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ACC 421 Final Exam

Business / Economics

7/3/12

Asked: 7/3/12 1:56 AM
Opening Offer: $25.00
Due Date: 7/3/12

1) An accrued expense can best be described as an amount

A.

paid and currently matched with earnings.

B.

not paid and not currently matched with earnings.

C.

not paid and currently matched with earnings.

D.

paid and not currently matched with earnings.

2) When an item of revenue is collected and recorded in advance, it is normally called a(n) ___________ revenue.

A.

unearned

B.

prepaid

C.

accrued

D.

cash

3) When an item of expense is paid and recorded in advance, it is normally called a(n)

A.

estimated expense.

B.

accrued expense.

C.

prepaid expense.

D.

cash expense.

4) A common set of accounting standards and procedures are called

A.

objectives of financial reporting.

B.

generally accepted accounting principles.

C.

financial accounting standards.

D.

statements of financial accounting concepts.

5) One objective of financial reporting is to provide

A.

information that is useful in assessing cash flow prospects.

B.

information about the liquidation values of the resources held by the enterprise.

C.

information about the investors in the business entity.

D.

information that will attract new investors.

6) The information provided by financial reporting pertains to

A.

individual business enterprises, industries, and an economy as a whole, rather than to members of society as consumers.

B.

business industries, rather than to individual enterprises or an economy as a whole or to members of society as consumers.

C.

individual business enterprises, rather than to industries or an economy as a whole or to members of society as consumers.

D.

an economy as a whole and to members of society as consumers, rather than to individual enterprises or industries.

7) The Financial Accounting Foundation

A.

provides information to interested parties on financial reporting issues.

B.

oversees the operations of the AICPA.

C.

oversees the operations of the FASB.

D.

works with the Financial Accounting Standards Advisory Council to provide informa-tion to interested parties on financial reporting issues.

8) The major distinction between the Financial Accounting Standards Board (FASB) and its predecessor, the Accounting Principles Board (APB), is

A.

all members of the FASB possess extensive experience in financial reporting.

B.

all members of the FASB are fully remunerated, serve full time, and are independent of any companies or institutions.

C.

the FASB issues exposure drafts of proposed standards.

D.

a majority of the members of the FASB are CPAs drawn from public practice.

9) The body that has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction is the

A.

FASB.

B.

SEC.

C.

APB.

D.

AICPA.

10) Limitations of the income statement include all of the following except

A.

items that cannot be measured reliably are not reported.

B.

income measurement involves judgment.

C.

income numbers are affected by the accounting methods employed.

D.

only actual amounts are reported in determining net income.

11) The income statement reveals

A.

resources and equities of a firm at a point in time.

B.

net earnings (net income) of a firm at a point in time.

C.

net earnings (net income) of a firm for a period of time.

D.

resources and equities of a firm for a period of time.

12) Which of the following would represent the least likely use of an income statement prepared for a business enterprise?

A.

Use by customers to determine a company's ability to provide needed goods and services.

B.

Use by government agencies to formulate tax and economic policy.

C.

Use by investors interested in the financial position of the entity.

D.

Use by labor unions to examine earnings closely as a basis for salary discussions.

13) The process of formally recording or incorporating an item in the financial statements of an entity is

A.

allocation.

B.

realization.

C.

recognition.

D.

articulation.

14) Which of the following is not a reason why revenue is recognized at time of sale?

A.

Realization has occurred.

B.

Title legally passes from seller to buyer.

C.

All of these are reasons to recognize revenue at time of sale.

D.

The sale is the critical event.

15) Which of the following is not an accurate representation concerning revenue recognition?

A.

Revenue from selling products is recognized at the date of sale, usually interpreted to mean the date of delivery to customers.

B.

Revenue from permitting others to use enterprise assets is recognized as time passes or as the assets are used.

C.

Revenue from disposing of assets other than products is recognized at the date of sale.

D.

Revenue from services rendered is recognized when cash is received or when services have been performed.

16) One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is

A.

an extensive use of estimates.

B.

the extensive use of separate classifications.

C.

failure to reflect current value information.

D.

failure to include items of financial value that cannot be recorded objectively.

17) The basis for classifying assets as current or noncurrent is conversion to cash within

A.

the accounting cycle or one year, whichever is longer.

B.

the operating cycle or one year, whichever is longer.

C.

the accounting cycle or one year, whichever is shorter.

D.

the operating cycle or one year, whichever is shorter.

18) The correct order to present current assets is

A.

Cash, inventories, accounts receivable, prepaid items.

B.

Cash, accounts receivable, inventories, prepaid items.

C.

Cash, accounts receivable, prepaid items, inventories.

D.

Cash, inventories, prepaid items, accounts receivable.

19) If a business entity entered into certain related party transactions, it would be required to disclose all of the following information except the

A.

dollar amount of the transactions for each of the periods for which an income state-ment is presented.

B.

nature of any future transactions planned between the parties and the terms involved.

C.

nature of the relationship between the parties to the transactions.

D.

amounts due from or to related parties as of the date of each balance sheet presented.

20) Events that occur after the December 31, 2008 balance sheet date (but before the balance sheet is issued) and provide additional evidence about conditions that existed at the balance sheet date and affect the realizability of accounts receivable should be

A.

used to record an adjustment to Bad Debt Expense for the year ending December 31, 2008.

B.

disclosed only in the Notes to the Financial Statements.

C.

discussed only in the MD&A (Management's Discussion and Analysis) section of the annual report.

D.

used to record an adjustment directly to the Retained Earnings account

21) The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?

A.

Enough information should be disclosed in the financial statements so a person wishing to invest in the stock of the company can make a profitable decision.

B.

Information about each account balance appearing in the financial statements is to be included in the notes to the financial statements.

C.

All information related to an entity's business and operating objectives is required to be disclosed in the financial statements.

D.

Disclosure of any financial facts significant enough to influence the judgment of an informed reader.

22) The MD&A section of an enterprise's annual report is to cover the following three items:

A.

liquidity, capital resources, and results of operations.

B.

income statement, balance sheet, and statement of cash flows.

C.

income statement, balance sheet, and statement of owners' equity.

D.

changes in the stock price, mergers, and acquisitions.

23) If the financial statements examined by an auditor lead the auditor to issue an opinion that contains an exception that is not of sufficient magnitude to invalidate the statement as a whole, the opinion is said to be

A.

unqualified.

B.

adverse.

C.

qualified.

D.

exceptional.

24) Which of the following best characterizes the difference between a financial forecast and a financial projection?

A.

Forecasts include a complete set of financial statements, while projections include only summary financial data.

B.

A forecast attempts to provide information on what is expected to happen, whereas a projection may provide information on what is not necessarily expected to happen.

C.

A forecast is normally for a full year or more and a projection presents data for less than a year.

D.

A forecast includes data which can be verified about future expectations, while the data in a projection is not susceptible to verification.

25) Theoretically, in computing the receivables turnover, the numerator should include

A.

net sales.

B.

sales.

C.

net credit sales.

D.

credit sales.

26) Which of the following ratios measures long-term solvency?

A.

Acid-test ratio

B.

Debt to total assets

C.

Receivables turnover

D.

Current ratio

27) The rate of return on common stock equity is calculated by dividing

A.

net income by average common stockholders' equity.

B.

net income by ending common stockholders' equity.

C.

net income less preferred dividends by average common stockholders' equity.

D.

net income less preferred dividends by ending common stockholders' equity.

28) The primary purpose of the statement of cash flows is to provide information

A.

about the operating, investing, and financing activities of an entity during a period.

B.

about the cash receipts and cash payments of an entity during a period.

C.

that is useful in assessing cash flow prospects.

D.

about the entity's ability to meet its obligations, its ability to pay dividends, and its needs for external financing.

29) The first step in the preparation of the statement of cash flows requires the use of information included in which comparative financial statements?

A.

Statements of cash flows

B.

Income statements

C.

Balance sheets

D.

Statements of retained earnings

30) To arrive at net cash provided by operating activities, it is necessary to report revenues and expenses on a cash basis. This is done by

A.

eliminating the effects of income statement transactions that did not result in a corresponding increase or decrease in cash.

B.

estimating the percentage of income statement transactions that were originally reported on a cash basis and projecting this amount to the entire array of income statement transactions.

C.

eliminating all transactions that have no current or future effect on cash, such as depreciation, from the net income computation.

D.

re-recording all income statement transactions that directly affect cash in a separate cash flow journal.

31) The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n)

A.

investing activity.

B.

deduction from net income.

C.

financing activity.

D.

addition to net income.

32) In determining net cash flow from operating activities, a decrease in accounts payable during a period

A.

requires an increase adjustment to cost of goods sold under the direct method.

B.

requires an addition adjustment to net income under the indirect method.

C.

requires a decrease adjustment to cost of goods sold under the direct method.

D.

means that income on an accrual basis is less than income on a cash basis.

33) In reporting extraordinary transactions on a statement of cash flows (indirect method), the

A.

net of tax amount of an extraordinary gain should be deducted from net income.

B.

net of tax amount of an extraordinary gain should be added to net income.

C.

gross amount of an extraordinary gain should be added to net income.

D.

gross amount of an extraordinary gain should be deducted from net income.

34) Which of the following transactions would require the use of the present value of an annuity due concept in order to calculate the present value of the asset obtained or liability owed at the date of incurrence?

A.

A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 7%.

B.

A capital lease is entered into with the initial lease payment due one month subse-quent to the signing of the lease agreement.

C.

A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 9%.

D.

A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement.

35) Which of the following tables would show the smallest value for an interest rate of 5% for six periods?

A.

Future value of an ordinary annuity of 1

B.

Present value of 1

C.

Present value of an ordinary annuity of 1

D.

Future value of 1

36) Which table would show the largest factor for an interest rate of 8% for five periods?

A.

Future value of an annuity due of 1

B.

Present value of an ordinary annuity of 1

C.

Present value of an annuity due of 1

D.

Future value of an ordinary annuity of 1

QNT 561 Final Exam

Business / Economics

7/3/12

Asked: 7/3/12 4:25 AM
Opening Offer: $25.00
Due Date: 7/3/12

1) Which of the following measures of central location is affected most by extreme values?

A. Mean

B. Median

C. Mode

D. Geometric mean

2) Which level of measurement is required for the median?

A. Nominal

B. Ordinal

C. Interval

D. Ratio

3) Which level of measurement is required for the mode?

A. Nominal

B. Ordinal

C. Interval

D. Ratio

4) In a set of observations, which measure of central tendency reports the value that occurs most often?

A. Mean

B. Median

C. Mode

D. Geometric mean

5) The weighted mean is a special case of what?

A. Mean

B. Median

C. Mode

D. Geometric mean

6) A sample of 5 companies were examined for changes in their relative market share. The results showed the following increases and decreases: –5, 10, 10, 5, –10.

A. 8

B. 2

C. -2

D. 6

7) The difference between the sample mean and the population mean is called the

A. margin of error

B. population standard deviation

C. standard error of the mean

D. sampling error

8) A local trade union consists of plumbers and electricians. Classified according to rank:

Apprentice Journeyman Master Total

Plumbers 25 20 30 75

Electricians 15 40 20 75

40 60 50

A member of the union is selected at random. Given that the person selected is an electrician, what is the probability that the person is a master?

A. .053

B. .133

C. .500

D. .267

9) Suppose a population consisted of 20 items. How many different samples of n = 3 are possible?

A. 6840

B. 1140

C. 20

D. 120

10) The mean and the variance are equal in

A. the normal distribution

B. the binomial distribution

C. the Poisson distribution

D. the hypergeometric distribution

11) In the 1936 Presidential Election Franklin D. Roosevelt defeated Alfred E. Landon in a landslide vote. A Landon victory had been predicted by the Literary Digest, a magazine that ran the oldest, largest, and most widely publicized of the polls at the time. The Digest's final prediction was based on 10 million sample ballots mailed to prospective voters, and 2.3 million were returned. The sample of voters was drawn from lists of automobile and telephone owners. Despite the massive size of this sample, it failed to predict a Roosevelt victory, being off the mark by 19 percentage points. The Digest was wrong because

A. the sample size, although large, was not large enough

B. the right research questions were not asked

C. respondents intentionally lied about their preferred candidate

D. the sample used was not representative of the actual population at the time

12) In a study on the effect of reinforcement on learning from a company online training program, two experimental treatments are planned: reinforcement given after every learning module, or reinforcement given after every two learning modules. Reinforcement is accomplished with the addition of more examples. Which one of the following control groups would serve best in this study?

A. A group that does not read any of the learning modules.

B. A group that reads the modules using hardcopy only.

C. A group that reads the learning modules, but does not receive reinforcement.

D. A group that reads the learning modules with random reinforcement.

13) The central limit theorem is important to market researchers because it states that as sample sizes increase, the distribution of the sample ________ collected from consumers on any topic of interest being researched approaches the normal distribution.

A. medians

B. means

C. standard deviations

D. variances

14) To find confidence intervals for the mean of a normal distribution, the t distribution is usually used in practical applications instead of the standard normal distribution because

A. the mean of the population is not known

B. the t distribution is more effective

C. the variance of the population is usually not known

D. the sample size is not known

15) We wish to develop a confidence interval for the population mean. The population follows the normal distribution, the standard deviation of the population is 3, and we have a sample of 10 observations. We decide to use the 90% level of confidence. The appropriate value of to represent the level of confidence is

A. z=1.65

B. z=1.96

C. z=1.833

D. z=1.812

16) Which of the following is a correct statement about a probability?

A. It may range from 0 to 1.

B. It may assume negative values.

C. It may be greater than 1.

D. It cannot be reported to more than 1 decimal place.

17) The special rule of addition is used to combine

A. independent events

B. mutually exclusive events

C. events that total more than one

D. events based on subjective probabilities

18) We use the general rule of multiplication to combine

A. events that are not independent

B. mutually exclusive events

C. events that total more than 1.00

D. events based on subjective probabilities

19) A discrete variable

A. is an example of a qualitative variable

B. can assume only whole number values

C. can assume only certain clearly separated values

D. cannot be negative

20) A nominal scale variable

A. usually involves ranking.

B. cannot assume negative values

C. has meaningful zero point

D. is usually based on counting

21) The ratio scale of measurement

A. usually the result of counting something

B. has meaningful zero point

C. may assume negative values

D. cannot have more than two categories

22) In the world of market research, the use of a questionnaire often plays a vital role in gaining useful business intelligence because

A. it is a structured technique to collect secondary data

B. it represents a way to ask anything you want from respondents and receive valid information

C. it does not need to be tested

D. it can be used in conjunction with other techniques such as field interviews and focus groups to maximize data input

23) A Type I error is

A. the correct decision

B. a value determined from the test statistic

C. rejecting the null hypothesis when it is true

D. accepting the null hypothesis when it is false

24) In a two-sample test of means for independent samples, we use the z distribution when

A. the population standard deviations are equal

B. both populations have at least 4,000 observations

C. both population standard deviations are known

D. nB and n(1-B) are both greater than 5

25) Which of the following is a requirement for a two-sample test of proportions?

A. The population standard deviations are equal.

B. Both populations are positively skewed.

C. Both samples are at least 30.

D. nB and n(1-B) are both greater than 5.

26) Bob is interested in opening a candy store in his town. He believes that his customers will spend an average of $75 or more in annual purchases (the alternative hypothesis). Bob hires a consultant to test this belief. The consultant tested this conjecture on a sample of 100 customers and found the p-value for the test statistic satisfied p > .25, then

A. you would not reject the null hypothesis

B. you would reject the null hypothesis for alpha= .01

C. you would reject the null hypothesis for alpha= .05

D. you would reject the null hypothesis for alpha= .10

27) A carefully designed business experiment has just been concluded. Unfortunately, use of alpha = .05 indicated no significant differences among four treatments. What useful information can you supply future investigators when you report on this experiment?

A. The means are different but their variances are the same.

B. The estimated variance (and its df) can be useful to future investigators.

C. Pair-wise tests can be conducted to show significant differences.

D. Significant differences can be reported by changing the type I error rate from .05 to .10, .20, or whatever is needed to declare significance.

28) A correlation matrix

A. shows all simple coefficients of correlation between variables

B. shows only correlations that are zero

C. shoes the correlations that are positive

D. shows only the correlations that are statistically significant

29) The multiple standard error of estimate is

A. the measure of variability to the prediction

B. negative when one of the net regression coefficients is zero

C. found by calculating SSR/SS total

D. the measure of accuracy of the prediction

30) A dummy variable or indicator variable

A. may assume only a value of 0 or 1

B. is another term for the dependent variable

C. is a quantitative variable

D. is a variable at a ratio or interval level of measurement

RES 351 Final Exam

Business / Economics

7/3/12

Asked: 7/3/12 11:45 AM
Opening Offer: $30.00
Due Date: 7/3/13

1) Northwest Airlines applied mathematical models to determine which customers in its database were currently responsible for most of its profitability and which customers were not currently profitable but had similar characteristics to the most profitable customers. Northwest Airlines utilized _____ to identify these customers.

A. Computer programming

B. Data warehousing

C. Customer relationships management

D. Data mining

E. Intervention

2) Minute Maid sees research as the fundamental first step in any business decision, and it created proprietary methods for conducting research. At what level of the hierarchy of business decision makers does Minute Maid operate?

A. Top tier

B. Middle tier

C. Base tier

D. Foundation tier

3) Which of the following questions is considered first when discussing a management dilemma?

A. How can management eliminate negative symptoms?

B. What does the manager need to know to choose the best alternative from the available sources of action?

C. What is the recommended course of action?

D. What symptoms cause management concern?

4) The goal of ethics in research is to _____.

A. To ensure that no one is harmed

B. To protect researchers from legal liability

C. identify what behavior is appropriate

D. ensure research sponsors fulfill their legal obligations

5) _____ occurs when the participants are told only part of the truth or when the truth is fully compromised.

A. coercion

B. deception

C. informed consent

D. debriefing

6) The process of stating the basic dilemma and then developing other questions by progressively breaking down the original question into more specific ones is called the _____.

A. Research question

B. Management-research-question hierarchy

C. Management dilemma

D. Management question

7) The fundamental weakness in the research process is _____.

A. incorrectly defining the research question

B. identifying a flawed sampling frame

C. misdefining the target population

D. failing to identify all relevant secondary information

8) Which type of management question asks what do we want to achieve?

A. Choice of purpose

B. Evaluation of solutions

C. Troubleshooting

D. Control

9) In the Southeast, the potato chip market share held by the Lays brand is 46%. This is an example of _____.

A. a research question

B. a descriptive hypothesis

C. a relational hypothesis

D. an explanatory hypothesis

10) An increase in hours of television viewing leads to increases in the sales of snack foods. This is an example of a _____.

A. research question

B. descriptive hypothesis

C. correlational hypothesis

D. causal hypothesis

11) To be categorized as a customer, an individual must have a history of shopping at the establishment at least twice before the start of the study with expenditures of more than $10. This is an example of _____.

A. Hypothetical construct

B. Conceptual scheme

C. Operational definition

D. Dictionary definition

E. Mediating variable

12) James is entering data on client gender. Because the values entered reflect male or female, this variable is _____.

A. discrete

B. dichotomous

C. continuous

D. ratio-scaled

13) Which variable in an experiment is the variable expected to be affected by the manipulation?

A. Dependent variable

B. Extraneous variable

C. Moderating variable

D. Independent variable

14) Qualitative research seeks to _____ theory while quantitative research _____ it.

A. examine, interprets

B. build, tests,

C. test, understands

D. apply, builds

E. justify, applies

15) Which of the following is true of quantitative research?

A. It uses a nonprobability sampling method

B. Results are generalizable

C. Data analysis is ongoing during the project

D. Sample sizes are generally small

E. It uses multiple data collection methods

16) The use of a control group in experimentation _____.

A. provides for the manipulation of the independent variable

B. serves as a comparison to assess the manipulation

C. minimizes the cost of experimentation

D. allows for discovery of the average effect of the independent variable in different situations

17) What is the first step in conducting an experiment?

A. Specify the level(s) of the treatment

B. Choose the experimental design

C. Control the experimental environment

D. Select relevant variables

18) Data originating from studies that are conducted by others and created for a purpose different from the purpose of the study for which the data are being reviewed are called _____ data

A. primary

B. secondary

C. quantitative

D. statistical

19) The goal of a formal study is to _____.

