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CF 1.4 Test

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Professional Development, Other

University - Professional Development

CF 1.4 Test
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40 questions

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1.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Which of the following statements regarding ESG implementation methods is most accurate?

A. Negative screening is the most commonly applied method.
B. Thematic investing considers multiple factors.
C. Relative/best-in-class screening excludes industries with unfavorable ESG aspects.

2.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

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A. 0.80 days.
B. 24.3 days.
C. 51.7 days.

3.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

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A. Line of credit.
B. Banker’s acceptance.
C. Commercial paper.

4.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

An analyst gathered the following information about a company and the market:<br />Current market price per share of common stock $28.00<br />Most recent dividend per share paid on common stock (D0) $2.00<br />Expected dividend payout rate 40%<br />Expected return on equity (ROE) 15%<br />Beta for the common stock 1.3<br />Expected rate of return on the market portfolio 13%<br />Risk-free rate of return 4%<br />Using the discounted cash flow (DCF) approach, the cost of retained earnings for the company is closest to:

A. 15.7%.
B. 16.1%.
C. 16.8%.

5.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

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A.
B.
C.

6.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

A consultant sees the following information about a publicly listed company:<br />The company has a 12-person board of directors.<br />The board is chaired by the chief executive officer (CEO) of the company.<br />All members of the audit committee are outside directors with relevant financial and accounting experience.<br />Which of the following changes would provide the greatest improvement in the corporate governance of this company?

A. The chairman of the board should be an independent director.
B. The company’s Vice President of Finance should be a member of the audit committee.
C. The board of directors should have an odd number of directors to preclude tied votes.

7.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

The following information is available for a company:<br /><br />Bonds are priced at par and have an annual coupon rate of 9.2%.<br />Preferred stock is priced at $8.18 and pays an annual dividend of $1.35.<br />Common equity has a beta of 1.3.<br />The risk-free rate is 4% and the market premium is 11%.<br />Capital structure: Debt = 30%; Preferred stock = 15%; Common equity = 55%.<br />The tax rate is 35%.<br />The weighted average cost of capital (WACC) for the company is closest to:

A. 11.5%.
B. 14.3%.
C. 13.4%.

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