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WorksheetsFinancal mangement mcq
Total questions: 20
Worksheet time: 10mins
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
A payoff schedule for a loan is known as:
a mortgage
an amortization schedule
a principal
an interest schedule
______ help us analyse whether a company is moving toward financial stress or is using benefit the company and ultimately, the owners of the company.
Total asset turnover
Financial leverage ratios
Days' sales in inventory
Asset management ratios
As the rating of a bond increases (for example, from A, to AA, to AAA), it generally means
the credit rating increases, the default risk increases, and the required rate of return
the credit rating increases, the default risk decreases, and the required rate of return
the credit rating increases, the default risk decreases, and the required rate of return
the credit rating decreases, the default risk decreases, and the required rate of return decreases.
Bonds are different from stocks because
bonds promise fixed payments for the length of their maturity
bonds give payments only after other owners are paid
bonds do not have maturity dates
bonds promise growth in earnings
______ break(s) down the return-on equity into three components.
The DuPont identity
Market value ratios
Profitability ratios
Asset management ratios
The least expensive form of financing for the firm is:
existing common stock
preferred stock
debt
new common stock
There are two typical ways to alter the one vote-one share standard. One way is _
to have companies buy back nonvoting common stock
to not have companies pay dividends
to have companies issue classes of stock whereby one or more classes have super voting rights
to not have companies issue bonds
Feet-on-the ground Inc. $1,000 par value bonds are selling for $825. Which of the following
The bond market currently requires a rate (yield) less than the coupon rate.
The bonds are selling at a premium to the par value.
The coupon rate is lower than the yield to maturity.
All of the above are true.
The one-time payment of money at a future date is often called a
lump-sum payment
present value
principal amount
perpetuity payment
The interest rate used to discount the cash flows associated with a bond is:
the government T-bill rate
the prime rate
the required rate of return on the firm's equity
the yield to maturity