A. Discover future research tasks

B. Expand understanding of a topic

C. Test hypotheses

D. Provide insight

E. Develop hypotheses

20) A _____ scale is a scale that scores an object or property without making a direct comparison to another object or property.

A. ranking

B. rating

C. categorization

D. sorting

21) What type of data is produced by simple category scales?

A. Nominal

B. Ordinal

C. Interval

D. Ratio

22) _____ is the extent to which a measurement tool actually measures what we wish to measure.

A. Reliability

B. Validity

C. Practicality

D. Significance

23) The list of elements in a population from which the sample is drawn is known as the _____.

A. sampling frame

B. population extent

C. database

D. sampling base

24) The process of ensuring the accuracy of data and their conversion from raw form into classified forms appropriate for analysis is called _____.

A. coding

B. data entry

C. data preparation

D. data measurement

25) _____ involves assigning numbers or other symbols to answers so that the responses can be grouped into a limited number of categories

A. Editing

B. Data entry

C. Coding

D. Measurement

26) The standard error of the estimate is a type of measure of _____.

A. central tendency

B. accuracy

C. significance

D. standard deviation

27) _____ are summary descriptors of variables of interest in the population

A. Sample statistics

B. Population parameters

C. Systematic estimates

D. Standard errors

28) The measure of deviation from the mean such that cases stretch toward one tail or the other is called _____.

A. kurtosis

B. platykurtic

C. skewness

D. ku

29) Which of the research questions/hypotheses below is best answered using cross-tabulations?

A. What percentage of men and women prefer Brand A over Brand B?

B. What percentage of residents shop at the local grocery store?

C. Is brand loyalty related to brand image?

D. What happens to sales when prices drop?

30) If a difference is not caused only by random sampling fluctuations, it is said to have _____.

A. resistance

B. statistical significance

C. substantive significance

D. reasonable doubt

RES 342 Final Exam

Business / Economics

7/3/12

Asked: 7/3/12 12:18 PM
Opening Offer: $23.00
Due Date: 7/3/12

1) What are the critical z-values for a two-tailed hypothesis test if the significant level = 0.01?

A. ± 1.96

B. ± 2.33

C. ± 2.58

D. ± 1.65

2) In classical hypothesis testing, the test statistic is to the critical value what the __________.

A. 'p-value' is to alpha

B. critical value is to alpha

C. test statistic is to the 'p-value'

D. level of significance is to the test statistic

3) For a hypothesis test of a single population mean at 95% confidence level, a calculated Z score of 1.7 supports the conclusion that

A. the population mean is greater than the hypothesized value

B. the null hypothesis cannot be rejected

C. the sample is biased

D. the population mean is less than expected

4) If the paired differences are normal in a test of mean differences, then the distribution used for testing is the

A. normal distribution

B. chi-square

C. student distribution

D. F distribution

5) One hundred women were polled and 60 reported successfully communicating an automobile problem to an auto repairman. A sample of 150 men had 95 reporting the same success. The value of the test statistic for a test of the equality of proportions is

A. -0.5319

B. 0.7293

C. -0.419

D. 0.2702

6) Weekly sales of iPods® at 20 Best Buy® stores are compared before and after installing a new eye-catching display. To determine if the display is effective in increasing sales, what type of statistical test would you perform?

A. Comparison of means using independent samples using a t-test

B. Comparison of proportions using independent samples using a z-test

C. Comparison of means using a paired z-test

D. Comparison of means using a paired t-test

7) When is it appropriate to use the paired difference t-test?

A. Four samples are compared at once.

B. Any two samples are compared.

C. Two independent samples are compared.

D. Two dependent samples are compared.

8) A survey of hotels found that the average hotel room rate in New Orleans is $88.42 and the average room rate in Phoenix is $80.61. The survey sampled 50 hotels in each city. The standard deviations were $5.62 and $4.83, respectively. At alpha=.05, it can be concluded that there is a significant different in the rates?

A. 7.45

B. -1.96

C. 1.96

D. -7.45

9) If the paired differences are normal in a test of mean differences, the distribution used for testing is the

A. normal distribution

B. chi-square

C. student t distribution

D. F distribution

10) The accountant for Thomas's Furniture Store is concerned regarding the outstanding receivable owed the company. There has been a cash flow problem and it is believed that the slow collection of accounts receivable is partially the blame. The accountant believes that 40% of the present accounts are more than 4 months behind in making payments. To be able to make a decision regarding this belief, a random sample of 100 accounts was taken. It was found that 37 accounts were more than 4 months late. Did the sample data confirm the accountant's belief? Use the .05 significant level for the statistical test.

A. There is not enough evidence to confirm or deny the belief.

B. The accountant's belief is not confirmed.

C. The accountant's belief is confirmed.

D. The accountant needed to take a larger sample.

11) New college business graduates are finding it difficult to get a job. A business journal has reported that only one in five graduates is able to find a job within 6 months of their graduation. A report by University of Phoenix indicated that out of a survey of 300 recent business graduates, 75 had jobs. You are a business major at University of Phoenix and have a concern about getting a job. Based on this data, will a graduate of University of Phoenix have a better chance of getting a job in the first 6 months after graduation? Use the .05 significant level for the test.

A. No, there is not a significant difference.

B. It cannot be predicted based on this data.

C. Yes, there is a significant difference.

D. The business journal information is incorrect.

12) Analysis of variance (ANOVA) is used to

A. compare nominal data

B. compute t- test

C. compare population proportion

D. simultaneously compare several population means

13) Mr. Thomas owns three different restaurants in Cincinnati, Ohio. He is concerned about the profitability of the restaurants. There are monthly differences between the restaurants and he wants to determine if the differences in profit are significant. Mr. Thomas wants to do a statistical test to see if he should be concerned. The best test to address this problem would be

A. a paired t- test

B. two different t tests

C. an ANOVA test

D. a two sample test

14) Sound engineers studied factors that might affect the output, in decibels, of a rock concert's speaker system. The desired level of significance was a = .05. The results of their ANOVA tests are shown:

Source of Variation SS df MS F P-value

Amplifier 99.02344 99.02344 0.005718

Position 93.98698 31.32899 3.215807 0.051003

Interaction 10.15365 3 3.384549 0.347412 0.791505

Error 155.875 16 9.742188

Total 359.0391 23

The interaction between the Position and Amplifier treatments was

A. very significant

B. slightly significant

C. insignificant

D. highly correlated

15) Totto, an automobile manufacturer, has designed a radically new engine and wants to recommend the grade of gasoline that will have the best fuel economy. The four grades are regular, below regular, premium, and super premium. The test car made three trial runs on the test track using each of the grades and the miles per gallon were recorded. At the 0.05 level, what is the critical value of F used to test the hypothesis that the miles per gallon for each fuel are the same?

A. 1.96

B. 4.07

C. 2.33

D. 12.00

16) If an ANOVA test is conducted and the null hypothesis is rejected, what does this indicate?

A. Too many degrees of freedom

B. A difference between at least one pair of population means

C. No difference between the population means

D. The variances are the same

17) Nonparametric statistics are used when

A. you have qualitative data, with your variables being measured at the nominal or interval level

B. you have qualitative data, with your variables being measured at the ordinal or ratio level

C. you have qualitative data, with your variables being measured at the nominal or ordinal level

D. you have qualitative data, with your variables being measured at the ordinal or interval level

18) The nonparametric test most commonly used for testing the statistical independence between two variables is

A. the Kruskal- Wallis test

B. the Chi- Square test

C. the Mann Whitney test

D. the Sign test

19) What nonparametric test is used when the assumptions for the parametric ANOVA cannot be met? Its purpose is to test whether three or more populations are equal. The data must be at least ordinal scaled.

A. Students' t

B. Kruskal- Wallis

C. Mann-Whitney

D. ANOVA

20) Rachael Smith is the personnel manager at Johnson and Johnston, an accounting firm. She is concerned about absenteeism, which seems to be an increasing problem, especially after days off work. She decided to sample the records to determine if absenteeism was distributed evenly throughout the 6-day work week. The null hypothesis to be tested was: Absenteeism is distributed evenly throughout the week. The sample results were:

Day of Week Number Absent

Monday 12

Tuesday 9

Wednesday 11

Thursday 10

Friday 9

Saturday 9

What is the critical value of chi-square with a significant level of = 0.05?

A. 11.070

B. 12.592

C. 13.388

D. 15.033

21) A public opinion poll surveyed a simple random sample of voters. Respondents were classified by gender and by voting preference—Republican, Democrat, or Independent. The results follow.

Voting Preferences Republican Democrat Independent Row total

Male 200 150 50 400

Female 250 300 50 600

Column total 450 450 100 1000

If you conduct a chi-square test of independence, what is the expected frequency count of male Independents?

A. 50

B. 60

C. 40

D. 30

22) What parametric test is equivalent to the nonparametric Spearman's rank test?

A. T-test of correlation coefficient

B. T-test of two sample means

C. T-test of one sample mean.

D. T-test of two sample proportions

23) What is the variable used to predict another variable called?

A. Independent variable

B. Dependent variable

C. Moderating variable

D. Intervening variable

24) Michelle used a sample of 50 U.S. cities to estimate the relationship between crime, or annual property crimes per 100,000 persons, and income, or median income per capita. Her estimated regression equation was crime = 428 - .01 income. Assuming her model is statistically significant, if income decreases by $1,000, we would predict that crime will

A. decrease by 1

B. increase by 10

C. decrease by 10

D. increase by 100

25) In the least squares equation, Y' = 12 + 25X the value of 25 indicates

A. the y- intercept

B. for each unit increase in 'x', y' increases by 25

C. for each unit increase in 'y', 'x' increases by 25

D. the residual of 'x' factor

26) A test is conducted in eight cities to see if giving away free transit system maps will increase bus ridership. In a regression analysis, the dependent variable is the increase in bus ridership in thousands of persons from the start of the test until its conclusion. The independent variables are X1 = the number in thousands of free maps distributed and X2 = a binary equal to 1, if the city has free downtown parking and 0 otherwise. The estimated regression equation is Y = 1.32+.0345X1-1.45X2. If the Y value for city 3 is 7.3, X1 = 140, and X2 = 0 the residual for city 3 in thousands is:

A. 6.34

B. 1.15

C. .57

D. 2.01

27) The following linear trend equation was developed for the annual sales of the Tractor Manufacturing Company. Y' = 355 + 50t in thousands of dollars. How much are sales increasing by?

A. $50,000 per year

B. $5,00 per month

C. $500,000 per year

D. $6,000 per year

28) The time series component that reflects variability over short, repetitive time periods that last less than one year is called

A. long-term trend

B. cyclical variation

C. seasonal variation

D. irregular variation

29) A research company has been hired by a realty company to do an analysis of heating cost of homes in the region. The realty company wanted to be able to predict the heating cost of a typical single-family home. The realty company was constantly being asked questions regarding heating costs by potential home buyers. It was believed that these variables would impact heating costs (Y'): mean daily outdoor temperature (X1), the number of inches of insulation (X2), and the age in years of the furnace (X3). The multiple regression analysis produced the following regression equation: Y' = 427.2 – 4.58X1 – 14.83X2 + 6.10X3. Which statement is correct based on this analysis?

A. The age of the furnace has an indirect relationship with heating costs.

B. There is an inverse relationship between outdoor temperature and heating costs.

C. There is no real clear relationship between these variables.

D. There exists a direct relationship between inches of insulation and heating costs.

30) If we fit a linear trend to data that are growing exponentially,

A. the fitted trend will be too high at the end

B. the forecasts, if extrapolated, will be too low

C. the forecasts, if extrapolated, will be too high

D. the fitted trend will be too low in the middle

c cdvdd

Business / Economics

7/4/12

Asked: 7/4/12 5:50 AM
Opening Offer: $2.00
Due Date: 7/4/12

1) An economist who is studying the relationship between the money supply, interest rates, and the rate of inflation is engaged in

A. microeconomic research

B. macroeconomic research

C. theoretical research, because there is no data on these variables

D. empirical research, because there is no economic theory related to these variables

2) A basic difference between microeconomics and macroeconomics is that microeconomics

A. focuses on the choices of individual consumers, while macroeconomics considers the behavior of large businesses

B. focuses on financial reporting by individuals, while macroeconomics focuses on financial reporting by large firms

C. examines the choices made by individual participants in an economy, while macroeconomics considers the economy's overall performance

D. focuses on national markets, while macroeconomics concentrates on international markets

3) The distinction between supply and the quantity supplied is best made by saying that

A. the quantity supplied is represented graphically by a curve and supply as a point on that curve associated with a particular price

B. supply is represented graphically by a curve and the quantity supplied as a point on that curve associated with a particular price

C. the quantity supplied is in direct relation with prices, whereas supply is in inverse relation

D. the quantity supplied is in inverse relation with prices, whereas supply is in direct relation

4) After several years of slow economic growth, world demand for petroleum began to rise rapidly in the 1990s. Much of the increase in demand was met by additional supplies from sources outside the Organization of Petroleum Exporting Countries (OPEC). OPEC, during this time, was unable to restrain output among members in its effort to lift oil prices. What best describes these events?

A. The rise in demand shifted the demand for oil to the right. OPEC actions shifted the demand for oil back to the left.

B. The rise in demand shifted the demand for oil to the right. As price rose, the supply of oil also rose.

C. The rise in demand shifted the demand for oil to the right. As price rose, the quantity of oil supplied rose.

D. The rise in demand reflects a movement down along the demand curve as supply shifted to the right when suppliers produced more oil.

5) Price elasticity of demand is the:

A. change in the quantity of a good demanded divided by the change in the price of that good

B. change in the price of a good divided by the change in the quantity of that good demanded

C. percentage change in price of that good divided by the percentage change in the quantity of that good demanded

D. percentage change in quantity demanded of a good divided by the percentage change in the price of that good

6) If average movie ticket prices rise by about 5 percent and attendance falls by about 2 percent, other things being equal, the elasticity of demand for movie tickets is about:

A. 0.0

B. 0.4

C. 0.6

D. 2.5

7) When labor is the variable input, the average product equals the

A. marginal product divided by the number of workers

B. marginal product multiplied by the number of workers

C. number of workers divided by the quantity of output

D. quantity of output divided by the number of workers

8) The increase in output obtained by hiring an additional worker is known as

A. the average product

B. the marginal product

C. the total product

D. value added

9) Which of the following is the best example of a long-run decision?

A. An automobile manufacturing company is considering whether or not to invest in robotic equipment to develop a more cost-effective production technique.

B. An automobile manufacturing company is considering whether or not to expand its existing workforce, while keeping the same factory and equipment.

C. A business consulting firm is considering whether or not to hire interns to assist with research and data processing.

D. A business consulting firm is considering whether or not to add new computers while maintaining the same number of employees.

10) Other things being equal, when average productivity falls,

A. average fixed cost must rise

B. marginal cost must rise

C. average total cost must rise

D. average variable cost must rise

11) According to economist Colin Camerer of the California Institute of Technology, many New York taxi drivers decide when to finish work by setting an income goal for themselves. If this is true, then on busy days when the effective hourly wage is higher, taxi drivers will

A. work the same number of hours as they will on slower days

B. work fewer hours than they will on slower days

C. work more hours than they will on slower days

D. not work any hours

12) A firm's demand for labor is derived from the

A. opportunity costs associated with labor and leisure

B. desires and needs of the entrepreneur

C. cost of labor inputs

D. demand for its output

13) Owen runs a delivery business and currently employs three drivers. He owns three vans that employees use to make deliveries, but he is considering hiring a fourth driver. If he hires a fourth driver, he can schedule breaks and lunch hours so all three vans are in constant use, allowing him to increase deliveries per day from 60 to 75. This will cost an additional $75 per day to hire the fourth driver. The marginal cost per delivery of increasing output beyond 60 deliveries per day

A. is $0 because Owen does not have to purchase another van

B. is $5

C. is $75

D. cannot be calculated without knowing Owen's total fixed costs

14) Expected economic profit per unit is equal to

A. expected price

B. expected average total cost

C. the difference between expected average price and expected average total cost

D. the difference between expected total revenue and expected total cost

15) If a firm in a perfectly competitive market experiences a technological breakthrough,

A. other firms would find out about it eventually

B. other firms would find out about it immediately

C. other firms would not find out about it

D. some firms would find out about it, but others would not

16) A significant difference between monopoly and perfect competition is that

A. free entry and exit is possible in a monopolized industry, but impossible in a competitive industry

B. competitive firms control market supply, but monopolies do not

C. the monopolist's demand curve is the industry demand curve, while the competitive firm's demand curve is perfectly elastic

D. profits are driven to zero in a monopolized industry, but may be positive in a competitive industry.

17) A monopoly firm is different from a competitive firm in that

A. there are many substitutes for a monopolist's product while there are no substitutes for a competitive firm's product

B. a monopolist's demand curve is perfectly inelastic while a competitive firm's demand curve is perfectly elastic

C. a monopolist can influence market price while a competitive firm cannot

D. a competitive firm has a U-shaped average cost curve while a monopolist does not

18) The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a

A. horizontal demand curve and price equals marginal cost in equilibrium

B. horizontal demand curve and price exceeds marginal cost in equilibrium

C. downward-sloping demand curve and price equals marginal cost in equilibrium

D. downward-sloping demand curve and price exceeds marginal cost in equilibrium

19) As long as marginal cost is below marginal revenue, a perfectly competitive firm should

A. increase production

B. hold production constant

C. decrease production

D. reconsider past production decisions

20) Because a monopolistic competitor has some monopoly power, advertising to increase that monopoly power makes sense as long as the marginal

A. benefit of advertising is positive

B. cost of advertising is positive

C. benefit of advertising exceeds the marginal cost of advertising

D. cost of advertising exceeds the marginal benefit of advertising

21) In the Flint Hills area of Kansas, proposals to build wind turbines to generate electricity have pitted environmentalist against environmentalist. Members of the Kansas Sierra Club support the turbines as a way to reduce fossil fuel usage, while local chapters of the Nature Conservancy say they will befoul the landscape. The Sierra Club argues that wind turbines

A. are a source of negative externalities

B. reduce negative externalities elsewhere in the economy

C. create a free-rider problem

D. are a way of solving a free-rider problem

22) When negative externalities are present, market failure often occurs because

A the marginal external cost resulting from the activity is not reflected in the market price

B. the marginal external cost resulting from the activity is reflected in the market price

C. the existence of imports from foreign countries takes jobs and income away from U.S. citizen

D. consumers will consume the good at a level where their individual marginal benefits exceed the marginal costs borne by the firm producing the good

23) A merger between a textile mill and a clothing manufacturing company would be considered a

A. horizontal merger

B. vertical merger

C. conglomerate merger

D. diagonal merger

24) A merger between a baby food company and a life insurance company would be considered a

A. horizontal merger

B. vertical merger

C. conglomerate merger

D. diagonal merger

25) From the point of view of consumer and producer surplus, what problem may be created when a country subsidizes the cost of energy to consumers to help alleviate the burden of higher energy costs?

A. It hurts the poor and benefits the rich.

B. It leads to less fuel being used than the amount that maximizes consumer surplus.

C. It encourages the consumption of too much fuel at the expense of other goods.

D. It has no effect; consumers gain a surplus, but taxpayers lose the same amount because they must finance the subsidy.

26) Suppose people freely choose to spend 40 percent of their income on health care, but the government decides to tax 40 percent of a person's income to provide the same level of coverage as before. What can be said about deadweight loss in each case?

A. Taxing income results in deadweight loss, while purchasing health care on one's own does not result in deadweight loss.

B. Taxing income results in less deadweight loss, because government knows better what health care coverage is good for society.

C. There is no difference because the goods are purchased in the market in either case.

D. There is no difference because the total spending remains the same and the health care purchased remains the same.

27) The U.S. textile industry is relatively small because the US imports most of its clothing. A clear result of the importation of clothing is

A. there is less variety available than there would be without imports

B. the quality of clothing is lower than it would be without imports

C. the price of clothing is higher than it would be without imports

D. the price of clothing is lower than it would be without imports

28) Countries can expect to gain from international trade as long as they

A. keep production diversified

B. specialize according to their comparative advantage

C. produce only those goods for which they have a relatively high opportunity cost

D. use trade restrictions to reduce competition for domestic producers

29) Which of the following is an example of the law of one price?

A. Exchange rates tend to have equivalent values. For example, one Italian lire equals one U.S. dollar.

B. Because people have essentially the same basic needs wherever they live, they tend to buy the same bundle of goods.

C. Because wages are so much lower in China, eventually all U.S. jobs will be outsourced to China, leaving the US to import all goods at one price.

