Financal mangement mcq

The value of a share of common stock may be thought of as:

• a perpetuity

• an annuity

• the present value of a perpetuity

• the present value of expected future dividends

The cost of debt is measured by.

• the yield to maturity on the firm's bonds

• the coupon rate on the firm's bonds

• the weighted average cost of capital

• the marginal cost of capital

As the owners of the firm, common shareholders:

• play a secondary role in financing the firm

• have a primary claim on earnings

• have a legally enforceable right to dividends

• have the right to vote on all important corporate issues

Preferred shareholders:

• play a primary role in the financing of the firm

• have a subordinated claim to dividends

• normally have no vote on corporate issues

• possess an ownership interest in the firm

The model is usually considered the best of the capital budgeting decision-making

• internal rate of return (IRR)

• net present value (NPV)

• profitability index (PI)

• discounted payback period

The _____model answers one basic question: How soon will I recover my initial investment

• IRR

• payback period

• NPV

• profitability index

______ can be helpful for managers to understand short-term cash obligations.

• Profitability ratios

• Liquidity ratios

• Asset management ratios

• Solvency ratios

When the ________ Is less than the yield to maturity, the bond sells at a/the _______ the per value

• coupon rate; discount to

• coupon; premium over

• time to maturity; discount to

• time to maturity; same price as

The difference between the price and the par value of a zero-coupon bond represents

• taxes payable by the bond buyer

• the accumulated interest over the life of the bond

• the accumulated principal over the life of the bond

• the bond premium

The value in five years of a stream of payments received over the five-year period is known as:

• future value-annuity

• present value-annuity

• compound sum-single amount

• present value-single amount