates it to the investment proposals of the firm's smaller units.A) TrueB) False2 With good financial planning, managers can be less vigilant in their day to day management of the firm.A) TrueB) False3 All else equal, a firm that utilizes assets inefficiently will have a higher sustainable growth rate than a firm that does not.A) TrueB) False4 One would expect the capital intensity ratio of an auto manufacturing firm to be lower than that of a software development firm.A) TrueB) False5 In most industries, planning beyond the period of one year is not very useful.A) TrueB) False6 Financial planning is important because the only way for a firm to prosper is for it to grow.A) TrueB) False7 One of the first things needed when constructing a financial plan is a sales forecast.A) TrueB) False8 All else equal, the lower the forecasted growth the larger the level of external financing needed.A) TrueB) False9 A firm with a positive ROE could have a negative ROA.A) TrueB) False10 All else equal, an increase in a firm's capital intensity ratio will increase its external financing needed.A) TrueB) False第五章1 Most investments, whether they involve real assets or financial assets, can be analyzed using the discounted cash flow approach.A) TrueB) False2 The Rule of 72 tells us how long into the future we must wait before an investment's value is equal to three times the initial amount.A) TrueB) False3 If you are given a present value, how long the money is to be invested, and the future value of that investment, you can solve for the interest rate that was earned on the investment.A) TrueB) False4 Calculating the present value of a future cash flow to determine its value today is known as the discount rate.A) TrueB) False5 Suppose you are trying to find the present value of two different cash flows using the same interest rate for each cash flow. One is $1,000 ten years from now, the other a $800 flow seven years from now. Which of the following is/are true about the discount factors used to value the cash flows?A) The factor for the cash flow ten years away is always less than or equal to the factor for the cash flow that is received seven years from nowB) Both factors are greater than 1C) Regardless of the interest rate, the discount factors are such that the present value of the $1,000 will always be higher than the present value of the $800D) Since the payments are different, no statement can be made regarding the factors to be usedE) The astute investor will factor in the time differential and choose the payment that arrives the soonest6 You are choosing between investments offered by two different banks. One promises a return of 10% for three years in simple interest while the other offers a return of 10% for three years in compound interest. You shouldA) choose the simple interest option because both have the same basic interestrateB) choose the compound interest option because it provides a higher return than the simple interest optionC) choose the compound interest option only if the compounding is for monthly periodsD) choose the simple interest option only if compounding occurs more than once a yearE) choose the compound interest option only if you are investing less than $5,0007 Given r and t greater than zero,I. Present value interest factors are less than 1.0II. Future value interest factors are less than 1.0III. Present value interest factors are greater than future value interest factorsIV. Present value interest factors grow as t grows, provided r is held constantA) I onlyB) I and III onlyC) I and IV onlyD) II and III onlyE) II and IV only8 You received a $1 savings account earning 5% on your 1st birthday. How much will you have in the account on your 40th birthday if you don't withdraw any money before then?A) $5.89B) $6.34C) $6.70D) $7.00E) $7.049 What is the future value of $25,000 received today if it is invested at 6.5% compounded annually for six years?A) $17,133.35B) $27,476.42C) $36,478.56D) $39,521.75E) $41,374.8910 How much would you have to invest today at 8% compounded annually to have $25,000 to buy a trailer house in 4 years?A) $18,267.26B) $18,375.75C) $19,147.25D) $21,370.10E) $22,149.57第六章1 The present value of an ordinary annuity and an annuity due will be the same if they have the same payment per period, the same number of periods, and identical discount rates.A) TrueB) False2 You can find the future value of a set of cash flows by finding the future value of each cash flow individually and then summing these future values.A) TrueB) False3 In almost all present and future value computations, it is implicitly assumed that the cash flows occur at the end of each period.A) TrueB) False4 In order to compare different investment opportunities (each with the same risk) with interest rates reported in different manners you shouldA) convert each interest rate to an annual nominal rateB) convert each interest rate to a monthly nominal rateC) convert each interest rate to an effective annual rateD) compare them by using the published annual ratesE) convert each interest rate to an APR5 Which of the following is a true statement?A) When comparing investments it is best not to rely solely on quoted ratesB) Compounding will typically not lead to differences between the quoted rate and the effective rateC) The APR on a loan requiring monthly payments is the interest rate you actually payD) An APR is the interest rate per period divided by the number of periods per yearE) With monthly compounding, the APR will be larger than the effective annual rate6 You are examining two perpetuities which are identical in every way, except that perpetuity A will begin making annual payments of $P to you two years from today while the first $P payment of perpetuity B will occur one year from today. It must be true thatA) the current value of perpetuity A is greater than that of