D. Because their countries have similar institutions, the price paid for a computer in Germany and the United States are about the same when converted into the same currency.

30) The fact that U.S. managers' salaries are substantially greater than those of comparable managers in Japan may be related to

A. an increase in the demand for CEOs

B. an increase in the supply of CEOs

C. the comparatively greater competitive markets in Japan

D. the greater number of public goods provided in the United States

RES-341- Final Exam

Business / Economics

7/4/12

Asked: 7/4/12 9:18 AM
Opening Offer: $35.00
Due Date: 7/4/12

1) A recent study of breast cancer revealed that 13% of the women in the sample used antibiotics more than 500 days in their lifetime. Further, 79% of these "heavy antibiotics users" developed breast cancer. According to the American Cancer Society, one in twelve women will develop breast cancer at some time in her life. Of the numbers mentioned, which are parameters?

A. 79% and 500 days
B. 13% and 79%
C. 79% and one in twelve
D. 13% and one in twelve

2) A sufficiently large coverage error will result in which of the following?

A. Statistics about the actual population rather than the target population
B. Non-response bias
C. Inability to perform inferential statistics
D. Probability sampling

3) When every member of a population has the chance of being selected based on the probability, or frequency, of its representation in that population, you are using which type of sampling?

A. Quota sample
B. Census sample
C. Convenience sample
D. Random sample

4) Which of the following statements is NOT true?

A. Estimating parameters is an important aspect of descriptive statistics.
B. Scientific progress consists of continual refinement of theories through hypothesis testing.
C. A statistical test may be significant yet have no practical importance.
D. Statistics is the science of collecting, organizing, analyzing, interpreting, and presenting data.

5) Which of the following is an example of statistical inference?

A. Calculating the mean age of patients discharged from hospitals in New York State in 1997.
B. Counting the number of patients who file malpractice suits after being discharged from hospitals in New York State.
C. Calculating the amount of fly spray needed for your orchard next season.
D. Calculating the mean number of fruit trees damaged by Mediterranean fruit flies in California last year.

6) Which one of the following is NOT part of the 5 step hypothesis testing procedure?

A. Determine the level of significance desired.
B. State the null and the alternate hypotheses.
C. Determine the cost of the research.
D. Choose the appropriate statistical test.

7) The manipulation of the independent variable is known as the ________.

A. randomization
B. treatment
C. experimental test
D. validity

8) Name the item that is NOT a recognized survey guideline.

A. ability to find friendly survey respondents
B. pilot or beta test
C. quality control

9) Which of the following is NOT a basic step in conducting a survey?

A. Secure financing for the survey
B. Create a research design
C. Develop a budget
D. State the goals

10) Which of the following is NOT a potential source of survey error?

A. Measurement error
B. Standard error or Systemic error
C. Interviewer error
D. Coverage error

11) A statistical researcher must be concerned about which of the following ethical issues?

A. Protection of privacy
B. Conceal financial support
C. Inhumane treatment of animals
D. Monetary compensation

12) Which of the following would NOT be considered and potential pitfall for a researcher?

A. Unconscious bias on the part of the researcher
B. Attaching a low level of importance to outliers in a large population
C. Assuming causality based on observations
D. Making conclusions about a large population from a small sample size

13) Which of the following is NOT an ethical concern for the statistical researcher?

A. Informed consent
B. Use of sound methodology
C. Monetary compensation or Conceal financial support or Inhumane treatment of animals
D. Protection of confidentiality

14) A study of the scores on an in plant course in management principles and the years of service of the employees enrolled in the course yielded the following statistics: Test Scores: mean=100 variance = 225 Years of Service: mean=5 variance = 81 Of test scores and years of service, which measure has the greater dispersion?

A. The short-run effects of those changes are always more beneficial to society than are the long-run effects.
B. Years of service
C. It is impossible to tell.
D. Test scores

15) The average score for a class of 30 students was 75. The 20 male students in the class averaged 70. The 10 female students in the class averaged

A. 75
B. 80
C. 70
D. 85

16) Textbook Price. Number of Textbooks: $25 to $35 2 35 to 45 16 45 to 55 5 55 to 65 7 65 to 75 20. Estimate the standard deviation of the price of a textbook.

A. 196.78
B. 33.85
C. 729.00
D. 14.03

17) Which measurement uses absolute values?

A. harmonic scale
B. ordinal scale
C. interval scale
D. ratio correct

18) Which of these measurement scales has a rank order associated with its use?

A. Nominal
B. Ordinal
C. Likert
D. Ratio

19) Identify the scale which has no meaningful zero.

A. interval
B. ordinal
C. ratio
D. nominal

20) Which of the following cannot generate a Poisson distribution?

A. The number of defects in a new automobile
B. The number of customers arriving at an ATM in a minute
C. The number of goals in the World Cup soccer game
D. The number of people at a movie theatre on Friday evening

21) Which of the following is a characteristic of every binomial distribution?

A. Each outcome is mutually exclusive.
B. The outcome of a trial depends on the number of trials.
C. The probability of success increases from trial to trial.
D. Each outcome is dependent on the previous outcome.

22)The local police department must write, on average, 5 tickets a day to keep department revenues at budgeted levels. Suppose the number of tickets written per day follows a Poisson distribution with a mean of 5.5 tickets per day. Interpret the value of the mean.

A. If we sampled all days, the arithmetic average or expected number of tickets written would be 5.5 tickets per day.
B. The mean cannot be interpreted.
C. Half of the days have less than 5.5 tickets written and half of the days have more than 5.5 tickets written
D. The number of tickets written most often is 5.5 tickets per day

23) Which of these parameters associated with a binomial experiment will produce a probability distribution with the smallest standard deviation; given n is the same for each situation?

A. p = 0.3
B. (1- p) = 0.1.
C. p = 0.4
D. p = 0.5

24) Trudy Jones recently completed her certification examination and learned that her z-score was –2.5. The examining board also informed her that a failure to pass would be all scores that were 1 or more standard deviations below the mean and that those with scores higher than 2 standard deviations above the mean would receive a special commendation award. Trudy can, therefore, conclude that she

A. passed the exam and will receive a special commendation award
B. passed the exam, but no commendation award is forthcoming
C. needs more data to determine if she passed the exam
D. failed the exam

25) The Big Red Arcade and Pizza Palace caters to young teens and sells tokens to play arcade games for 25¢ each and slices of pizza for 50¢ each. The distribution of sales of pizza slices per customer and sales of arcade tokens per customer is below. # Slices of Pizza 0 1 2 3 4 5 Probability 0.05 0.10 0.20 0.30 0.15 0.20 # Arcade Games 0 1 2 3 4 5 Probability 0.01 0.04 0.15 0.20 0.25 0.35 What is the probability that revenues from pizza slice sales will be greater than $1.00 per customer?

A. .85
B. .43
C. .65
D. .95

26) For a sample size of 1, the sampling distribution of the mean will be normally distributed

A. only if the population values are larger than 30.
B. only if the population is normally distributed.
C. only if the shape of the population is positively skewed.
D. regardless of the shape of the population.

27) A random variable follows the student's t distribution. The probability that it will be positive is

A. less than 0.50.
B. 0
C. 0.05
D. 1

28) The use of the student's t distribution requires which of the following assumptions?

A. The population is normal
B. The sample is drawn from a positively skewed distribution
C. The population variance is known
D. The sample size is greater than 30

29) Ceteris paribus, which is narrower, a 95% confidence interval with n=100 or a 99% confidence interval with n=30?

A. They are the same width.
B. Need the margin of error to tell
C. The 99% confidence interval
D. The 95% confidence interval

30) A study of 200 insomniacs paid for by the Serta Mattress Company found that the average insomniac counted 350 sheep before falling asleep, with a standard deviation of 120. An insomniac is a person who has difficulty falling asleep. Some useful numbers might be: =NORMSINV(0.89) 1.2265 =NORMSINV(0.945) 1.5982 =TINV(0.89,199) 0.1385 =TINV(0.11,199) 1.6053 =TINV(0.055,199) 1.9302 Out of the 200 insomniacs, 98 reported regularly watching The Late Show with David Letterman before they began to count sheep. Calculate the margin of error for a 78% confidence interval of the true proportion of insomniacs who regularly watch David Letterman before counting sheep.

A. 0.136
B. 0.164
C. 0.056
D. 0.043

31) Summary statistics computed from two independent samples are as follows: n1 = 50, x1 = 175, s1 = 18.5, n2 = 42, x2 = 158, and s2 = 32.4. Construct a 95% confidence interval estimate for the difference between the means of two normally distributed populations, where the unknown population variances are assumed to not be equal. The upper confidence limit is

A. 24.911.
B. 5.788.
C. 28.212.
D. 19.123.

32) In statistical process control, a Type I error occurs if we decide that the process is

A. under control when it is under control.
B. out of control when it is out of control.
C. out of control when it is under control.
D. under control when it is out of control.

33) To tell if the standard deviation of a process has changed, the control charts used are

A. R and S charts.
B. x bar and p charts.
C. p and R charts.
D. S and x bar charts.

34) When the results of a process are either defective or acceptable, the charts used for SPC are called

A. control charts for attributes.
B. control charts for variables.
C. control charts for in control process.
D. control charts for out of control process.

35) A poll is planned to determine what proportion of all students favor an increase in fees to support a new track and field stadium. A questionnaire will be published and the first 1000 completed questionnaires will be analyzed. Which of the following errors will be associated with the sample?

A. Sampling errors and errors due to selection bias
B. Sampling errors only
C. Errors due to interviewer bias and selection bias
D. Only non-sampling errors

36) Which of the following is NOT a characteristic of an ideal statistician?

A. Technically current (e.g. software)
B. Can deal with imperfect information
C. Communicates well (both written and oral)
D. Adapts answers to client desire

37) A __________ can be defined as a logically conjectured relationship between two or more variables expressed in the form of a testable statement.

A. research design
B. theoretical framework
C. research problem
D. hypothesis

38) Which of these is NOT an acceptable type of survey question?

A. leading question
B. ranking questions
C. pictograms
D. Likert scale

39) A supermarket has determined that daily demand for eggs has a bell-shaped distribution, with a mean of 55 cartons and a standard deviation of six cartons. If the supermarket begins each morning with a stock of 61 cartons of eggs, approximately what percentage of days will there be a surplus of eggs?

A. ˜84%
B. ˜16%
C. ˜68%
D. ˜18

40) A child was born into the Doe family each year for five consecutive years. What is the variance of the ages of the Doe children?

A. 2.5
B. 1.4
C. 2.0
D. 4.6

41) The Information Commons in the main library has 150 personal computers. The probability that any one of them will require repair on a given day is 0.02. To find the probability that exactly 25 of the computers will require repair, one would use what type of probability distribution?

A. Hypergeometric distribution
B. Normal distribution
C. Poisson distribution
D. Binomial distributio

42) What is the total expected per-customer revenue for pizza slice sales and arcade token sales?

A. $1.34
B. $2.42
C. $2.60
D. $6.69

43) A popular restaurant recently asked 300 customers how may times per month they ate steak for dinner. The results were used to build the following probability distribution: x01234 or more P(x)0.050.100.200.300.15
The probability that a customer eats steak for dinner less than 3 times a month is

A. .15
B. .30
C. .50
D. .45

44) The expected value of the sampling distribution of the sample mean equals the population mean

A. for all populations.
B. when the population size N > 30.
C. when the population is symmetric.
D. when the population is normally distributed

45) A random variable follows the student's t distribution. The probability that it will be positive is

A. 0
B. 0.05
C. less than 0.50.
D. 1

46) A random sample of 25 observations is selected from a normally distributed population. The sample variance is 10. In the 95% confidence interval for the population variance, the upper limit will be

A. 19.353
B. 6.097
C. 17.331
D. 17.110

47) When no point lies outside the control limits of a chart, we conclude that variation in the process is

A. due to common cause and there is not enough evidence to infer that the process is out of control.
B. due to special causes and there is enough evidence to infer that the process is under control.
C. due to common cause and there is enough evidence to infer that the process is out of control.
D. due to special causes and there is not enough evidence to infer that the process is out of control.

48) When a change has occurred in the mean of the process distribution, the result is referred to as

A. a trend.
B. instability.
C. a cycle.
D. a level shift.

acc 291

Business / Economics

7/6/12

Asked: 7/6/12 9:46 AM
Opening Offer: $20.00
Due Date: 7/6/12

1) Hahn Company uses the percentage of sales method for recording bad debts expense. For the year, cash sales are $300,000 and credit sales are $1,200,000. Management estimates that 1% is the sales percentage to use. What adjusting entry will Hahn Company make to record the bad debts expense?

A.
Bad Debts Expense ................ ................ $15,000
Allowances for Doubtful Accounts ................ ................ $15,000
B.
Bad Debts Expense ................ ................ $12,000
Allowances for Doubtful Accounts ................ ................ $12,000
C.
Bad Debts Expense ................ ................ $12,000
Accounts Receivable ................ ................ ................. $12,000
D.
Bad Debts Expense ................ ................ $15,000
Accounts Receivable ................ ................ ................. $15,000

2) Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are $15,000. If the balance of the Allowance for Doubtful Accounts is $3,000 credit before adjustment, what is the amount of bad debts expense for that period?

A. $15,000
B. $12,000
C. $18,000
D. $8,000

3) Intangible assets

A. should be reported under the heading Property, Plant, and Equipment
B. should be reported as a separate classification on the balance sheet
C. should be reported as Current Assets on the balance sheet
D. are not reported on the balance sheet because they lack physical substance

4) Intangible assets are the rights and privileges that result from ownership of long-lived assets that

A. must be generated internally
B. are depletable natural resources
C. do not have physical substance
D. have been exchanged at a gain

5) The book value of an asset is equal to the

A. asset's market value less its historic cost
B. blue book value relied on by secondary markets
C. replacement cost of the asset
D. asset's cost less accumulated depreciation

6) Gains on an exchange of plant assets that has commercial substance are

A. deducted from the cost of the new asset acquired
B. deferred
C. not possible
D. recognized immediately

7) Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as

A. capital expenditures
B. expense expenditures
C. improvements
D. revenue expenditures

8) Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as

A. capital expenditures
B. expense expenditures
C. ordinary repairs
D. revenue expenditures

9) When an interest-bearing note matures, the balance in the Notes Payable account is

A. less than the total amount repaid by the borrower
B. the difference between the maturity value of the note and the face value of the note
C. equal to the total amount repaid by the owner
D. greater than the total amount repaid by the owner

10) The interest charged on a $200,000 note payable, at a rate of 6%, on a 2-month note would be

A. $12,000
B. $6,000
C. $3,000
D. $2,000

11) If a corporation issued $3,000,000 in bonds which pay 10% annual interest, what is the annual net cash cost of this borrowing if the income tax rate is 30%?

A. $3,000,000
B. $90,000
C. $300,000
D. $210,000

12) Hilton Company issued a four-year interest-bearing note payable for $300,000 on January 1, 2011. Each January the company is required to pay $75,000 on the note. How will this note be reported on the December 31, 2012 balance sheet?

A. Long-term debt, $300,000.
B. Long-term debt, $225,000.
C. Long-term debt, $150,000; Long-term debt due within one year, $75,000.
D. Long-term debt, $225,000; Long-term debt due within one year, $75,000.

13) A corporation issued $600,000, 10%, 5-year bonds on January 1, 2011 for 648,666, which reflects an effective-interest rate of 8%. Interest is paid semiannually on January 1 and July 1. If the corporation uses the effective-interest method of amortization of bond premium, the amount of bond interest expense to be recognized on July 1, 2011, is

A. $30,000
B. $24,000
C. $32,434
D. $25,946

14) When the effective-interest method of bond discount amortization is used

A. the applicable interest rate used to compute interest expense is the prevailing market interest rate on the date of each interest payment date
B. the carrying value of the bonds will decrease each period
C. interest expense will not be a constant dollar amount over the life of the bond
D. interest paid to bondholders will be a function of the effective-interest rate on the date the bonds were issued

15) If a corporation has only one class of stock, it is referred to as

A. classless stock
B. preferred stock
C. solitary stock
D. common stock

16) Capital stock to which the charter has assigned a value per share is called

A. par value stock
B. no-par value stock
C. stated value stock
D. assigned value stock

17) ABC, Inc. has 1,000 shares of 5%, $100 par value, cumulative preferred stock and 50,000 shares of $1 par value common stock outstanding at December 31, 2011. What is the annual dividend on the preferred stock?

A. $50 per share
B. $5,000 in total
C. $500 in total
D. $.50 per share

18) Manner, Inc. has 5,000 shares of 5%, $100 par value, noncumulative preferred stock and 20,000 shares of $1 par value common stock outstanding at December 31, 2011. There were no dividends declared in 2010. The board of directors declares and pays a $45,000 dividend in 2011. What is the amount of dividends received by the common stockholders in 2011?

A. $0
B. $25,000
C. $45,000
D. $20,000

19) When the selling price of treasury stock is greater than its cost, the company credits the difference to

A. Gain on Sale of Treasury Stock
B. Paid-in Capital from Treasury Stock
C. Paid-in Capital in Excess of Par Value
D. Treasury Stock

20) The purchase of treasury stock

A. decreases common stock authorized
B. decreases common stock issued
C. decreases common stock outstanding
D. has no effect on common stock outstanding

21) Marsh Company has other operating expenses of $240,000. There has been an increase in prepaid expenses of $16,000 during the year, and accrued liabilities are $24,000 lower than in the prior period. Using the direct method of reporting cash flows from operating activities, what were Marsh's cash payments for operating expenses?

A. $228,000
B. $232,000
C. $200,000
D. $280,000

22) Where would the event purchased land for cash appear, if at all, on the indirect statement of cash flows?

A. Operating activities section
B. Investing activities section
C. Financing activities section
D. Does not represent a cash flow

23) In performing a vertical analysis, the base for cost of goods sold is

A. total selling expenses
B. net sales
C. total revenues
D. total expense

24) Blanco, Inc. has the following income statement (in millions):

BLANCO, INC.

Income Statement

For the Year Ended December 31, 2011

Net Sales .............................. $200

Cost of Goods Sold .............................. 120

Gross Profit .............................. 80

Operating Expenses .............................. 44

Net Income .............................. $ 36

Using vertical analysis, what percentage is assigned to Net Income?

100%
B. 82%
C. 18%
D. 25%

25) Dawson Company issued 500 shares of no-par common stock for $4,500. Which of the following journal entries would be made if the stock has a stated value of $2 per share?

A.
Cash ........................................................... $4,500
Common Stock 4,500

B.
Cash .................................... $4,500
Common Stock 1,000
Paid-In Capital in Excess of Par 3,500

C.
Cash ...................... $4,500
Common Stock 1,000
Paid-In Capital in Excess of Stated Value 3,500

D.
Common Stock ........................................................... $4,500
Cash 4,500

26) Andrews, Inc. paid $45,000 to buy back 9,000 shares of its $1 par value common stock. This stock was sold later at a selling price of $6 per share. The entry to record the sale includes a

A. credit to Paid-In Capital from Treasury Stock for $9,000
B. credit to Retained Earnings for $9,000
C. debit to Pain-In Capital from Treasury Stock for $45,000
D. debit to Retained Earnings for $45,000

27) Which of the following is a fundamental factor in having an effective, ethical corporate culture?

A. Efficient oversight by the company's Board of Directors
B. Workplace ethics
C. Code of conduct
D. Ethics management programs

28) Two individuals at a retail store work the same cash register. You evaluate this situation as

A. a violation of establishment of responsibility
B. a violation of segregation of duties
C. supporting the establishment of responsibility
D. supporting internal independent verification

29) The Sarbanes-Oxley Act imposed which new penalty for executives?

A. Fines
B. Suspension
C. Criminal prosecution for executives
D. Return of ill-gotten gains

30) The Sarbanes-Oxley Act requires that all publicly traded companies maintain a system of internal controls. Internal controls can be defined as a plan to

A.safeguard assets
B.monitor balance sheets
C.control liabilities
D.evaluate capital stock

ACC-400 -Final- Exam

Mathematics

7/6/12

Asked: 7/6/12 9:54 AM
Opening Offer: $20.00
Due Date: 7/6/12

1. The best definition of assets is the

a. cash owned by the company.b. collections of resources belonging to the company and the claims on these resources.c. Owners' investment in the business.d. resources belonging to a company have future benefit to the company.

