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Corporate Finance I

NYSE Dealer or auction market?
Auction
Purchaser is called the?
Agent
Principal
Principal
Treasurer or Controller?
Cash manager
credit manager
capital expenditures
Financial planning
Treasurer
Treasurer or Controller?
Tax Manager
Cost Accounting Manager
Financial Accounting Manager
Informational Technology manager
Controller
Accounting functions- Treasurer or Controller?
Controller
The mixture of debt and equity used by a firm to
finance its operations is called:

capital budgeting.
working capital management.
agency cost analysis.
financial depreciation

capital structure
Which one of the following is a capital budgeting?

determining how much inventory to keep on hand
deciding whether or not to purchase a new machine for the production line
deciding how to refinance a debt issue that is maturing
determining how many shares of stock to issue
determining how much money should be kept in the checking account

deciding whether or not to purchase a new machine for the production line
Which one of the following is a capital structure
decision?
determining the amount of funds needed to finance customer purchases of a new product

determining how much inventory will be needed to support a project

determining how to allocate investment funds to multiple projects

determining which one of two projects to accept

determining how much debt should be assumed to fund a project

determining how much debt should be assumed to fund a project
Which one of the following is a working capital
management decision?
determining whether or not a project should be
accepted

determining the number of shares of stock to issue to fund an acquisition

determining whether to pay cash for a purchase or use the credit offered by the supplier

determining the amount of long-term debt required to complete a project

determining the amount of equipment needed to complete a job

Determining whether to pay cash for a purchase or use the credit offered by the supplier
Which one of the following statements concerning
a sole proprietorship is correct?
A sole proprietor can generally raise large sums of capital quite easily.

A sole proprietorship is taxed the same as a C corporation.

The life of a sole proprietorship is potentially unlimited.

Transferring ownership of a sole proprietorship is easier than transferring ownership of a corporation.

It is easy to create a sole proprietorship.

It is easy to create a sole proprietorship
Negotiator:
Agent
Principal
Agent
Which one of the following is the financial
statement that shows the accounting value of a firm’s equity as of a particular date?
income statement
creditor’s statement
balance sheet
statement of cash flows
dividend statement
balance sheet
Net working capital is defined as:

total liabilities minus shareholders’ equity.
current liabilities minus shareholders’ equity.
fixed assets minus long-term liabilities.
total assets minus total liabilities.
current assets minus current liabilities.

current assets minus current liabilities
Which one of the following is the financial
statement that summarizes a firm’s revenue and expenses over a period of time?
income statement
balance sheet
statement of cash flows
tax reconciliation statement
market value report
income statement
Which one of the following categories of securities
had the highest average return for the period 1926-2007?
U.S. Treasury bills
large company stocks
small company stocks
long-term corporate bonds
long-term government bonds
Small company stocks
Which one of the following categories of securities
had the lowest average risk premium for the period 1926-2007?
long-term government bonds
small company stocks
large company stocks
long-term corporate bonds
U.S. Treasury bills
U.S. Treasury bills
The percentage of the next dollar you earn that must be paid in taxes is referred to as the _____ tax rate.
mean
residual
total
average
marginal
marginal
The cash flow of a firm which is available for distribution to the firm’s creditors and stockholders is called the:
operating cash flow.
net capital spending.
net working capital.
cash flow from assets.
cash flow to stockholders.
Cash flow from assets
Which term relates to the cash flow which results from a firm’s ongoing, normal business activities?
operating cash flow
capital spending
net working capital
cash flow from assets
cash flow to creditors
Operating Cash flow
The decision to issue additional shares of stock is an example of which one of the following?
working capital management
net working capital decision
capital budgeting
controller’s duties
capital structure decision
Capital structure decision
Ratios that measure a firm’s financial leverage are known as _____ ratios.
asset management
long-term solvency
short-term solvency
profitability
book value
Long term solvency
The most acceptable method of evaluating the financial statements of a firm is to compare the firm’s current:
financial ratios to the firm’s historical ratios.
financial statements to the financial statements of similar firms operating in other
countries.
financial ratios to the average ratios of all firms located within the same geographic area.
financial statements to those of larger firms in unrelated industries.
financial statements to the projections that were created based on Tobin’s Q.
Financial ratios to the firm’s historical ratios
Which one of the following terms is defined as
dividends paid expressed as a percentage of net income?
dividend retention ratio
dividend yield
dividend payout ratio
dividend portion
dividend section
dividend payout ratio
Which one of the following terms is applied to the
financial planning method which uses the projected sales level as the basis for determining changes in balance sheet and income statement account values?
percentage of sales method
sales dilution method
sales reconciliation method
common-size method
trend method
percentage of sales method
interest earned on both the initial principal and the interest reinvested from prior periods is called:
free interest.
dual interest.
simple interest.
interest on interest.
compound interest.
Compound interest
Shelley won a lottery and will receive $1,000 a year for the next ten years. The value of her winnings today discounted at her discount rate is called which one of the following?
single amount
future value
present value
simple amount
compounded value
Present value
An ordinary annuity is best defined by which one of the following?
increasing payments paid for a definitive period of time
increasing payments paid forever
equal payments paid at regular intervals over a stated time period
equal payments paid at regular intervals of time on an ongoing basis
unequal payments that occur at set intervals for a limited period of time
equal payments paid at regular intervals over a stated time period
Which one of the following accurately defines a perpetuity?
a limited number of equal payments paid in even time increments
payments of equal amounts that are paid irregularly but indefinitely
varying amounts that are paid at even intervals forever
unending equal payments paid at equal time intervals
unending equal payments paid at either equal or unequal time intervals
unending equal payments paid at equal time intervals
Mary just purchased a bond which pays $60 a year in interest. What is this $60 called?
coupon
face value
discount
call premium
yield
Coupon
Currently, the bond market requires a return of 11.6 percent on the 10-year bonds issued by Winston Industries. The 11.6 percent is referred to as which one of the following?
coupon rate
face rate
call rate
yield to maturity
coupon rate
Yield to maturity
Which one of the following terms is used to describe a loan wherein each payment is equal in amount and includes both interest and principal?
amortized loan
modified loan
balloon loan
pure discount loan
interest-only loan
amortized loan
If interest Rate increases the value of your bond will:
decrease

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