B by $PB) the current value of perpetuity B is greater than that of A by $PC) the current value of perpetuity B is equal to that of perpetuity AD) the current value of perpetuity A exceeds that of B by the PV of $P for one yearE) the current value of perpetuity B exceeds that of A by the PV of $P for one year7 Which of the following describes the equation for finding the annuity present value factor?A) (1 minus present value factor) times the interest rateB) (1 plus present value factor) divided by the interest rateC) (1 plus present value factor) times the interest rateD) (1 minus present value factor) divided by the interest rateE) (present value factor minus 1) divided by the interest rate8 Which of the following describes the equation for finding the annuity future value factor?A) (future value factor minus 1) times the interest rateB) (future value factor plus 1) divided by the interest rateC) (future value factor plus 1) times the interest rateD) (future value factor minus 1) divided by the interest rateE) (1 minus present value factor) divided by the interest rate9 Which of the following is it NOT possible to compute?A) present value of a perpetuityB) interest rate on a perpetuity given the present value and paymentC) present value of an annuity dueD) future value of an annuity dueE) future value of a perpetuity10 You have $500 that you would like to invest. You have 2 choices: Savings Account A which earns 8% compounded annually or Savings Account B which earns7.75% compounded semiannually. Which would you choose and why?A) A because it has a higher effective annual rateB) A because the future value in one year is lowerC) B because it has a higher effective annual rateD) B because the future value in one year is lowerE) B because it has the higher quoted rate第七章1 Which of the following is correct? A zero coupon bond _________________.A) typically pays coupons only during the first five yearsB) sells for a price that is greater than the face valueC) has no interest payments and is thus non-taxable until maturityD) is also known as a deep discount bondE) provides no cash flow to the holder at maturity2 Your neighbor is bragging that the coupon payment on the bonds he bought five years ago have increased in each of the last three years. You know he must ownA) a zero coupon bondB) a LYONC) a convertible bondD) a put bondE) a floating rate bond3 You want to own equity in a Russian oil firm, but the firm does not have traded stock. If it had ___________ outstanding you could purchase them and then trade them in for shares of stock.A) convertible bondsB) put bondsC) debenturesD) zero coupon bondsE) subordinated debentures4 A firm intends to take on a significant amount of new debt in order to fund the purchase of a close competitor. However the firm cannot complete the transaction unless it first calls one of its outstanding bond issues. It must be true that the called bondsA) are backed by the corporation's fixed assetsB) have a higher interest rate than the new bonds willC) have an inferior tax status than the new bonds willD) can be called at a price that is very near parE) have covenants which restrict such increase in debt5 ________ is an unsecured obligation of the issuing company.A) A indentureB) A debentureC) A covenantD) The deed of trustE) Dedicated capital6 __________ included in the bond indenture to protect bondholders from certain actions by the company.A) Indentures areB) Debentures areC) Covenants areD) Articles of incorporation areE) A description of dedicated capital is7 ________________ is an account into which periodic payments are made for the purpose of retiring a bond issue.A) An indentureB) A debentureC) A covenantD) A call optionE) A sinking fund8 __________ is the legal document that describes the mortgage on real property that acts as security on a bond issue.A) A specific performance contractB) A debentureC) A restrictive covenantD) A trust deedE) An indenture9 Which of the following risks do debt ratings specifically attempt to assess?I. Interest rate riskII. Default riskIII. The risk of a call being madeA) I onlyB) II onlyC) I and II onlyD) II and III onlyE) I, II, and III10 Which of the following is NOT a duty of a trust company appointed when bonds are issued?A) Make sure terms of the indenture are obeyedB) Manage the sinking fundC) Decide when the bonds should be calledD) Monitor the protective covenants for the bondholdersE) Represent the bondholders in default第八章1 A firm must make its dividend payments to preferred shareholders before it makes any interest payments to its bondholders.A) TrueB) False2 Dividends on preferred stock are tax deductible to the issuing firm.A) TrueB) False3 Most preferred stock has dividends that are cumulative.A) TrueB) False4 If a firm experiences a financial loss for the year, the loss is shared equally by the debt holders and equity holders.B) False5 For income tax purposes, preferred stock is more like debt than it is like common stock.A) TrueB) False6 The price-earnings ratios for NYSE stocks that are reported in the Wall Street Journal are based on earnings per share for the past year.A) TrueB) False7 According to the constant growth model, the dividend yield is equal to the required return minus the dividend growth rate.A) TrueB) False8 If one uses the constant growth model to value stock, one assumes that P1 = P0*(1 + g), P2 = P0*(1 + g), etc.A) TrueB) False9 If one uses the perpetuity model to value stock, one assumes that P0 = P1 = P3, etc., implying that the annual return from owning the stock is zero.A) TrueB) False10 It is never possible to value a stock that has supernormal dividend growth.A) TrueB) False第九章1 An investment should be accepted if the net present value is positive.A) TrueB) False2 For projects with conventional cash flows and for positive discount rates, the payback period will