2. Liabilities

a. are future economic benefits.

b. are debts and obligations.

c. possess service potential.

d. are things of value owned by a business.

3. Notes to the financial statements

a. are optional.b. help clarify information presented in the financial statements.c. are generally brief and few in number.d. need not be read in detail if an unqualified opinion accompanies the financial statements.

4. The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n)

account payable.b. account receivable.c. revenue.d. expense.

5. An income statement

a. summarizes the changes in retained earnings for a specific period of time.

b. reports the changes in assets, liabilities, and stockholders' equity over a period of time.

c. reports the assets, liabilities, and stockholders' equity at a specific date.

d. presents the revenues and expenses for a specific period of time.

6. Liabilities

a. are future economic benefits.

b. are debts and obligations.

c. possess service potential.

d. are things of value owned by a business.

7. Payments to stockholders are called

a. expenses.

b. liabilities.

c. dividends.

d. distributions.

8. The discontinued operations section of the income statement refers to

a. discontinuance of a product line.

b. the income or loss on products that have been completed and sold.

c. obsolete equipment and discontinued inventory items.

d. the disposal of a significant segment of a business.

Use the following information for questions 9-10.

The following amounts were taken from the financial statements of Alien Company:

2007 2006

Current liabilities $280,000 $220,000

Long-term liabilities 800,000 600,000

Interest Expense 100,000 50,000

Income tax expense 120,000 58,000

Net income 300,000 170,000

Net cash provided by operating activity 480,000 270,000

9. The times interest earned ratio for 2007 is

a. 3.0 times.

b. 4.8 times.

c. 4.0 times.

d. 5.2 times.

10. The cash debt coverage ratio for 2007 is

a. 50.5%.

b. 44.4%.

c. 31.6%.

d. 62.5%.

Part II – 60pts

Problems

11. Selected data taken from the 2006 financial statements of trading card company Bottoms Company, Inc. are as follows (in millions). 10pts

Net sales $295.9

Current liabilities, February 28, 2005 39.5

Current liabilities, February 28, 2006 47.5

Net cash provided by operating activities 23.0

Total liabilities, February 28, 2005 64.2

Total liabilities, February 28, 2006 71.2

Capital expenditures 2.6

Cash dividends 6.5

Instructions

Compute these ratios at February 28, 2006:

(a) Current cash debt coverage ratio

(b) Cash debt coverage ratio

(c) Free cash flow

Provide a brief interpretation of your results.

12. The comparative balance sheet of Stuart Company appears below: 20pt

STUART COMPANY

Comparative Balance Sheet

December 31,

_____________________________________________________________________________

Assets 2007 2006

Current assets ......................................................................................... $ 340 $280

Plant assets ............................................................................................. 675 520

Total assets ....................................................................................... $1,015 $800

Liabilities and stockholders' equity

Current liabilities .................................................................................... $ 180 $120

Long-term debt ....................................................................................... 250 160

Common stock ........................................................................................ 325 320

Retained earnings ................................................................................... 260 200

Total liabilities and stockholders' equity .......................................... $1,015 $800

Instructions

(a) Using horizontal analysis, show the percentage change for each balance sheet item using 2006 as a base year.

(b) Using vertical analysis, prepare a common size comparative balance sheet.

13. The Brawn Company had a $400 credit balance in Allowance for Doubtful Accounts at December 31, 2007, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following: 20pts

Estimated Percentage

Uncollectible

Current Accounts $140,000 1%

1–30 days past due 15,000 3%

31–60 days past due 12,000 6%

61–90 days past due 5,000 12%

Over 90 days past due 7,000 30%

Total Accounts Receivable $179,000

Instructions

a) Prepare the Estimated Uncollectible schedule for each percentage.

b) Prepare the adjusting entry on December 31, 2007, to recognize bad debts expense.

a)

b)

14. Shown below are data from recent reports of two publicly owned bakeries. Dollar amounts are stated in thousands. 10pts

HomeStyle Bakery

Sweet and Sassy's

Total Assets

$755,000

$3,127,150

Total Liabilities

327,925

2,105,000

Interest Expense

35,000

47,508

Operating Income

20,550

375,090

Instructions

a. Compute for each company (1) the debt ratio and (2) the interest coverage ratio. (Round the debt ratio to the nearest percent and the interest coverage ratio to two decimal places.)

b. In your opinion, which of these companies would a long-term creditor probably view as the safer investment? Explain.

a)

1) Debt Ratio:

HomeStyle Bakery:

= $327,925 / $755,000 = 43.43%

Sweetand Sassy's:

= $2,105,000 / $3,127,150 = 67.31%

2) Interest Coverage Ratio:

HomeStyle Bakery:

= $20,550 / $35,000 = 0.59

Sweetand Sassy's:

= $375,090 / $47,508 = 7.9

b)

I would feel safer investing in HomeStyle Bakery as it has a lower debt ratio, and although Sweetand Sassy has a higher interest coverage ratio, this is an indication that the firm can cover its interest obligations, but not its debt obligations. A high debt ratio can be dangerous as it exposes the company to the threat of bankruptcy if it cannot meet its obligations.

Part III – 20pts

15. Your friend, Mark, has opened a movie theater. Mark states that he does not have

time to develop and implement a system of internal controls. 10pts

Provide Mark with the objectives of a system of internal control.

Internal control is the whole set of procedures and controls taken by a firm to safeguard its assets and help achieve the corporate objectives.

The major objectives, of internal control, is:

to safeguard propertyensure that the firm is achieving its stated goals.ensure that staff are working coherently.safeguard business information.

b. Explain to Mark why he should develop a system of internal control.

As explained above, a system of internal control helps a firm achieve its objectives. If the system is not implemented then the theatre may not be successful.

Without the system of control all the employees would behave in a different manner that will be opposite to the company's objectives.

Similarly the system helps the theatre maintain all its assets and ensure that each is in a stable and adequate condition.

16. A large stock dividend and stock split can frequently have the same effect on the market price of a corporation's stock. Explain how stock dividends and stock splits affect the market price of a corporation's stock. 10pts

A stock dividend is the payment made to the shareholders of a firm while a stock split is the process of creating more shares by replacing current ones through a certain multiple.

Investors utilize the information, on dividends, to estimate the likely price of a share. Prior to the stock dividend the price is usually higher than before and once the dividend is declared the inventors may adjust their estimates based on the amount. If the amount is substantial then the price may be higher vice versa for lower dividends.

Similarly, a stock split creates more stock. The additional stock available according to the laws of demand and supply would affect the estimates made by the investors.

E10.13

On July 1, Pine Region Dairy leased equipment from Farm America for a period of three years. The lease calls for monthly payments of $2,500 payable in advance on the first day of each month, beginning July 1.

Prepare the journal entry needed to record this lease in the accounting records of Pine Region Dairy on July 1 under each of the following independent assumptions:

a. The lease represents a simple rental arrangement.

b. At the end of three years, title to this equipment will be transferred to Pine Region Dairy at no additional cost. The present value of the 36 monthly lease payments is $76,021, of which $2,500 is paid in cash on July 1. None of the initial $2,500 is allocated to interest expense.

c. Why is situation a, the operating lease, sometimes called off-balance-sheet financing?

d. Would it be acceptable for a company to account for a capital lease as an operating lease to report rent expense rather than a long-term liability?

E10.16

To answer the following questions use the annual report for Tootsie Roll Industries, Inc., in Appendix A at the end of the textbook:

a. Compute the company's current ratio and quick ratio for the most recent year reported. Do these ratios provide support that Tootsie Roll is able to repay its current liabilities as they come due? Explain.

b. Compute the company's debt ratio. Does Tootsie Roll appear to have excessive debt? Explain.

c. Examine the company's statement of cash flows. Does Tootsie Roll's cash flow from operating activities appear adequate to cover its current liabilities as they come due? Explain.

FIN 534 – Chapter 1

Business / Economics

7/6/12

Asked: 7/6/12 9:59 AM
Opening Offer: $5.00
Due Date: 7/6/12

FIN 534 – Chapter 1

1. Which of the following statements is CORRECT?

a. One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability.

b. It is generally easier to transfer one's ownership interest in a partnership than in a corporation.

c. One of the advantages of the corporate form of organization is that it avoids double taxation.

d. One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights, i.e., "one person, one vote."

e. Corporations of all types are subject to the corporate income tax.

2. Which of the following would be most likely to lead to higher interest rates on all debt securities in the economy?

a. Households start saving a larger percentage of their income.

b. The economy moves from a boom to a recession.

c. The level of inflation begins to decline.

d. Corporations step up their expansion plans and thus increase their demand for capital.

e. The Federal Reserve uses monetary policy in an attempt to stimulate the economy.

3. Which of the following statements is CORRECT?

a. If General Electric were to issue new stock this year it would be considered a secondary market transaction since the company already has stock outstanding.

b. Capital market transactions only include preferred stock and common stock transactions.

c. The distinguishing feature between spot markets versus futures markets transactions is the maturity of the investments. That is, spot market transactions involve securities that have maturities of less than one year, whereas futures markets transactions involve securities with maturities greater than one year.

d. Both Nasdaq "dealers" and NYSE "specialists" hold inventories of stocks.

e. An electronic communications network (ECN) is a physical location exchange.

4. Which of the following statements is CORRECT?

a. A good goal for a firm's management is maximization of expected EPS.

b. Most business in the U.S. is conducted by corporations, and corporations' popularity results primarily from their favorable tax treatment.

c. Because most stock ownership is concentrated in the hands of a relatively small segment of society, firms' actions to maximize their stock prices have little benefit to society.

d. Corporations and partnerships have an advantage over proprietorships because a sole proprietor is exposed to unlimited liability, but the liability of all investors in the other types of businesses is more limited.

e. The potential exists for agency conflicts between stockholders and managers.

5. Which of the following statements is NOT CORRECT?

a. When a corporation's shares are owned by a few individuals and are not traded on public markets, we say that the firm is "closely, or privately, held."

b. "Going public" establishes a firm's true intrinsic value, and it also insures that a highly liquid market will always exist for the firm's shares.

c. When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public," and the market for such stock is called the new issue market.

d. Publicly owned companies have shares owned by investors who are not associated with management, and public companies must register with and report to a regulatory agency such as the SEC.

e. It is possible for a firm to go public and yet not raise any additional new capital at the time.

FIN 534 – Homework Chapter 2

Business / Economics

7/6/12

Asked: 7/6/12 10:03 AM
Opening Offer: $7.00
Due Date: 7/6/12

1. Which of the following statements is CORRECT?

a. Typically, a firm's DPS should exceed its EPS.

b. Typically, a firm's EBIT should exceed its EBITDA.

c. If a firm is more profitable than average (e.g., Google), we would normally expect to see its stock price exceed its book value per share.

d. If a firm is more profitable than most other firms, we would normally expect to see its book value per share exceed its stock price, especially after several years of high inflation.

e. The more depreciation a firm has in a given year, the higher its EPS, other things held constant.

2. Which of the following statements is CORRECT?

a. The statement of cash flows reflects cash flows from operations, but it does not reflect the effects of buying or selling fixed assets.

b. The statement of cash flows shows where the firm's cash is located; indeed, it provides a listing of all banks and brokerage houses where cash is on deposit.

c. The statement of cash flows reflects cash flows from continuing operations, but it does not reflect the effects of changes in working capital.

d. The statement of cash flows reflects cash flows from operations and from borrowings, but it does not reflect cash obtained by selling new common stock.

e. The statement of cash flows shows how much the firm's cash--the total of currency, bank deposits, and short-term liquid securities (or cash equivalents)--increased or decreased during a given year.

3. Which of the following statements is CORRECT?

a. Dividends paid reduce the net income that is reported on a company's income statement.

b. If a company uses some of its bank deposits to buy short-term, highly liquid marketable securities, this will cause a decline in its current assets as shown on the balance sheet.

c. If a company issues new long-term bonds during the current year, this will increase its reported current liabilities at the end of the year.

d. Accounts receivable are reported as a current liability on the balance sheet.

e. If a company pays more in dividends than it generates in net income, its retained. earnings as reported on the balance sheet will decline from the previous year's balance.

4. Last year Roussakis Company's operations provided a negative net cash flow, yet the cash shown on its balance sheet increased. Which of the following statements could explain the increase in cash, assuming the company's financial statements were prepared under generally accepted accounting principles?

a. The company repurchased some of its common stock.

b. The company dramatically increased its capital expenditures.

c. The company retired a large amount of its long-term debt.

d. The company sold some of its fixed assets.

e. The company had high depreciation expenses.

5. Bartling Energy Systems recently reported $9,250 of sales, $5,750 of operating costs other than depreciation, and $700 of depreciation. The company had no amortization charges, it had $3,200 of outstanding bonds that carry a 5% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to make $1,250 of capital expenditures on new fixed assets and to invest $300 in net operating working capital. By how much did the firm's net income exceed its free cash flow?

a. $673.27

b. $708.70

c. $746.00

d. $783.30

e. $822.47

FIN 534 – Chapter 3

Business / Economics

7/6/12

Asked: 7/6/12 10:06 AM
Opening Offer: $7.00
Due Date: 7/6/12

1. Which of the following statements is CORRECT?

a. The ratio of long-term debt to total capital is more likely to experience seasonal fluctuations than is either the DSO or the inventory turnover ratio.

b. If two firms have the same ROA, the firm with the most debt can be expected to have the lower ROE.

c. An increase in the DSO, other things held constant, could be expected to increase the total assets turnover ratio.

d. An increase in the DSO, other things held constant, could be expected to increase the ROE.

e. An increase in a firm's debt ratio, with no changes in its sales or operating costs, could be expected to lower the profit margin.

2. Companies HD and LD have the same tax rate, sales, total assets, and basic earning power. Both companies have positive net incomes. Company HD has a higher debt ratio and, therefore, a higher interest expense. Which of the following statements is CORRECT?

a. Company HD has a lower equity multiplier.

b. Company HD has more net income.

c. Company HD pays more in taxes.

d. Company HD has a lower ROE.

e. Company HD has a lower times interest earned (TIE) ratio.

3. Companies HD and LD have the same total assets, sales, operating costs, and tax rates, and they pay the same interest rate on their debt. However, company HD has a higher debt ratio. Which of the following statements is CORRECT?

a. Given this information, LD must have the higher ROE.

b. Company LD has a higher basic earning power ratio (BEP).

c. Company HD has a higher basic earning power ratio (BEP).

d. If the interest rate the companies pay on their debt is more than their basic earning power (BEP), then Company HD will have the higher ROE.

e. If the interest rate the companies pay on their debt is less than their basic earning power (BEP), then Company HD will have the higher ROE.

4. Muscarella Inc. has the following balance sheet and income statement data:

Cash $ 14,000 Accounts payable $ 42,000

Receivables 70,000 Other current liabilities 28,000

Inventories 210,000 Total CL $ 70,000

Total CA $294,000 Long-term debt 70,000

Net fixed assets 126,000 Common equity 280,000

Total assets $420,000 Total liab. and equity $420,000

Sales $280,000

Net income $ 21,000

The new CFO thinks that inventories are excessive and could be lowered sufficiently to cause the current ratio to equal the industry average, 2.70, without affecting either sales or net income. Assuming that inventories are sold off and not replaced to get the current ratio to the target level, and that the funds generated are used to buy back common stock at book value, by how much would the ROE change?

a. 4.28%

b. 4.50%

c. 4.73%

d. 4.96%

e. 5.21%

5. Quigley Inc. is considering two financial plans for the coming year. Management expects sales to be $301,770, operating costs to be $266,545, assets to be $200,000, and its tax rate to be 35%. Under Plan A it would use 25% debt and 75% common equity. The interest rate on the debt would be 8.8%, but the TIE ratio would have to be kept at 4.00 or more. Under Plan B the maximum debt that met the TIE constraint would be employed. Assuming that sales, operating costs, assets, the interest rate, and the tax rate would all remain constant, by how much would the ROE change in response to the change in the capital structure?

a. 3.83%

b. 4.02%

c. 4.22%

d. 4.43%

e. 4.65%

FIN 534 – Chapter 4

Business / Economics

7/6/12

Asked: 7/6/12 10:09 AM
Opening Offer: $5.00
Due Date: 7/6/12

1. A $50,000 loan is to be amortized over 7 years, with annual end-of-year payments. Which of these statements is CORRECT?

a. The annual payments would be larger if the interest rate were lower.

b. If the loan were amortized over 10 years rather than 7 years, and if the interest rate were the same in either case, the first payment would include more dollars of interest under the 7-year amortization plan.

c. The proportion of each payment that represents interest as opposed to repayment of principal would be lower if the interest rate were lower.

d. The last payment would have a higher proportion of interest than the first payment.

e. The proportion of interest versus principal repayment would be the same for each of the 7 payments.

2. Which of the following statements is CORRECT?

a. If you have a series of cash flows, each of which is positive, you can solve for I, where the solution value of I causes the PV of the cash flows to equal the cash flow at Time 0.

b. If you have a series of cash flows, and CF0 is negative but each of the following CFs is positive, you can solve for I, but only if the sum of the undiscounted cash flows exceeds the cost.

c. To solve for I, one must identify the value of I that causes the PV of the positive CFs to equal the absolute value of the PV of the negative CFs. This is, essentially, a trial-and-error procedure that is easy with a computer or financial calculator but quite difficult otherwise.

d. If you solve for I and get a negative number, then you must have made a mistake.

e. If CF0 is positive and all the other CFs are negative, then you cannot solve for I.

3. Riverside Bank offers to lend you $50,000 at a nominal rate of 6.5%, compounded monthly. The loan (principal plus interest) must be repaid at the end of the year. Midwest Bank also offers to lend you the $50,000, but it will charge an annual rate of 7.0%, with no interest due until the end of the year. How much higher or lower is the effective annual rate charged by Midwest versus the rate charged by Riverside?

a. 0.52%

b. 0.44%

c. 0.36%

d. 0.30%

e. 0.24%

4. Steve and Ed are cousins who were both born on the same day, and both turned 25 today. Their grandfather began putting $2,500 per year into a trust fund for Steve on his 20th birthday, and he just made a 6th payment into the fund. The grandfather (or his estate's trustee) will make 40 more $2,500 payments until a 46th and final payment is made on Steve's 65th birthday. The grandfather set things up this way because he wants Steve to work, not be a "trust fund baby," but he also wants to ensure that Steve is provided for in his old age.

Until now, the grandfather has been disappointed with Ed, hence has not given him anything. However, they recently reconciled, and the grandfather decided to make an equivalent provision for Ed. He will make the first payment to a trust for Ed today, and he has instructed his trustee to make 40 additional equal annual payments until Ed turns 65, when the 41st and final payment will be made. If both trusts earn an annual return of 8%, how much must the grandfather put into Ed's trust today and each subsequent year to enable him to have the same retirement nest egg as Steve after the last payment is made on their 65th birthday?

a. $3,726

b. $3,912

c. $4,107

d. $4,313

e. $4,528

5. John and Daphne are saving for their daughter Ellen's college education. Ellen just turned 10 at (t = 0), and she will be entering college 8 years from now (at t = 8). College tuition and expenses at State U. are currently $14,500 a year, but they are expected to increase at a rate of 3.5% a year. Ellen should graduate in 4 years--if she takes longer or wants to go to graduate school, she will be on her own. Tuition and other costs will be due at the beginning of each school year (at t = 8, 9, 10, and 11).

So far, John and Daphne have accumulated $15,000 in their college savings account (at t = 0). Their long-run financial plan is to add an additional $5,000 in each of the next 4 years (at t = 1, 2, 3, and 4). Then they plan to make 3 equal annual contributions in each of the following years, t = 5, 6, and 7. They expect their investment account to earn 9%. How large must the annual payments at t = 5, 6, and 7 be to cover Ellen's anticipated college costs?

a. $1,965.21

b. $2,068.64

c. $2,177.51

d. $2,292.12

e. $2,412.76

FIN 534 – Homework Chapter 12

Business / Economics

7/6/12

Asked: 7/6/12 10:11 AM
Opening Offer: $2.00
Due Date: 7/6/12

FIN 534 – Homework Chapter 12

1. Which of the following statements is CORRECT?

a. Perhaps the most important step when developing forecasted financial statements is to determine the breakdown of common equity between common stock and retained earnings.

b. The first, and perhaps the most critical, step in forecasting financial requirements is to forecast future sales.

c. Forecasted financial statements, as discussed in the text, are used primarily as a part of the managerial compensation program, where management's historical performance is evaluated.

d. The capital intensity ratio gives us an idea of the physical condition of the firm's fixed assets.

e. The AFN equation produces more accurate forecasts than the forecasted financial statement method, especially if fixed assets are lumpy, economies of scale exist, or if excess capacity exists.

2. Which of the following statements is CORRECT?

a. The sustainable growth rate is the maximum achievable growth rate without the firm having to raise external funds. In other words, it is the growth rate at which the firm's AFN equals zero.

b. If a firm's assets are growing at a positive rate, but its retained earnings are not increasing, then it would be impossible for the firm's AFN to be negative.

c. If a firm increases its dividend payout ratio in anticipation of higher earnings, but sales and earnings actually decrease, then the firm's actual AFN must, mathematically, exceed the previously calculated AFN.

d. Higher sales usually require higher asset levels, and this leads to what we call AFN. However, the AFN will be zero if the firm chooses to retain all of its profits, i.e., to have a zero dividend payout ratio.

e. Dividend policy does not affect the requirement for external funds based on the AFN equation.

3. Which of the following statements is CORRECT?

a. When we use the AFN equation, we assume that the ratios of assets and liabilities to sales (A0*/S0 and L0*/S0) vary from year to year in a stable, predictable manner.

b. When fixed assets are added in large, discrete units as a company grows, the assumption of constant ratios is more appropriate than if assets are relatively small and can be added in small increments as sales grow.

c. Firms whose fixed assets are "lumpy" frequently have excess capacity, and this should be accounted for in the financial forecasting process.

d. For a firm that uses lumpy assets, it is impossible to have small increases in sales without expanding fixed assets.

e. There are economies of scale in the use of many kinds of assets. When economies occur the ratios are likely to remain constant over time as the size of the firm increases.

4. Last year Jain Technologies had $250 million of sales and $100 million of fixed assets, so its FA/Sales ratio was 40%. However, its fixed assets were used at only 75% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity. What target FA/Sales ratio should the company set?

a. 28.5%

b. 30.0%

c. 31.5%

d. 33.1%

e. 34.7%

5. Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm's investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.

Last year's sales = S0 $300.0 Last year's accounts payable $50.0

Sales growth rate = g 40% Last year's notes payable $15.0

Last year's total assets = A0* $500.0 Last year's accruals $20.0

Last year's profit margin = PM 20.0% Initial payout ratio 10.0%

a. $31.9

b. $33.6

c. $35.3

d. $37.0

e. $38.9

FIN 534 – Homework Chapter 12(a step..

Business / Economics

7/6/12

Asked: 7/6/12 10:12 AM
Opening Offer: $7.00
Due Date: 7/6/13

FIN 534 – Homework Chapter 12

1. Which of the following statements is CORRECT?

a. Perhaps the most important step when developing forecasted financial statements is to determine the breakdown of common equity between common stock and retained earnings.

b. The first, and perhaps the most critical, step in forecasting financial requirements is to forecast future sales.

c. Forecasted financial statements, as discussed in the text, are used primarily as a part of the managerial compensation program, where management's historical performance is evaluated.

d. The capital intensity ratio gives us an idea of the physical condition of the firm's fixed assets.

e. The AFN equation produces more accurate forecasts than the forecasted financial statement method, especially if fixed assets are lumpy, economies of scale exist, or if excess capacity exists.

2. Which of the following statements is CORRECT?

a. The sustainable growth rate is the maximum achievable growth rate without the firm having to raise external funds. In other words, it is the growth rate at which the firm's AFN equals zero.

b. If a firm's assets are growing at a positive rate, but its retained earnings are not increasing, then it would be impossible for the firm's AFN to be negative.

c. If a firm increases its dividend payout ratio in anticipation of higher earnings, but sales and earnings actually decrease, then the firm's actual AFN must, mathematically, exceed the previously calculated AFN.

d. Higher sales usually require higher asset levels, and this leads to what we call AFN. However, the AFN will be zero if the firm chooses to retain all of its profits, i.e., to have a zero dividend payout ratio.

e. Dividend policy does not affect the requirement for external funds based on the AFN equation.

3. Which of the following statements is CORRECT?

a. When we use the AFN equation, we assume that the ratios of assets and liabilities to sales (A0*/S0 and L0*/S0) vary from year to year in a stable, predictable manner.

b. When fixed assets are added in large, discrete units as a company grows, the assumption of constant ratios is more appropriate than if assets are relatively small and can be added in small increments as sales grow.

c. Firms whose fixed assets are "lumpy" frequently have excess capacity, and this should be accounted for in the financial forecasting process.

d. For a firm that uses lumpy assets, it is impossible to have small increases in sales without expanding fixed assets.

e. There are economies of scale in the use of many kinds of assets. When economies occur the ratios are likely to remain constant over time as the size of the firm increases.

4. Last year Jain Technologies had $250 million of sales and $100 million of fixed assets, so its FA/Sales ratio was 40%. However, its fixed assets were used at only 75% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity. What target FA/Sales ratio should the company set?

a. 28.5%

b. 30.0%

c. 31.5%

d. 33.1%

e. 34.7%

5. Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm's investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.

Last year's sales = S0 $300.0 Last year's accounts payable $50.0

Sales growth rate = g 40% Last year's notes payable $15.0

Last year's total assets = A0* $500.0 Last year's accruals $20.0

Last year's profit margin = PM 20.0% Initial payout ratio 10.0%

a. $31.9

b. $33.6

c. $35.3

d. $37.0

e. $38.9

FIN 534 – Homework Chapter 13(a step..

Business / Economics

7/6/12

Asked: 7/6/12 10:15 AM
Opening Offer: $7.00
Due Date: 7/6/12

1. Suppose Leonard, Nixon, & Shull Corporation's projected free cash flow for next year is $100,000, and FCF is expected to grow at a constant rate of 6%. If the company's weighted average cost of capital is 11%, what is the value of its operations?

a. $1,714,750

b. $1,805,000

c. $1,900,000

d. $2,000,000

e. $2,100,000

2. Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments).

Year: 1 2

Free cash flow: -$50 $100

a. $1,456

b. $1,529

c. $1,606

d. $1,686

e. $1,770

3. Based on the corporate valuation model, the value of a company's operations is $1,200 million. The company's balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are unrelated to operations. The balance sheet also shows $90 million in accounts payable, $120 million in notes payable, $300 million in long-term debt, $50 million in preferred stock, $180 million in retained earnings, and $800 million in total common equity. If the company has 30 million shares of stock outstanding, what is the best estimate of the stock's price per share?

a. $24.90

b. $27.67

c. $30.43

d. $33.48

e. $36.82

4. Based on the corporate valuation model, the value of a company's operations is $900 million. Its balance sheet shows $70 million in accounts receivable, $50 million in inventory, $30 million in short-term investments that are unrelated to operations, $20 million in accounts payable, $110 million in notes payable, $90 million in long-term debt, $20 million in preferred stock, $140 million in retained earnings, and $280 million in total common equity. If the company has 25 million shares of stock outstanding, what is the best estimate of the stock's price per share?

a. $23.00

b. $25.56

c. $28.40

d. $31.24

e. $34.36

5. Vasudevan Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 13% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the Year 0 value of operations, in millions?

Year: 1 2 3

Free cash flow: -$20 $42 $45

a. $586

b. $617

c. $648

d. $680

e. $714

FIN 534 – Homework Chapter 14(a step..

Business / Economics

7/6/12

Asked: 7/6/12 10:17 AM
Opening Offer: $7.00
Due Date: 7/6/12

FIN 534 – Homework Chapter 14

1. Which of the following statements about dividend policies is CORRECT?

a. Modigliani and Miller argue that investors prefer dividends to capital gains because dividends are more certain than capital gains. They call this the ―bird-in-the hand‖ effect.

b. One reason that companies tend to avoid stock repurchases is that dividend payments are taxed at a lower rate than gains on stock repurchases.

c. One advantage of dividend reinvestment plans is that they allow shareholders to avoid paying taxes on the dividends that they choose to reinvest.

d. One key advantage of a residual dividend policy is that it enables a company to follow a stable dividend policy.

e. The clientele effect suggests that companies should follow a stable dividend policy.

2. Which of the following statements is CORRECT?

a. One disadvantage of dividend reinvestment plans is that they increase transactions costs for investors who want to increase their ownership in the company.

b. One advantage of dividend reinvestment plans is that they enable investors to postpone paying taxes on the dividends credited to their account.

c. Stock repurchases can be used by a firm that wants to increase its debt ratio.

d. Stock repurchases make sense if a company expects to have a lot of profitable new projects to fund over the next few years, provided investors are aware of these investment opportunities.

e. One advantage of an open market dividend reinvestment plan is that it provides new equity capital and increases the shares outstanding.

3. Which of the following statements is CORRECT?

a. When firms are deciding on the size of stock splits—say whether to declare a 2-for-1 split or a 3-for-1 split, it is best to declare the smaller one, in this case the 2-for-1 split, because then the after-split price will be higher than if the 3-for-1 split had been used.

b. Back before the SEC was created in the 1930s, companies would declare reverse splits in order to boost their stock prices. However, this was determined to be a deceptive practice, and it is illegal today.

c. Stock splits create more administrative problems for investors than stock dividends, especially determining the tax basis of their shares when they decide to sell them, so today stock dividends are used far more often than stock splits.

d. When a company declares a stock split, the price of the stock typically declines—by about 50% after a 2-for-1 split—and this necessarily reduces the total market value of the equity.

e. If a firm's stock price is quite high relative to most stocks—say $500 per share—then it can declare a stock split of say 10-for-1 so as to bring the price down to something close to $50.

4. Which of the following statements is CORRECT?

a. If a firm follows the residual dividend policy, then a sudden increase in the number of profitable projects is likely to reduce the firm's dividend payout.

b. The clientele effect can explain why so many firms change their dividend policies so often.

c. One advantage of adopting the residual dividend policy is that this policy makes it easier for corporations to develop a specific and well-identified dividend clientele.

d. New-stock dividend reinvestment plans are similar to stock dividends because they both increase the number of shares outstanding but don't change the firm's total amount of book equity.

e. Investors who receive stock dividends must pay taxes on the value of the new shares in the year the stock dividends are received.

5. DeAngelo Corp.'s projected net income is $150.0 million, its target capital structure is 25% debt and 75% equity, and its target payout ratio is 65%. DeAngelo has more positive NPV projects than it can finance without issuing new stock, but its board of directors had decreed that it cannot issue any new shares in the foreseeable future. The CFO now wants to determine how the maximum capital budget would be affected by changes in capital structure policy and/or the target dividend payout policy. Versus the current policy, how much larger could the capital budget be if (1) the target debt ratio were raised to 75%, other things held constant, (2) the target payout ratio were lowered to 20%, other things held constant, and (3) the debt ratio and payout were both changed by the indicated amounts.

Increase in Capital Budget

Increase Debt Lower Payout Do Both to 75% to 20%___________________

a. $114.0 $73.3 $333.9

b. $120.0 $77.2 $351.5

c. $126.4 $81.2 $370.0

d. $133.0 $85.5 $389.5

e. $140.0 $90.0 $410.0

FIN 534 – Homework Chapter 15

Business / Economics

7/6/12

Asked: 7/6/12 10:20 AM
Opening Offer: $7.00
Due Date: 7/6/12

FIN 534 – Homework Chapter 15

1. Which of the following statements best describes the optimal capital structure?

a. The optimal capital structure is the mix of debt, equity, and preferred stock that maximizes the company's earnings per share (EPS).

b. The optimal capital structure is the mix of debt, equity, and preferred stock that maximizes the company's stock price.

c. The optimal capital structure is the mix of debt, equity, and preferred stock that minimizes the company's cost of equity.

d. The optimal capital structure is the mix of debt, equity, and preferred stock that minimizes the company's cost of debt.

e. The optimal capital structure is the mix of debt, equity, and preferred stock that minimizes the company's cost of preferred stock.

2. Which of the following statements is CORRECT?

a. A firm can use retained earnings without paying a flotation cost. Therefore, while the cost of retained earnings is not zero, its cost is generally lower than the after-tax cost of debt.

b. The capital structure that minimizes a firm's weighted average cost of capital is also the capital structure that maximizes its stock price.

c. The capital structure that minimizes the firm's weighted average cost of capital is also the capital structure that maximizes its earnings per share.

d. If a firm finds that the cost of debt is less than the cost of equity, increasing its debt ratio must reduce its WACC.

e. Other things held constant, if corporate tax rates declined, then the Modigliani-Miller tax-adjusted tradeoff theory would suggest that firms should increase their use of debt.

3. Which of the following statements is CORRECT?

a. In general, a firm with low operating leverage also has a small proportion of its total costs in the form of fixed costs.

b. There is no reason to think that changes in the personal tax rate would affect firms' capital structure decisions.

c. A firm with high business risk is more likely to increase its use of financial leverage than a firm with low business risk, assuming all else equal.

d. If a firm's after-tax cost of equity exceeds its after-tax cost of debt, it can always reduce its WACC by increasing its use of debt.

e. Suppose a firm has less than its optimal amount of debt. Increasing its use of debt to the point where it is at its optimal capital structure will decrease the costs of both debt and equity financing.

4. Companies HD and LD have identical amounts of assets, operating income (EBIT), tax rates, and business risk. Company HD, however, has a much higher debt ratio than LD. Company HD's basic earning power ratio (BEP) exceeds its cost of debt (rd). Which of the following statements is CORRECT?

a. Company HD has a higher return on assets (ROA) than Company LD.

b. Company HD has a higher times interest earned (TIE) ratio than Company LD.

c. Company HD has a higher return on equity (ROE) than Company LD, and its risk, as measured by the standard deviation of ROE, is also higher than LD's.

d. The two companies have the same ROE.

e. Company HD's ROE would be higher if it had no debt.

5. Which of the following statements is CORRECT?

a. Generally, debt-to-total-assets ratios do not vary much among different industries, although they do vary among firms within a given industry.

b. Electric utilities generally have very high common equity ratios because their revenues are more volatile than those of firms in most other industries.

c. Drug companies (prescription, not illegal!) generally have high debt-to-equity ratios because their earnings are very stable and, thus, they can cover the high interest costs associated with high debt levels.

d. Wide variations in capital structures exist both between industries and among individual firms within given industries. These differences are caused by differing business risks and also managerial attitudes.

e. Since most stocks sell at or very close to their book values, book value capital structures are almost always adequate for use in estimating firms' costs of capital.

FIN 534 – Homework Chapter 16(a step..

Business / Economics

7/6/12

Asked: 7/6/12 10:22 AM
Opening Offer: $7.00
Due Date: 7/6/12

1. Swim Suits Unlimited is in a highly seasonal business, and the following summary balance sheet data show its assets and liabilities at peak and off-peak seasons (in thousands of dollars):

Peak Off-Peak

Cash $ 50 $ 30

Marketable securities 0 20

Accounts receivable 40 20

Inventories 100 50

Net fixed assets 500 500

Total assets $690 $620

Payables and accruals $ 30 $ 10

Short-term bank debt 50 0

Long-term debt 300 300

Common equity 310 310

Total claims $690 $620

From this data we may conclude that

a. Swim Suits' current asset financing policy calls for exactly matching asset and liability maturities.

b. Swim Suits' current asset financing policy is relatively aggressive; that is, the company finances some of its permanent assets with short-term discretionary debt.

c. Swim Suits follows a relatively conservative approach to current asset financing; that is, some of its short-term needs are met by permanent capital.

d. Without income statement data, we cannot determine the aggressiveness or conservatism of the company's current asset financing policy.

e. Without cash flow data, we cannot determine the aggressiveness or conservatism of the company's current asset financing policy.

2. Which of the following statements is CORRECT?

a. A firm that makes 90% of its sales on credit and 10% for cash is growing at a constant rate of 10% annually. Such a firm will be able to keep its accounts receivable at the current level, since the 10% cash sales can be used to finance the 10% growth rate.

b. In managing a firm's accounts receivable, it is possible to increase credit sales per day yet still keep accounts receivable fairly steady, provided the firm can shorten the length of its collection period (its DSO) sufficiently.

c. Because of the costs of granting credit, it is not possible for credit sales to be more profitable than cash sales.

d. Since receivables and payables both result from sales transactions, a firm with a high receivables-to-sales ratio must also have a high payables-to-sales ratio.

e. Other things held constant, if a firm can shorten its DSO, this will lead to a higher current ratio.

3. Halka Company is a no-growth firm. Its sales fluctuate seasonally, causing total assets to vary from $320,000 to $410,000, but fixed assets remain constant at $260,000. If the firm follows a maturity matching (or moderate) working capital financing policy, what is the most likely total of long-term debt plus equity capital?

a. $260,642

b. $274,360

c. $288,800

d. $304,000

e. $320,000

4. Your consulting firm was recently hired to improve the performance of Shin-Soenen Inc, which is highly profitable but has been experiencing cash shortages due to its high growth rate. As one part of your analysis, you want to determine the firm's cash conversion cycle. Using the following information and a 365-day year, what is the firm's present cash conversion cycle?

Average inventory = $75,000

Annual sales = $600,000

Annual cost of goods sold = $360,000

Average accounts receivable = $160,000

Average accounts payable = $25,000

a. 120.6 days

b. 126.9 days

c. 133.6 days

d. 140.6 days

e. 148.0 days

5. Affleck Inc.'s business is booming, and it needs to raise more capital. The company purchases supplies on terms of 1/10 net 20, and it currently takes the discount. One way of getting the needed funds would be to forgo the discount, and the firm's owner believes she could delay payment to 40 days without adverse effects. What would be the effective annual percentage cost of funds raised by this action? (Assume a 365-day year.)

a. 10.59%

b. 11.15%

c. 11.74%

d. 12.36%

e. 13.01%

FIN 534 – Homework Chapter 17 (a ste..

Business / Economics

7/6/12

Asked: 7/6/12 10:24 AM
Opening Offer: $7.00
Due Date: 7/6/12

1. In Japan, 90-day securities have a 4% annualized return and 180-day securities have a 5% annualized return. In the United States, 90-day securities have a 4% annualized return and 180-day securities have an annualized return of 4.5%. All securities are of equal risk, and Japanese securities are denominated in terms of the Japanese yen. Assuming that interest rate parity holds in all markets, which of the following statements is most CORRECT?

a. The yen-dollar spot exchange rate equals the yen-dollar exchange rate in the 90-day forward market.

b. The yen-dollar spot exchange rate equals the yen-dollar exchange rate in the 180-day forward market.

c. The yen-dollar exchange rate in the 90-day forward market equals the yen-dollar exchange rate in the 180-day forward market.

d. The spot rate equals the 90-day forward rate.

e. The spot rate equals the 180-day forward rate.

2. If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.97 shekels per dollar, then the forward rate for the Israeli shekel is selling at a ________________ to the spot rate.

a. premium of 8%

b. premium of 18%

c. discount of 18%

d. discount of 8%

e. premium of 16%

3. Stover Corporation, a U.S. based importer, makes a purchase of crystal glassware from a firm in Switzerland for 39,960 Swiss francs, or $24,000, at the spot rate of 1.665 francs per dollar. The terms of the purchase are net 90 days, and the U.S. firm wants to cover this trade payable with a forward market hedge to eliminate its exchange rate risk. Suppose the firm completes a forward hedge at the 90-day forward rate of 1.682 francs. If the spot rate in 90 days is actually 1.638 francs, how much will the U.S. firm have saved or lost in U.S. dollars by hedging its exchange rate exposure?

a. -$396

b. -$243

c. $0

d. $243

e. $638

4. A product sells for $750 in the United States. The exchange rate is $1 to 1.65 Swiss francs. If purchasing power parity (PPP) holds, what is the price of the product in Switzerland?

a. 123.75 Swiss francs

b. 454.55 Swiss francs

c. 750.00 Swiss francs

d. 1,237.50 Swiss francs

e. 1,650.00 Swiss francs

5. Chen Transport, a U.S. based company, is considering expanding its operations into a foreign country. The required investment at Time = 0 is $10 million. The firm forecasts total cash inflows of $4 million per year for 2 years, $6 million for the next 2 years, and then a possible terminal value of $8 million. In addition, due to political risk factors, Chen believes that there is a 50% chance that the gross terminal value will be only $2 million and a 50% chance that it will be $8 million. However, the government of the host country will block 20% of all cash flows. Thus, cash flows that can be repatriated are 80% of those projected. Chen's cost of capital is 15%, but it adds one percentage point to all foreign projects to account for exchange rate risk. Under these conditions, what is the project's NPV?

a. $1.01 million

b. $2.77 million

c. $3.09 million

d. $5.96 million

e. $7.39 million

HRM 531 Final Exam

Business / Economics

7/6/12

Asked: 7/6/12 10:28 AM
Opening Offer: $25.00
Due Date: 7/6/12

1) Distrust, disrespect, and animosity pertain to which component of indirect costs associated with mismanaged organizational stress?