be shorter than the discounted payback period.A) TrueB) False3 The only advantage of the average accounting return is that the information needed to compute it will usually be available.B) False4 An investment is acceptable if the IRR exceeds the required return.A) TrueB) False5 If a project has conventional cash flows, it may also have more than one IRR.A) TrueB) False6 Both the IRR and the profitability index decision rules may lead to incorrect decisions in comparisons of mutually exclusive investments.A) TrueB) False7 Very few large U.S. firms use the payback rule when making capital budgeting decisions.A) TrueB) False8 If investment funds are limited and the projects under consideration are independent from one another, the IRR should be used to rank projects to determine which ones should be accepted.A) TrueB) False9 The essence of _________________ is determining whether a proposed investment or project will generate positive wealth for the owners of the firm once it is in place.A) strategic asset allocationB) capital structure analysisC) cash flow analysisD) payback analysisE) working capital analysis10 Which of the following is NOT correct?A) NPV is one of the two or three most important concepts in financeB) NPV is always just the difference between the market value of an asset or project and its costC) The financial manager acts in the shareholders' best interests by identifying and taking positive NPV projectsD) NPV's can normally be directly observed in the marketE) Investment criteria other than NPV provide additional information aboutwhether or not a project truly has a positive NPV第十章1 A taxable gain occurs when an asset is sold for more than its book value. For capital budgeting purposes, the taxes on the sale _____________.A) are treated as a reduction in cash and added to operating cash flowB) are treated as a noncash event similar to depreciationC) are treated as a reduction in cash and deducted from the book value of the assetD) are treated as a reduction in cash and deducted from the taxable gainE) are treated as a reduction in cash and are deducted from the sale price2 By using the tax shield approach for computing operating cash flows we canA) obtain more accurate results than with the customary methodsB) more readily verify what cash flows would be without interest expensesC) more readily identify the tax shield from interest deductionsD) more readily identify the tax benefits of depreciationE) start with the bottom line, net income, and work backwards3 The government has been trying to decide whether or not to purchase any of the new, advanced missiles it has developed. One of the arguments in favor of purchasing the missiles is that so much money has been spent on their development that it would be a waste of money not to buy any. What is the major problem with this argument?A) It ignores the opportunity cost of the money that has been spentB) It includes sunk costs in the decisionC) It includes opportunity costs in the decisionD) It includes changes in net working capitalE) It includes financing costs in the decision4 You are to calculate operating cash flows using the following information: sales, net income, depreciation, and net initial investment. If interest expense is zero, it would likely be easiest for you to use the __________ approach.A) conventionalB) tax shieldC) bottom-upD) top-downE) depreciation first5 Which of the following projects would increase net working capital the most?A) Making a purchase of land for a new baseball manufacturing plantB) Decreasing the amount of sales your firm makes on creditC) Decreasing the number of product lines your firm carriesD) Converting a manufacturing process so that you produce goods only after acustomer order has been receivedE) Using long-term bank credit to reduce payables6 When you set NPV equal to zero in calculating a bid price you areA) going to earn net income of zero on the projectB) appropriately including opportunity costs in your analysisC) certain to be the lowest bidder since, if any firm bids lower, they will be bidding based on them taking a negative NPV project, which they shouldn't doD) assured of earning your firm's highest possible IRRE) finding the price at which you expect to create zero wealth for your stockholders7 Your company is considering three different methods of producing its product: purchase production equipment, lease production equipment, or contract with a supplier to purchase the product from them. The methods have differing lives and cash flow streams. You are responsible for choosing one of the methods. Of the following, the best statement of your objective is toA) choose the method that will least affect the balance sheet of the companyB) choose the method that maximizes future cash inflowsC) choose the method that will result in the highest accounting net incomeD) choose the method that minimizes initial cash outflowsE) choose the method that maximizes shareholder wealth8 It is important to identify and use only incremental cash flows in capital investment decisionsA) because they are the simplest to identifyB) only when the stand alone principle fails to holdC) because ultimately it is the change in a firm's overall future cash flows that matterD) in order to accommodate unforeseen changes that might occurE) whenever sunk costs are involved9 The incremental cash flows related to a capital investment project are easiest to identify when _____________.A) sunk costs existB) opportunity costs are significantC) the stand alone principle holdsD) erosion of cash flow is expected to occurE) the project has no impact on total fixed assets10 ______________ would usually represent a net cash inflow at the beginning or during the life of a project and an equal net cash outflow upon completion of the project.A) An increase in payablesB) An increase in inventory。