A. Quality of work relations

B. Participation and membership

C. Performance on the job

D. Communication breakdowns

2) Inventory shrinkages and accidents pertain to which component of direct costs associated with mismanaged organizational stress?

A. Employee conflict

B. Performance on the job

C. Loss of vitality

D. Communication breakdowns

3) Thousands of equal-pay lawsuits have been filed, predominantly by ___________ since the Equal Pay Act of 1963 was passed

A. women

B. African Americans

C. the elderly

D. Americans with disabilities

4) What term refers to those actions appropriate to overcome the effects of past or present policies, practices, or other barriers to equal employment opportunity?

A. Reparation

B. Emancipation

C. Desegregation

D. Affirmative action

5) In the employment context, _______________ can be viewed broadly as giving an unfair advantage or disadvantage to the members of a particular group in comparison with the members of other groups

A. ethnocentrism

B. discrimination

C. seniority system

D. race norming

6) Thousands of equal-pay suits have been filed, predominantly by ___________ since the Equal Pay Act of 1963 was passed

A. women

B. African Americans

C. the elderly

D. Americans with disabilities

7) Which of the following observations is correct?

A. Diversity is problem focused, and affirmative action is opportunity focused

B. Diversity is government initiated, and affirmative action is voluntary

C. Diversity is proactive, and affirmative action is reactive

D. Diversity is quantitative, and affirmative action is qualitative

8) Which of the following would you associate with managing diversity?

A. Government initiated

B. Assumes integration

C. Internally focused

D. Quantitative

9) "To be the world's best quick-service restaurant" is an example of what?

A. Organizational charter

B. Standard operating procedure

C. Code of ethics

D. Vision statement

10) _________ is a job analysis method that lists tasks or behaviors and involves workers rating each task or behavior in terms of whether or not it is performed. If the task is performed, workers also rate the frequency, importance, level of difficulty, and relationship to overall performance

A. Job performance

B. Structured questionnaires

C. Interviews

D. Critical incidents

11) Recruitment begins by specifying _____, which are the typical results of job analysis and workforce planning activities

A. human resource requirements

B. strategic imperatives

C. succession plans

D. affirmative action candidates

12) The step following recruitment is _____, which is basically a rapid, rough selection process

A. an orientation

B. an initial screening

C. a suspension

D. a workforce plan

13) During the _____ stage, it is most important to select the managers who can develop stable management systems to preserve the gains achieved during the embryonic stage

A. mature

B. high-growth

C. aging

D. embryonic

14) Increasing an individual's employability outside the company simultaneously increases his or her job security and desire to stay with the current employer. What is this known as?

A. Training paradox

B. Pygmalion effect

C. Distributed practice

D. Massed practice

15) Which is a characteristic of the most effective training practices?

A. Training starts at the bottom of the organization

B. Training is part of the corporate culture

C. Training is evaluated by checking participant reactions

D. Little time is spent assessing training needs

16) Which analysis is helpful in determining the special needs of a particular group, such as older workers, women, or managers at different levels?

A. Individual

B. Operations

C. Demographic

D. Organization

17) Providing adequate resources to get a job done right and on time, and paying careful attention to selecting employees, are parts of

A. employee welfare

B. grievance management

C. performance appraisal

D. performance facilitation

18) This can be thought of as a compass that indicates a person's actual direction as well as a person's desired direction.

A. Management by objectives

B. Forced distribution

C. Central tendency

D. Performance management

19) What would you call a meeting that is typically done once a year to identify and discuss job-relevant strengths and weaknesses of individuals or work teams?

A. performance appraisal

B. performance facilitation

C. performance encouragement

D. performance standard

20) When managing careers, what should organizations do?

A. Plan for shorter employment relationships

B. Focus primarily on employee needs and aspirations

C. Allow employees to structure work assignments

D. Focus on and recognize career stages that employees go through

21) A sequence of positions occupied by a person during the course of a lifetime is characteristic of what type of career?

A. Subjective

B. Objective

C. Specific

D. General

22) In the new world of career management, the primary goal is to provide which of the following for employees?

A. Rising aspirations

B. Executive ranking

C. Psychological success

D. Time off when they need it

23) At a broad level, _____ includes anything an employee values and desires that an employer is able and willing to offer in exchange for employee contributions

A. a competency-based pay system

B. an employee stock ownership plan

C. an organizational reward system

D. a merit-pay method

24) This benefit, tied mostly to profitability and promising better job security, but not guaranteeing it, is at the center of the evolving bonus system

A. Contribution-based pay

B. Competency-based pay

C. Skill-based pay

D. Flexible pay

25) Financial rewards include direct payments plus indirect payments in the form of what?

A. Individual equity

B. Corporate compensation

C. Spot awards

D. Employee benefits

26) Which law offers full coverage for retirees, dependent survivors, and disabled persons insured by 40 quarters of payroll taxes on their past earnings or earnings of heads of households?

A. Federal Unemployment Tax Act

B. Social Security Act

C. Workers' compensation

D. Employee Retirement Income Security Act

27) Plans are known as _____ when the employees share in the cost of the premiums

A. share-based

B. contributory

C. distributive

D. peer participating

28) Which type of justice refers to the quality of interpersonal treatment that employees receive in their everyday work?

A. Interactional

B. Informational

C. Distributive

D. Blind

29) Procedural justice affects citizenship behaviors by influencing employees' perceptions of _____, the extent to which the organization values employees' general contributions and cares for their well being.

A. due process

B. management accessibility

C. indirect compensation

D. organizational support

30) When companies discover they can communicate better with their customers through employees who are similar to their customers, those companies then realize they have increased their _____ diversity.

A. primary

B. secondary

C. internal

D. external

OPS 571 FINAL EXAM

Business / Economics

7/6/12

Asked: 7/6/12 10:31 AM
Opening Offer: $25.00
Due Date: 7/6/12

1)__________ is when the activities in the stage must stop because there is no place to deposit the item just completed

A.None of these answers
B. Starving
C. Blocking
D. Buffering

2) According to your text, the most common process metric is

A.Throughput time
B. Utilization
C. Efficiency
D. Productivit

3) Declining product prices

A. increase the manufacturing costs
B. lower the break-point
C. result in lower manufacturing costs
D. increase the break-even point

4) The type of processing structure that is used for producing discrete products at a controlled rate is

A)Continuous Flow
b) Assembly Line
c) Batch
d) Job Shop

5) The best process flow structure to use for making automobiles is

A. Job Shop

B. Group technology cell

C. Assembly line

D. Batch Shop

6) The break-even analysis is a standard approach to determine alternative processes A break-even analysis chart usually present alternative __________ and __________ based upon the units produced or sold.

A.demand, supply
B. profits, losses
C. equipment, materials
D. variable, fixed costs

7) A statistical term that refers to the philosophy and methods companies use to eliminate defects in their products and processes by establishing a quality goal of no more than four defects out of every million units is __________.

A. ISO 9000

B. Six Sigma

C. Total Quality Management

D. SERVQUAL

8) Independent demand is

A. inventory where demand comes from independent suppliers

B. inventory that is independent of any known rules of demand and supply

C. demand that is related to the demand for another item

D. demand determined by the marketplace that requires forecasting

9) An inventory system designed to ensure that an item will be available on an ongoing basis throughout the year is known as

A. Optional Replenishment System
B. Inventory Accuracy and Cycle Counting
C. ABC Inventory Planning
D. Multiperiod Inventory Systems

10) A/an __________ approach actually schedules in detail each resource using the setup and runtime required for each order.

. A. Forward scheduling

B. Backward scheduling

C. Infinite loading

D. Finite loading

11) What is the net result of reducing the duration of a task (crashing) not on the critical path?

A. Decreased project overhead costs
B. Reduced likelihood of liquidated damages for late delivery
C. Increased slack time associated with the task
D. Reduction in the project duration

12) The idea of the value density calculation is:

A. Finding a carrier that can handle the weight

B. Matching the weight of the product with an appropriate carrier

C. Determining how a product should be shipped considering its weight and value

D. Finding the minimum cost carrier

13When designing a supply chain,
A. cost vs customer service must be considered
B. quality vs cost must be considered
C. lead times vs payment terms must be considered
D. customer service vs product customization must be considered

14) According to Hau Lee, which of the following types of products need to be delivered with efficient supply-chains?

A. Custom products

B. Innovative products

C. Grocery products

D. High technology products

15) Which of the following product promotional activities would probably help make the supply chain more efficient?

A. An "everyday" low price strategy where prices are not dependent on quantity delivered with a specific order
B. Price promotions that expire on a specific date
C. A 2 for 1 price promotion
D. Special packaging for a specific event that occurs one time each year

16) The best operating level is:

A. the maximum point of the cost curve
B. the level of capacity for which average unit cost is minimized
C. maximum capacity
D. the level of capacity for which total cost is minimized

17) Capacity utilization rate can be computed as:

A. Capacity used x best operating level
B. Capacity used / best operating level
C. Capacity used + best operating level
D. Capacity used - best operating level

18) The objective of __________ is to provide an approach for determining the overall capacity level of capital-intensive resources that best supports the company's long-range competitive strategy.

A. workforce management
B. management supervision
C. operations management
D. strategic capacity planning

19) Lean production systems typically require

A. delivery of large lots at frequent intervals
B. buyer inspection of goods and materials
C. multiple sources from which to purchase
D. low inventory levels throughout production

20) Given that the previous forecast of 65 turned out to be four units less than the actual demand; the next forecast is 66. What would be the value of alpha if the simple exponential smoothing forecast method is being used?

A. 002
B. 04
C. 004
D. 025

21) Linear regression sales forecasting techniques:

A. work best when future sales are randomly distributed
B. will not work for declining sales
C. work best when sales are increasing
D. will not work if future sales forecasts lie on a curve

22) What should the value of alpha be in an exponential smoothing forecast to be very responsive to recent demand?
A. Large
B. Small

C. Negative
D. Zero OPS

23) Which of the following statements are true about time-series forecasting?

A. Time series methods are useful for long-range forecasts when the demand pattern is erratic
B. Under time-series methods, demand is divided into the time-based components such as daily, weekly, etc.
C. Agent liability. Time series analysis tries to understand the system underlying and surrounding the item being forecast.
D. Time series analysis is based on the idea that the history of occurrences over time can be used to predict the future.

24) One option for altering the pattern of demand is:

A. hiring employees
B. using overtime
C. carrying inventory
D. Pricing

25) Aggregate planners balance:

A. demand and costs
B. demand and inventories
C. demand and capacity
D. supply and inventories

26) Which of the following accurately describes a chase strategy?

A. All of the above could describe the strategy, depending on the organization.
B. The firm produces exactly what is needed every month.
C. The firm produces at the same level for several months, and then adjusts production to another level and produces at that level for several more months.
D. The firm produces the same amount each day over the planning period and deals with the variations in demand through the use of inventory or overtime

27) Which of the following reflects net material requirements:?

A. gross requirements - on-hand - planned order receipts

B. gross requirements - on-hand + planned order receipts

C. gross requirements - planned order receipts

D. gross requirements - planned order releases

28) Which MRP system input element specifies how many and when the firm plans to build each end item?

Master production schedule

B. Bills of material

C. Inventory records file

D. Capacity planning

29) Which of the following is true about MRP systems?

A. demand pattern is random

B. lot sizing is EOQ

C. based on independent demand

D. objective is to meet manufacturing needs

30) A Material Requirements Planning (MRP) is most valuable in industries where a number of products are made in batches using the same productive equipment and with companies involving:

A. fabrication
B. low number of units annually
C. complex, expensive products
D. assembly operations

LAW 531 Final Exam

Business / Economics

7/6/12

Asked: 7/6/12 10:35 AM
Opening Offer: $35.00
Due Date: 7/6/12

1) The concept of flexibility in the law is best illustrated by:

a. The use of precedent to decide similar cases in similar ways.

b. The ability to overturn precedent when it is no longer valid or when it is erroneous.

c. The use of appointed judges rather than elected judges.

d. Imposing mandatory penalties for criminal violations.

2 The school of jurisprudence that believes that free market forces should determine the outcome to lawsuits is:

A. The Sociological school

B. The Command school

C. The Critical Legal Studies school

D. The Law and Economics school

3) Which of the following is correct about litigating commercial disputes?
A. Commercial disputes, because of their specialized nature, are first heard at the appellate court level.
B. Nearly all states have specialized trial courts that hear commercial disputes.
C. A few states have established specialized trial courts for commercial disputes.
D. Businesses generally dislike the concept of specialized trail courts for commercial disputes because the large numbers of consumers who sue businesses in these courts have led the judges to become generally biased against business.
E. In all states, commercial disputes must be heard in a limited-jurisdiction court.

4) A ___________ is a court-appointed party who conducts a private trial and renders a judgment.

A. fact-finder
B. arbitrator
C. judicial referee
D. Negotiator

5) ________ is a form of alternative dispute resolution that is often used when the parties involved do not want to face one another.

A. Fact-finding

B. Negotiation

C. Mini-trial

D. Conciliation

6) Which form of alternative dispute resolution occurs when the parties choose an impartial third party to hear and decide their dispute?

A. Minitrial
B. Conciliation
C. Arbitration
D. Mediation

7) The Double Diamond Dude Ranch is located in Montana and maintains a web site on the Internet Before the Internet, the ranch relied exclusively on word-of-mouth advertising The web site simply provides some general information and lists the ranch's phone number for reservations, but reservations cannot be made online The ranch has no other connections or presence outside of Montana Bob lives in Ohio and learned of the ranch through its web site Bob then spent a week as a paying guest at the ranch, but was injured when he fell off a horse Can Bob sue the dude ranch in Ohio state court?

A. No, because cases involving residents of two different states must be filed in federal, not state, court.
B. Yes, because Bob viewed the advertising on the Internet when he was in Ohio.
C. No, because the mere ability of an Ohio resident to view the ranch's Internet advertising does not amount to the minimum contacts necessary for personal jurisdiction over the ranch in Ohio.
D. No, because the minimum contacts standard simply cannot be met based on Internet activity.

8) What is the result of the "effects on interstate commerce" test?

A. The federal government can regulate a business activity that takes place within a single state if the activity has an effect on interstate commerce even though the regulated activity itself does not involve interstate commerce.
B. Commercial speech protections apply only to speech that has an effect on interstate commerce.

C. The federal government can regulate all interstate commerce that actually crosses state lines.

D. Prior to enacting laws, states were required to indentify any effects that the law might have on interstate commerce.

9) If there is an area of interstate commerce that the federal government has not chosen to regulate, the states can:

A. Regulate in that area so long as the state law does not unduly burden interstate commerce.

B. Regulate without restriction in that area.

C. Regulate in that area so long as it first gets the requisite approval from Congress.

D. Not regulate in that area because states cannot pass laws affecting interstate commerce.

10) The legal effect of the presence of a superceding event is that:

A. The burden of proof shifts from the plaintiff to the defendant
B. Intent must be proven in addition to elements of negligence
C. The defendant is not liable even if the plaintiff has proved all the elements of negligence.
D. The plaintiff and defendant will share liability

11) If a plaintiff voluntarily enters into or participates into a risk activity that results in injury, what is the most likely defense that he or she may use to a defendant's claim that the plaintiff assumed the risk?

Assumption of the risk

12) The tort of palming off involves:

Knowingly selling goods that are defective.
B. Representing one's own goods to be those of a competitor
C. Failing to credit another for that other person's legal accomplishments
D. Making false statements about the goods of another

13) Based on the law of product liability, which of the following is correct?

A) A manufacturer should design its products to take into account all possible misuse by the
initial purchaser, but need not worry about misuse by other users.
B) A manufacturer need only take into account the intended use of its products.
C) A manufacturer should design its products to take into account foreseeable misuse.
D) A manufacturer should design its products to take into account all possible misuse.

14) Sean has a 6 year old car which he bought 2 years ago from its original owner Eight months ago he received a recall notice about a safety problem with the brakes He never responded to the notice Yesterday Sean was driving when the brakes failed and caused him to strike and injure a pedestrian Which of the following is true in lawsuits against the car's manufacturer?

Sean can recover despite having received the recall notice.

B. The pedestrian cannot recover because the correction of the defect will apply even though Sean did not take the car in for repairs.
C. The pedestrian cannot recover due to the fact that the pedestrian was not using the car.

D. Neither party can recover if Sean's was one of only a few of these cars that actually had a brake defect.

15) Little Bobby, five years old, finds his brothers Extendo Sword, which is a toy sword about a foot long which spring out to about five feet long when a button on the handle is pushed His mother tells him to put it down because he will hurt someone if he's not careful Bobby pushes the button when the sword is pointed toward his face and, just as all properly functioning Extendo Swords do, the sword shoots out Bobby is injured and, under products liability, sues the toy store which sold the toy Bobby will most likely:

A. Win on the basis of a manufacturing defect.
B. Lose because of contributory negligence by playing with the sword after being told not to.
C. Lose if he cannot prove negligence on the part of the toy store.
D. Win on the basis of a design defect.

16) Under federal rules regulating food and drugs, which of the following is true?

a. Food must be pure 100% before it can be sold to consumers.

b. Food may contain certain impurities, such as insect parts, as long as it is not adulterated.

c. If a food contains impurities, such as insect parts, these impurities must be disclosed on the food label.

d. All food must be inspected by the government before it is sold.

17) Which of the following statements best describes the procedures under the Clean Air Act?

A. The state governments set and enforce the standards.

B. Both the federal and state governments set standards and each enforces its own standards.

C. The federal government sets and enforces the standards

D. The federal government sets the standard; the state government enforces the standards; if the state governments do not adequately enforce the standards, the federal government may enforce them.

18) Mary applied for a permit with a federal administrative agency to operate a business within the boundaries of a popular national forest The agency grants a limited number of these permits that allow operation of the business during the busy tourist season The agency has turned down Mary's application even though she received a permit in the prior year, paid the related fees on time, and violated none of the permit's conditions The agency granted a permit to a different applicant who had never run this type of business previously If Mary appeals the decision to a court, what standard of review will it most likely use?

A. The substantial evidence test
B. The unwarranted by the facts test
C. The arbitrary and capricious abuse of process test
D. The unfair results test

19) What is the most basic or common remedy available for breach of a contract?

Compensatory damages Consequential damages Punitive damages Nominal damages

20) The circumstances where an offer cannot be withdrawn under promissory estoppel is also known as:

A. The doctrine of detrimental reliance

B. The strict counteroffer rule

C. Irrevocable offers

D. The doctrine of renewable offers

21) Which of the following is correct regarding a counteroffer?

A. It is treated as both a rejection of an offer and a new offer.
B. It is not really an offer, but operates as the revocation of an offer.
C. It operates as both an offer and acceptance.
D. It is no different from any other offer.

22) A contract for the sale of land:

A. Is governed exclusively by the Uniform Commercial Code.
B. Requires at least two promisors.
C. Must be in writing to be enforceable.
D. Must be in writing only if the value of the land exceeds $500.

23) What does the parol evidence rule do?

A. It sets the rules for admissibility of evidence relating to releasing a criminal from a prison term.
B. It determines which contracts are required to be in writing.
C. It limits the ability of parties to written contracts from introducing certain evidence related to the contract.
D. It sets the general rules for the admissability of evidence in criminal actions.

24) John is president and sole shareholder of Photo, Inc Photo, Inc wishes to borrow money, but to do so, the bank requires John to orally guarantee to repay the loan if Photo, Inc cannot John's guaranty to repay is:

A. Unenforceable, because John did not sign any agreement.
B. Unenforceable, because in general, guaranty contracts need to be in writing.
C. Enforceable, because the main purpose of the loan and the guarantee was to benefit John.
D. Enforceable, because in general, guaranty contracts do not need to be in writing.

25) Licensing of informational rights can best be described as:

A. The granting of any rights to use information, which can differ greatly in scope and duration.
B. The granting of limited rights to use that cannot be simultaneously granted to others.
C. A lease of tangible personal property to the licensee.
D. A sale of underlying intellectual property rights.

26) Which of the following best describes how e-mail contracts are viewed under the law?

E-mail contracts are generally treated similarly to contracts negotiated by other means.
B. E-mail contract are valid only for contract less than $500.
C. E-mail contracts are valid so long as both parties sign a written copy printed out from the e-mail.
D. E-mail contracts for goods can be valid, but not email contracts for services.

27) Under the Uniform Computer Information Transactions Act, tender of performance is:

A. The actual completion of a party's obligations under the contract.
B. The offer to complete the performance of contractual duties made by a party who is willing and able to perform.
C. A party's agreement to perform
D. A party's unequivocal indication of intent to perform.

28) William was a factory worker at the Spruce Industries plant When it was learned he was a homosexual, he was fired This action is:

A. A violation of the Civil Rights Act of 1964
B. A violation of the Equal Pay Act
C. A violation of Title VII
D. Not prohibited under federal law

29) Which is true about the two kinds of discrimination that are actionable under Title VII?

A. Disparate impact refers to individuals and disparate treatment refers to protected classes.
B. Disparate treatment refers to individuals and disparate impact refers to protected classes.
C. Disparate impact and disparate treatment are both based on how an employer treats a specific individual.
D. Disparate impact and disparate treatment are both based on how an employer treats a protected class.

30) Which of the following is true about sexual harassment in the workplace?

A. Sexual harassment is covered under OSHA as part of workplace safety.
B. If a supervisor approaches someone and asks the person out for a social date, and if the supervisor acts in a socially customary manner, it will not be sexual harassment.
C. The standards for a hostile work environment are extremely vague and depend on all the facts and circumstances.
D. Sexual harassment claims require that persons of both genders be involved.

31) Minimum wage, hours of employment, and child labor are regulated by the:

A. Regulated Hours Act
B. Right to Work Laws
C. Federal Employment Act of 1940
D. Fair Labor Standards Act

32) Which of the following is true about the provisions of the Consolidated Omnibus Budget Reconciliation Act (COBRA) as they related to health insurance?

Certain companies are required to provide group health insurance coverage to their employees. Upon termination of employment, an employer is required to pay, for a limited time, for the former employee's health insurance coverage under the same terms that it had been paying for it while the employee worked for the employer. Upon termination of employment, a health insurance provider must allow the employee to participate in the same health insurance coverage program that the employee participated in while working for the employer, although the employee must pay for it. Employers must make the same group health insurance available to all employees.

33) Which of the following statutes provides that it is legal for employees to organize a union?

A. The Norris-LaGuardia Act
B. The National Labor Relations Act
C. The Labor-Management Relations Act
D. The Worker Adjustment and Retraining Notification Act

34) Edward's Warehouse stores a variety of generic goods for several distributors in Anytown Which of the following describes Edward's liability for the bailed goods should something happen to them?

35) A bailment is:

A. Characterized by a splitting of title into legal and beneficial components
B. Required to be in writing in order to be effective
C. The rightful possession of goods by someone other than the owner
D. Usually the preliminary step to a permanent transfer of goods

36) Which of the following would be classified as tangible personal property?

A. A freestanding desk
B. Built-in cabinets in an office
C. A copyright to a literary work
D. A field of corn

37) What was accomplished by the Visual Artists Rights Act?

A. The fair use doctrine was eliminated with respect to visual works of art.

B. Copyright protection was extended to visual creative works.

C. Copyright protection for visual artwork no longer needed a copyright notice.

D. Artists retained certain rights to limit the reproduction and modification of their works even if the work or copyright is old.

38) Which of the following is true about misappropriation of trade secrets?

A. Trade secrets are protected regardless of the actions of the trade secret owner.

B. Although it is not necessary that the trade secret be patented, the secret must be such that it could be patented.

C. The plaintiff can recover only if the defendant acquired the secret through illegal means.

D. Injunctions are generally not available to protect trade secrets.

39) A doctrine that says a patent may not be granted if the invention was used by the public for more than a certain period of time prior to the filing of the patent application is known as;

A. The public use doctrine

B. The public service doctrine

C. The fair use doctrine

D. The bar to patents doctrine

40) How does an easement appurtenant differ from an easement in gross?

A. An easement appurtenant is permanent

B. An easement appurtenant is in writing.

C. The dominant estate of an easement appurtenant is adjacent to the servient estate.

D. An easement appurtenant must be recorded.

41) Sam sells property to Betty and delivers Betty a deed that says "This property is conveyed to Betty so long as she never operates a bar on the premises." If she operates a bar on the premises, Sam Seller may take possession of the property. The type of interest that Betty Buyer has acquired is a:

A. Fee simple defeasible

B. Fee simple absolute

C. Fee simple limited

D. Fee simple remainder

42) Which of the following is true about a life estate?

The holder of a life estate may sell that interest to another. The holder of a life estate may not lease the property to a tenant because it is uncertain when the holder of the life estate may die. The holder of a life estate may lose his right if the remainderperson desires to reenter the land. The holder of the life estate must be related to the remainderperson.

43) What makes a publicly held corporation different from a public corporation?

a. A publicly held corporation has had an IPO, and has many private shareholders rather than being a corporation owned by a governmental entity.

b. A publicly held corporation is entitled to limited liability, but the public corporation is not.

c. A publicly held corporation must have a charitable purpose, but a public corporation need not have a charitable purpose

d. They are two terms that have the same meaning.

44) Limited partners can lose their limited liability by Breaching the fiduciary duty to the limited partnership.:

A. Actively managing the business of the limited partnership.

B. Withdrawing from a limited partnership contrary to provisions in the limited partnership agreement.

C. Breaching the fiduciary duty to the limited partnership.

D. Investing too much in the partnership.

45) If an LLC fails to follow formalities such as keeping minutes of meetings, then which of the following is true?

A. This failure will not result in imposing personal liability on any member.

B. All members will lose their limited liability.

C. Only the parties responsible for the failure will lose limited liability.

D. Only the managers of a manager-managed LLC will lose limited liability.

46) The Sarbanes-Oxley Act provides for the establishment of the _____________ to over see audits of public companies. This will be done to protect the interests of shareholders and investors.

A. Accounting Inspection Committee

B. Internal Auditing Investigation Board

C. Public Company Accounting Oversight Board

D. Corporate Audit Committee

47) The Sarbane-Oxley Act of 2002 was enacted in order to:

A. Regulate the salaries paid to corporate executives.
B. Make it more challenging to incorporate a business.
C. Establish more equitable international trade rules.
D. Improve corporate governance.

48) According to Sarbanes-Oxley, this person or people should sign the Federal income tax return of a corporation:

A. Head of the accounting firm that prepares the corporation's tax returns.
B. Chief Executive Officer
C. Board of Directors
D. Chief Executive Officer and Chief Financial Officer

49) Which of the following is likely to be a breach of a corporate officer's/director's duty of care?

А. Failing to anticipate a precipitous drop in consumer demand of the company's product
B. Failing to make a reasonable investigation of relevant facts
C. Failing to predict the unexpected startup of a new competitor
D. Failing to foresee a sudden rise in the interest rate

50) In what ways may officers and directors protect themselves from liability for actions taken as an officer or director?

A. By having the corporation purchase liability insurance or indemnify the officers and directors, but the corporation cannot do both.
B. By having the corporation purchase liability insurance or indemnify the officers and directors, or do both.

C. By having the corporation indemnify the officers and directors.

D. By having the corporation purchase liability insurance to cover such losses.

51) There are no accountants on the board of the Oriole Corporation The board routinely relies on a Certified Public Accountant (CPA) to explain the financial situation of the corporation The board does not do an independent analysis of the CPA's report In these circumstances, the board is:

A. Violating the business judgement rule.
B. Violating a duty to exercise due care.
C. Not violating any duty.
D. Violating a duty of loyalty

STR 581 Final Exam Answers

Business / Economics

7/6/12

Asked: 7/6/12 10:38 AM
Opening Offer: $15.00
Due Date: 7/6/13

Power prices use price as a key strategic tool. These power prices have discovered the highly

A. direct
B. dramatic
C. soothing
D. Leveraged
E. abrasive

Some intermediaries use the following: strategic planning, advanced information systems, sophisticated marketing tools, measure performance on a return-on-investment basis, segment their markets, improve their target marketing and positioning, and

A. dominant the manufacturers they do business with
B. contend with dwindling customer bases
C. aggressively pursue market expansion and diversification strategies
D. aggressively pursue take over strategies
E. aggressively "squeeze" manufacturer margins

Price has operated as the major determinant of buyer choice among poorer nations, among poorer groups, and with

A. similar
B. identical
C. commodity-type
D. over the Internet

Major retailer types include the following EXCEPT

A. the Internet
B. specialty store
C. superstore
D. catalog showroom
E. discount store

Following the ________ approach to target market selection encompasses a strong knowledge of the segment's needs, a strong market presence, and operating economies through specializing in production, distribution, and promotion.

selective specialization
market specialization
full market coverage
product specialization
single-segment concentration

To reach Generation Y, rock band Foo Fighters created a digital street team that sends targeted e-mail messages to members who

Unconventional sports
Computer games
Online buzz
Cool events
Student ambassadors

A company can add new products through acquisition or development. The acquisition route can take three forms. The company can buy other companies, it can acquire patents from other companies, or it can buy a

license/receive permission
franchise/co-brand
franchise/acquire rights
license/franchise

New-to-the- world products are

new products that allow a company to enter an established market for the first time
new products that provide improved performance or greater perceived value and replace existing products
existing products that are targeted to new markets or market segments
new products that supplement established product lines (package sizes, flavors, and so on)
new products that create an entirely new market

The chief disadvantage to a firm that decides to follow a product specialization strategy in selecting target markets is

logistics can become a nightmare

competitors can easily copy any new product introductions

e-commerce becomes difficult for the company

the product may be supplanted by an entirely new technology

no synergy exists

Which of the following statements best defines a work group?

A work group interacts primarily to share information, rather than to engage in work that requires joint effort.

A work group consists of 3 or more people from across departmental or functional lines.
A work group is a group comprised of 10 or more people
A work group consists of 3 or more people who take on self-supervising responsibilities.
The performance of a work group is generally greater than the sum of its inputs from individual members.

The traditional view of conflict is the belief that conflict is

natural
situationally-dependent
neutral
necessary
harmful

Which of the following is NOT included in the definition of conflict?

disruption of tasks
negative effects
incompatibility
something that is cared about
perceptio

Which of the following statements about leadership is true?

Formal rights enable managers to lead effectively.
leaders are hierarchically superior to followers.
Nonsanctioned leadership is as important as or more important than formal influence.
managers are leaders.
leaders are managers

bargaining is negotiation that seeks to divide a fixed pie

Integrative
Affective
Conjunctive
Reflective
Distributive

Danielle wants to become a surgeon, not only because achieving this goal will give her self-respect and autonomy, but also because she wants a job with high status and recognition from others. Which of Maslow's needs is Danielle trying to fill?

social
psychological
safety
esteem
self-actualization

Which of the following qualities is NOT found in work groups?

security
energy
objectives
enthusiasm
synergy

A ________ is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment.

marketing research system
marketing intelligence system
vertical system
product management system
marketing information system

Is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives.

Perceived usefulness
Customer perceived value
Competitors market share rate
Report rating
Failure avoidance rate

is any good, service, or idea that is perceived by someone as new

product
creative product
new idea
innovation

A company can take several steps to improve the quality of its marketing intelligence. If the company purchases competitive products for study, attends open houses and trade shows, and reads competitors' published reports and stockholder information, the company is using ________ to improve the quality of its marketing intelligence.

sales force surrogates
advisory panels
customer feedback systems
external networks
intermediaries

Most established companies focus on ________ when it comes to innovation.

incremental innovation
demand innovation
competitive innovation
everyday innovation
continuous innovatio

consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers

A marketing information system
A promotional campaign
A marketing database
A marketing intelligence system
A marketing research system

The value proposition consists of a cluster of benefits the company promises to deliver; it is

customer expectations
Customer loyalty to the company
business processes
total customer satisfaction
customer experience with the company

Purchase decisions are based on how consumers perceive prices and what they consider to be the

current sale price
current actual
referent price
last purchased price

consists of a group of customers who share a similar set of needs and wants.

market segment
market target
market level
market slice
market group

Marketers usually identify niches by

examining the demographics section of The Handbook of Marketing
dividing a segment into sub-segments
producing products that can be used in a variety of ways
allowing consumers to gravitate toward product brands
conducting VALS test

Which of the following is generally considered to be the last step in the marketing research process?

Make the decision.
Present the findings.
Draft the report
Control the environment.
Analyze the information.

is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.

Demographics
Marketing intelligence
Marketing management
Marketing research
MIS (marketing information system)

With respect to the sampling plan, three decisions must be made. The decisions are: the sampling unit—who is to be surveyed? Sample size—how many people should be surveyed? And

sampling procedure—how should the respondents be chosen?
sample cost—how much does sampling cost?
sample supervisor—who will lead the sampling effort?
sample security—how to protect the sample data?
surveyor skill—who will do the surveying?

communicates a company's intended value positioning of its product or brand to the market.

Promotion
Packaging
Physical evidence
Place
Price

A company has total fixed costs of $120,000 and a contribution margin ratio of 20%. The total sales necessary to break even are

$150,000.
$600,000.
$144,000.
$480,000.

A company requires $1,020,000 in sales to meet its net income target. Its contribution margin is 30%, and fixed costs are $180,000. What is the target net income?

$420,000.
$234,000.
$126,000.
$306,000

At the break-even point of 2,000 units, variable costs are $55,000, and fixed costs are $32,000. How much is the selling price per unit?

$16.00.
$11.50.
Not enough information
$43.50.

The last step in activity-based costing is to

identify and classify the major activities involved in the manufacture of specific products.
compute the activity-based overhead rate per cost driver.
identify the cost driver that has a strong correlation to the activity cost pool.
assign manufacturing overhead costs for each activity cost pool to products.

A well-designed activity-based costing system starts with

assigning manufacturing overhead costs for each activity cost pool to products.
computing the activity-based overhead rate.
analyzing the activities performed to manufacture a product.
identifying the activity-cost pools.

Identify which of the following statements about perfection standards is true.

They usually result in unfavorable variances.
They are expressions of the most efficient performance possible.
It is generally believed that they have a negative influence on employee morale.
All of these answers are correct

In a process cost system

a Work in Process account is maintained for each process.
a materials requisition must identify the job on which the materials will be used.
one Work in Process account is maintained for all the processes, similar to a job order cost system.
a Work in Process account is maintained for each product.

are profitability ratios.

Earnings per share and dividend yield
Dividend payout and rate of return in invested capital
Price earnings and current ratio
Gross profit rate and return on sale

The _____ is not one of the three major financial statements.

balance
income statement
statement of equity position
statement of cash flows

Financial statements are helpful to predict the future performance of a company for all of the following reasons except

financial statements are required to give formal projections of management's assessment of the next period's financial results
the assets and liabilities of a company provide clues to a company's future prospects
past performance is often a good indicator of future performance
the evaluation of management's past performance gives clues to its ability to generate future return

A local retail shop has been operating as a sole proprietorship. The business is growing and now the owner wants to incorporate. Which of the following is not a reason for this owner to incorporate?

ability to raise capital for expansion
the ease in transferring shares of the corporation's stock
the prestige of operating as a corporation
desire to limit the owner's personal liability

Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?

Japan
Ecuador
China
Mexico
Canada

Which of the following might a company consider to help employees address work-life conflicts?

keeping work-related travel reasonable
relocation assistance
tie manager pay to customer satisfaction
offering off-site quality child-care
reducing workloads

Which of the following is not one of the Caux Round Table Principles for International Business?

Avoidance of Illicit Operations.
Responsibility of Business Beyond Shareholders Toward Stakeholders.
Respect for the Environment.
Promotion of Multiculturalism.
Support for Multilateral Trade.

One study found that manufacturing labor costs about ___ an hour in China, compared to ____ dollars in the United States

Less than $1; about 15
Less than $1; about 40
$2; about 25
Less than $1; about 25
About $2; about 15

Diversity training programs are generally intended to provide a vehicle for

increasing awareness and examining stereotypes
socializing otherwise unmanageable employees
balancing work/life conflicts
eliminating group learning
focusing on individual difference

Which of the following is correct about litigating commercial disputes?

Nearly all states have specialized trial courts that hear commercial disputes.
In all states, commercial disputes must be heard in a limited-jurisdiction court.
Businesses generally dislike the concept of specialized trail courts for commercial disputes because the large numbers of consumers who sue businesses in these courts have led the judges to become generally biased against business.
A few states have established specialized trial courts for commercial disputes.
Commercial disputes, because of their specialized nature, are first heard at the appellate court level

Which article of the United States Constitution deals with the judicial power of the federal government?

Article I.
Article V.
Article IV.
Article III.
Article II.

When an economist says that the demand for a product has increased, this means that:

quantity demanded is greater at each possible price.
the demand curve becomes steeper.
consumers respond to a lower price by buying more.
firms make less of the product available for sale.

When movie ticket prices increase, families tend to spend less time watching movies and more time at home watching videos instead. This best reflects:

diminishing marginal utility.
the substitution effect.
the rationing function of markets.
the income effect.

Which of the following is NOT a function of functional area information systems?

provides information to managers in the functional areas
provides analysis capabilities to middle level managers and staff
provides data from business events to the corporate database
provides information mainly in the form of reports
supports the managerial tasks of planning, organizing, and controlling operation

The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.

physical, financial
digital, e-commerce
physical, digital
digital, physical
e-commerce, digital

is the integration of economic, social, cultural, and ecological facets of life, enabled by

information technologies.
globalization
regionalization
business environment
nationalizatio

A _____ scale is a scale that scores an object or property without making a direct comparison to another object or property.

Sorting
Rating
Recording
Categorization
Ranking

The quartile deviation is

In squared units of the original data.
The square root of the variance.
Appropriate only for symmetric distributions.
Based on the middle 50 percent of the observations.

Marketing research is now about a ________ billion industry globally.

$10
$21.5
$7.5
$16.5
$5

An investor's risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true?

Selling any stock in this portfolio will lower the beta of the portfolio.

An investor cannot change the risk of this portfolio by her choice about personal leverage (lending or borrowing).

Each stock in the portfolio will have a beta greater than one.

Each stock in the portfolio has its own beta.

58. Due to asymmetric information, the market fears that a firm issuing securities will do so when the stock is

overvalued

caught up in a bear market

being sold by insiders

undervalued

Says to seek out investments that offer the greatest expected risk-adjusted real return

The Signaling Principle

The Principle of Self-Interested Behavior

The Principle of Valuable Ideas

The Principle of Incremental Benefits

Under capital rationing, a good tool to use is the

payback method

PI method

NPV method

IRR method

A checking account is

a place to "collect" money between inflows and outflows

an account that acts like a reservoir

useful because you can add money in any amount

all of these

says that if you transfer risk to another party, you must offer a return that fully compensates for the amount of risk transferred

The Principle of Self-Interested

The Principle of Incremental Benefits

The Risk-Return Trade-Off Principle

The Behavioral Principle

A key variable covered in our text for the Black-Scholes OPM is

the riskless APR with continuous compounding

dividends.

EPS.

transaction costs.

Dimensions of risk include

uncertainty about yesterday's outcome

the impossibility of the same return

the certainty of a negative outcome

uncertainty about the future outcome

According to the Principle of Risk-Return Trade-Off, investors require a higher return to compensate for

greater risk

less risk

diversification

lack of diversification

Which of these investments would you expect to have the highest rate of return for the next 20 years?

anybody's guess
intermediate-term U.S. government bonds
long-term corporate bonds
U.S. Treasury bills

The conversion price (for a convertible security) is usually adjusted

for a new debt offering.

for stock splits.

for cash dividends.

all of these

Which (if any) statement is false?

The Principle of Self-Interested Behavior suggests that self-interested capital market transactions force market prices toward being fair prices.

The Principle of Two-Sided Transactions states that intense capital market competition to get and use information to take advantage of arbitrage opportunities eliminates such opportunities.

The Principle of Signaling states that information in the transactions of others can be valuable, such as providing an accurate measure of current market value, or information about expected future value.

none of these answers are correct.

Which of the following is (are) true?

The Principle of Capital Market Efficiency states that differences between financial assets are measured primarily in terms of risk and return. Investors choose the highest return for a given risk level.

The Principle of Comparative Advantage states that people apply the Principles of Self-Interested Behavior, Two-Sided Transactions, and Signaling to an environment characterized by similar financial assets, low transaction costs, and intense competition leads to capital market efficiency.

The Principle of Valuable Ideas states that new ideas can provide value when first introduced, even in an efficient capital market.

all of these answers are correct.

A transfer price exists when two segments of the same organization sell

the same service to competitors

a product in a foreign country

a service to each other

a product to the same customer

Incremental analysis would be appropriate for

acceptance of an order at a special price.

a retain or replace equipment decision.

a sell or process further decision.

all of the answers are correct

Undertaker Corporation has a joint process that produces three products: P, G, and A.

an be processed further or sold at split off; there is no difference in profit.

should be processed further to increase profits by $19,000.

should be sold at split off since processing further would only reduce profits by $6,500.

should be processed further to increase profits by $6,500.

It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 2,000 scales at $15 each

$30,000 increase

$6,000 decrease

$4,000 decrease

$4,000 increase

The steps to determining capacity requirements include

A. Using decision trees to evaluate capacity alternatives

B. Calculating equipment and labor requirements to meet product line forecasts

C. Projecting labor and equipment availabilities over the planning horizon

D. B and C

Which of the following does not appear as a separate section on the cash budget?

Financing

Capital expenditures

Cash disbursements

Cash receipts

mgt216 final exam

Business / Economics

7/6/12

Asked: 7/6/12 10:41 AM
Opening Offer: $20.00
Due Date: 7/6/13

1. "When in Rome, do as Romans do" is an example of:

a) Ethical imperialism

b) Ethical relativism

c) Cultural imperialism

d) Cultural relativism

2. Which of the following is legal according to the Foreign Corrupt Practices Act (FCPA) passed in 1977?

a) Payments to high ranking government officials

b) Grease payments to lower-level government officials

c) Bribes to political parties

d) Kickbacks to win overseas contracts

e) None of the above

3. If we understand how people think and behave in their native environment, we will understand how a particular group will behave in relation to cultural outsiders.

A. True

B. False

4. Women working as expatriate managers are unsuccessful in some countries because they are treated the same as women from that local culture.

A. True

B. False

5. Ethical issues are universal and do not vary from culture to culture.

A. True

B. False

6. A country's sociopolitical environment increases the number of ethical questions a company must deal with.

A. True

B. False

7. Which of the following is false?

a) Organizations are affected by the expatriate manager's ability to adjust to the new setting.

b) Organizations are not affected by the expatriate family's ability to adjust to the new setting.

c) Foreign language proficiency is more important for non-English speakers in English-speaking countries.

d) Cross-cultural training can help an expatriate manager better adjust to the new culture.

8. Which of the following is false?

a) Culture can be defined as "collective mental programming."

b) Culture represents different patterns of believing.

c) Culture is used to interpret the world.

d) Individuals will interpret their experiences in a new culture in terms of that new culture.

9. ___________ define themselves in terms of their group memberships and their contributions to the success of those groups.

a) Individualists

b) Collectivist

c) High power distance

d) Low power distance

10. ____________ reflects acceptance of inequality and respect for social status or class boundaries.

a) Individualism

b) Collectivism

c) High power distance

d) Low power distance

11. The title "ethics officer" did not exist until the early 1950s.

A. True

B. False

12. Ethics only needs to be communicated in orientation materials for new employees.

A. True

B. False

13. An increase in the number of calls on the "ethics action line" is a sign that there are more problems in the company now.

A. True

B. False

14. Research has shown that between ___________ of the information that passes through the grapevine is accurate.

a) 10 to 30%

b) 30 to 50%

c) 50 to 70%

d) 70 to 90%

15. As an important component of _________'s ethics communication approach, Agent Dewright's sample ethical dilemmas were e-mailed to all employees for responses. It was a great way to engage front line employees as well as to communicate the company's strong commitment to ethics.

a) Texas Instruments

b) Scott's Paper Products

c) USAA

d) Southwest Airlines

16. Your friend, Sam, has been selected to create a new ethics training program at work. What advice should you give Sam?

a) Ensure that all employees receive the same training content.

b) Focus on new employees only; the other employees already know this stuff.

c) Provide separate training depending on the needs of different groups of employees.

d) Bring in outside consultants to conduct the training.

17. The __________ approach to formal corporate ethics initiatives is proactive and inspirational.

a) Rules

b) Compliance

c) Principles

d) Values

18. The _________ approach to formal corporate ethics initiatives focuses on required behavior or obeying the letter of the law.

a) Rules

b) Compliance

c) Principles

d) Values

19. Organization cultures vary widely, even within the same industry.

A. True

B. False

20. Because common ethical problems exist across virtually all organizations, formal programs designed for ethics work well as "one size fits all."

A. True

B. False

21. Weak organizational cultures are:

a) desirable if an organization has many subcultures.

b) desirable if an organization wants diversity of thought and action.

c) desirable if an organization wants behavioral consistency.

d) undesirable in all situations.

22. The "moral person" component of ethical leadership:

a) Tells employees how the leader expects them to behave.

b) Tells employees how the leader is likely to behave.

c) Shows that ethics and values are an important part of the leader's message.

d) Demonstrates a reputation for ethical leadership among employees.

23. According to the Executive Ethical Leadership Reputation Matrix, ___________ is an executive characterized as a weak "moral person" and a strong "moral manager."

a) Unethical leader

b) Ethical leader

c) Ethically neutral leader

d) Hypocritical leader

24. Describing the decision-making process in the language of ethics does not help individuals make more ethical decisions.

A. True

B. False

25. According to the Executive Ethical Leadership Reputation Matrix, ___________ is an executive characterized as a strong "moral person" and a strong "moral manager."

a) Unethical leader

b) Ethical leader

c) Ethically neutral leader

d) Hypocritical leader

26. Weak organizational cultures are:

a) desirable if an organization has many subcultures.

b) desirable if an organization wants diversity of thought and action.

c) desirable if an organization wants behavioral consistency.

d) undesirable in all situations.

27. The more a firm demands unquestioning obedience to authority, the more likely the firm will experience higher levels of unethical conduct among employees.

A. True

B. False

28. Research has found that employees working in organizations with a code of ethics report that they engage in less unethical behavior.

A. True

B. False

29. One of the most common faults in ethical decision making is to ignore the long-term consequences of a decision.

A. True

B. False

30. The idea that consumers have the right to safety, right to be heard, right to choose, and right to be informed came from ____________ in ________.

a) Theodore Roosevelt; 1930.

b) The Food and Drug Act; 1906.

c) John F. Kennedy; 1962.

d) George W. Bush; 2004.

31. In this example of a conflict of interest, ________ conducted a series of off-the-books partnerships that were used to hide the organization's debt and inflate its stock price. The partnerships were managed by the company's executives who stood to profit the most from the transactions.

a) Merrill Lynch

b) Enron

c) Citicorp

d) Adelphia

32. Only since Enron's collapse have ethicists and business professionals really been concerned about the increasing focus on "short-term" earnings.

A. True

B. False

33. In a 2002 poll, _________ ranked last on the "who do you trust scale."

a) Lawyers

b) Politicians

c) Chief executive officers

d) Accountants

34. The real proportion of wrong-doers is probably quite small.

A. True

B. False

35. Unethical behavior is often caused by the work environment and the work environment is the manager's responsibility.

A. True

B. False

36. Group norms can cause an "everyone is doing it" mentality. This means:

a) People are more likely to recognize issues as "ethical issues."

b) Many individuals will go along with unethical behavior because of a strong need to be accepted.

c) Managers cannot blame individual employees for unethical behavior.

d) Employees are actively disengaged.

37. A statement such as "integrity is important here" is enough for subordinates to understand what kind of behavior you expect from them.

A. True

B. False

38. Groupthink occurs when:

a) A group is working together in a cohesive, flowing manner for peak performance.

b) Group members know each other so well that they are able to anticipate the other's ideas.

c) Group members conform to the group's decision and are unwilling to express disagreement.

d) A group cannot make a decision because members are unwilling to compromise.

39. When an employee brings up an ethical concern at work, the manager is obliged to take the issues completely off the employee's hands.

A. True

B. False

40. The Tailhook scandal is an example of:

a) Management focusing too much on the ends rather than the means.

b) The ethical Pygmalion effect.

c) Social learning theory.

d) Employees ignoring management's clear message.

41. Managers play a limited role in increasing engagement and building an ethical culture.

A. True

B. False

42. This driver of engagement, __________, refers to the fact that employees should understand the company's strategic direction and how their individual efforts play a role in the company's revenue-generating enterprise.

a) Line of sight

b) Involvement

c) Information sharing

d) Rewards and recognition

43. Research has shown that the best way to encourage ethical behavior is to create an organizational culture that is built to enhance employee engagement.

A. True

B. False

44. As a manager of ABC Corporation, you are in a tough situation. You must send an employee to work with your new client in Europe and Sam is clearly the most qualified candidate. However, ABC Corporation is located in an area where several people of Sam's race have been violently attacked. You must choose to send Sam or Tonya. What should you do?

a) Automatically send Tonya to Europe without telling Sam he was considered.

b) Automatically send Sam to Europe because he is clearly the most qualified.

c) Ask Sam if he wants to go to Europe and discuss the situation.

d) Assign Sam to a new task and send the Tonya to Europe.

45. According to a survey of executives, most respondents would rather lie to employees about performance than confront them about performance problems.

A. True

B. False

46. Which of the following is not an effective way to discipline employees?

a) Discipline must be constructive and done in a professional manner.

b) Discipline should be done privately.

c) Employees should be encouraged to explain their side of the story.

d) Discipline should be consistent with what other employees at the same level or position received.

47. You are a manager forced to layoff certain employees. What is the primary objective that should guide your treatment of these individuals?

a) To make the process as quick and painless to the company as possible.

b) To ensure the grapevine is passing truthful information.

c) To ensure layoff survivors understand why they were not chosen.

d) To allow the terminated employee to maintain personal dignity.

48. Because of a family emergency, John was unable to complete a report for his boss. Instead, he asks a coworker to finish it for him and in the morning, John tells his boss that he did the report. Is there anything wrong with John's action?

a) No, because John's coworker only finished what John had started.

b) No, because John had a family emergency and his boss don't need the details. The report is done.

c) Yes, because John told a lie to his boss and put his reputation on the line.

d) Yes, because John is indebted to his coworker now.

49. People do not want to believe that the world operates on the principles of fairness.

A. True

B. False

50. The best way to ensure that you are not going to be asked to compromise your values is to clearly communicate what people can expect from you.

A. True

B. False

MGT445 FINAL EXAM QUESTIONS

Business / Economics

7/6/12

Asked: 7/6/12 10:44 AM
Opening Offer: $15.00
Due Date: 7/6/13

 

1. In distributive bargaining, negotiators view tradeoffs as a "zero-sum" game.

a. True

b.False

2. A "win-win" negotiation goal would best describe the integrative negotiation style.

a. True

False

3. Which one of the following is an effective technique for dealing with hard-ball tactics?

a. Fight fire with fire

b. Threaten and bluff until the other party is intimidated

c. Plead for mercy

d. Complain to the other party's constituents

e. Ignore them

4. Which of the following approaches is inconsistent with interest-based negotiation?

a. Separating the people from the problem

b. Identifying shared interests

c. Fully exploring the problem

d. "Low-balling" and "high-balling" opening offers

e. Inventing options for mutual gain

5.All of the following arilwell- regarded approaches to ethical reasoning, except

a. QDuty

b. D Social contract

c. D "Personalistic"

d. D End results

e. D Absolute ethics

6. The following are true of coalitions, except

a. D They rarely start with a founder

b. D They build by adding one member at a time

c. n They need to achieve critical mass

d. D They exclude members

e. S They sometimes form quietly and disband quickly

7. Which of the following would be an incorrect statement about multi-party negotiations?

a. The number of parties greatly influences the process

b. D Information exchange tends to be more complex
c. The social environment, remains static

d, Procedural complexity adds to the negotiation challenges

e. They are strategically more complex

8, Which of the following best describes the conflict type when disagreements center on personal beliefs and deeply held values?

a. D Nuisances

b. D Data

c. Values

d. D Attribution

e. Control

9. To maximize the potential for a successful resolution, prudent conflict managers analyze and consider the interests of which of the following stakeholders?

a. D Agents

b. D Constituents

c. n Advocates

d. El Parties

e. n All of the above

10. The "bottom line" a disputant is seeking when resolving conflict is best described as which of the following?

a. D Principle

b. D Position

c. D Interests

d. D Needs

e. Aspiration

11. Which of the following elements need not be considered when assessing the negotiation environme of a foreign nation?

a. D Legal pluralism

b. D Instability and change

c. D Political pluralism

d. Cultural differences

e. None of the above

12. Given the complexity and uncertainty surrounding global business negotiations, it is particularly important that prudent negotiators do which of the following?

a. H Assess their "BATNA" before commencing negotiations

b. Arrange their travel itineraries well in advance of negotiations

c. Avoid any form of conflict or competition

d. Avoid showing weakness by creating options for their opponents during negotiation

e. All of the above

13. In which of the following cultures would a friendly, trusting, and relationship-building negotiation
protocol be highly valued?

a.. Mexican

b. Italian

c.russian
d. Japanese

e. Brazilian

14. While important, culture is rarely a significant factor in assessing the probability of success in a global
negotiation.

a. True

b. False

15. "E-Negotiations" and similar technological advances effectively remove the need for negotiators tc
travel to their markets to maintain personal contact with customers and to assess the local ss

environment.

a. True

b. False

16. Name the top ten ways culture affects negotiations (5 points). Vou must list all fen to receive credit.

Negotiating Goal: Contract or Relationship

Negotiating Attitude: Win/Lose or Win/Win

Personal Style: Formal or Informal

Communication: Direct or Indirect?

Sensitivity to Time: High or Low?

Emotionalism: High or low?

Form of agreement: General or specific?

Building an Agreement: bottom up or top down?

Team Organization: One leader or group consensus?

Risk taking: High or Low?

MGT 311 Final Exam

Business / Economics

7/6/12

Asked: 7/6/12 10:47 AM
Opening Offer: $30.00
Due Date: 7/6/13

1) In her work in the publishing industry, Vera seeks out new authors whom she considers promising. In the past 2 years she has found a number of new writers whose work she thought was exceptional, and immersed herself in the task of helping them shape their manuscripts for submission to her managers for publishing. Although she was extremely proud of the results, none of the authors she worked with were chosen for publication. Vera believes that the decision not to publish these authors was based on personal rivalries within management, rather than the quality of her writers' work. She is extremely frustrated, dreads coming into work each morning, and is seriously thinking of resigning. How can Vera's job attitude best be described?
A. Low job satisfaction and low job involvement

B. High job satisfaction and low job involvement

C. Low job satisfaction and high job involvement

D. High job satisfaction and high job involvement

2) Julia works as a receptionist at a real-estate company. Her boss just came in the door and yelled at her, telling her that the front office was a mess and that she needed to get up and clean it immediately. After her boss left the room, Julia grabbed three magazines and violently slammed them into the trash can. Which of the following best describes Julia's action?
A. An affect

B. A thought

C. A mood

D. An emotion

3) Erin works on a software help desk. After being yelled at by a customer about the state of her company's software, she becomes angry, and has to take a short break to calm down. What makes her anger an emotion, rather than a mood?
A. It is a simple, unambiguous feeling.

B. It interferes with her capacity to work effectively.

C. It has contextual stimulus.

D. It can be controlled given some time.

4) Any incompatibility between two or more attitudes or between behavior and attitudes results in what?
A. Organizational dissonance

B. Cognitive dissonance

C. Attitudinal clarification

D. Values clarification

5) What is the degree to which a person identifies with his or her job, actively participates in it, and considers his or her performance as being important to self-worth?
A. Job satisfaction

B. Job involvement

C. Job stability

D. Organizational commitment

6) What term is used for those emotions that an organization requires workers to show and considers appropriate for a given job?
A. Felt emotions

B. Required emotions

C. Conditional emotions

D. Displayed emotions

7) Janet needs to assign a very important advertising account to one of her writers. First she reviewed each writers work load, then she studied the sales data of the products for the last three campaigns of each writer, then she reviewed each writer's annual review to familiarize herself with their goals. Finally, she gave the account to Paula, a very creative, efficient writer who has had high sales results with her last three clients' products. What is Janet's management style is based on?
A. Organizational behavior studies
B. Substantive evidence approach
C. Preconceived notions
D. Systematic study

8) Basing managerial methods on the best available scientific evidence is called what?
A. Systematic study

B. Organizational behavior

C. Evidence-based management

D. Conceptual management

9) The manager at a construction site observes that he is spending a great deal of time interviewing prospective employees. This is due to the large amount of absenteeism and turnover among his skilled workers. While questioning exiting employees, he discovers that many of them quit because they feel the work place is too dangerous. In particular, several foremen have stated that the need to get the job done quickly is more important than a few rules, and have gone as far as to mock the courage of workers who question this attitude. What is the best way for the manager to control the deviant behavior of the foremen?
A. Ordering the foremen to conform with the required safety standards

B. Finding out why the foremen place a greater importance on finishing the job than on safety

C. Firing the foremen and promoting new foremen from the current pool of workers

D. Taking over the work of the foreman himself

10) Phil loves sales. He has been a stellar sales person since he was 12. Recently he was awarded a full paid trip for two to Puerto Rico for breaking a company sales record. Phil is so motivated to work, he has set a new goal to break his old record in the coming year. Taking into account self-determination theory, why did the company recognition and award, an extrinsic reward, motivate Phil?
A. The reward was seen as a coercive method of increasing sales and motivated Phil to prove himself intrinsically.

B. The reward was imposed to work toward a standard that Phil could not believe in, and his intrinsic motivation suffered.

C. The reward increased Phil's sense of competence by providing feedback that improved his intrinsic motivation.

D. The reward increased Phil's sense of competence by providing feedback that diminished his intrinsic motivation.

11) Tony loves programming. He was on the ground level of the computer revolution. This year his boss has set personal goals for each of the programmers, one of which includes a presentation from each programmer about a project. Tony is very annoyed because he has a tremendous amount of work to do and he will have to spend the weekend, his personal time, preparing the presentation. Taking into account self-determination theory, why did his manager's goals and the presentation reduce Tony's motivation?

A. The internally imposed goal feels coercive, causing Tony's intrinsic motivation to suffer.

B. The self-imposed goal increases his sense of competence, causing the intrinsic motivation to suffer.

C. The externally imposed goal is an external reward, causing Tony's intrinsic motivation to increase.

D. The externally imposed goal feels coercive, causing Tony's intrinsic motivation to suffer.

12) Glendon has a degree in business and worked for 2 years at an international firm in Spain. When the firm suffered cutbacks and Glendon returned home, he took a job at a nonprofit agency mentoring at-risk Spanish-speaking children. Glendon earns a third of what he earned in the business world, but has decided that his new goal is to acquire a larger case load and continue to use his Spanish to help people. Which theory explains why Glendon is happy with a much smaller external reward for his work?

A. Self-imposition of goals

B. nAch

C. Self-concordance

D. Extrinsic motivation

13) Today Marci's boss entered her cubicle and told her that her work has been fantastic, and that because of her last project the client is going to give the company all of their business. Marci's boss continued to talk about what a great job she's doing. When her boss left, Marci felt very confident and satisfied with herself and her job. Marci's boss uses communication in which of the following functions?

A. Motivation

B. Control

C. Emotional expression

D. Information

14) What can managers do to make sure that important information is not withheld from them through silence?

A. Listen to and support diverse opinions.

B. Deal with information overload.

C. Interpret what they see and call it reality.

D. Tell employees what they want to hear.

15) When Neal Patterson, CEO of Cerner Corporation, sent his seething e-mail to 400 managers, he erred by selecting the wrong

A. channel for his message

B. message

C. distribution

D. emotional charge

16) Araceli is a team member in a large corporation. She never speaks in the team meetings because she has seen members talk behind each others' backs outside of the meetings. Members are constantly monitoring the other member's work, looking for a mistake to point out in a meeting. According to the information provided, which contextual factor is most likely hindering the success of Araceli's team?

A. Adequate resources

B. Climate of trust

C. Team structure

D. Performance evaluations

17) Ayesha is leading a group to develop a prototype for a new product. She has chosen three people to work with her. Ben and Tom are good friends and socialize on the weekend. They are both very creative. Julian is older than Ben and Tom, but they have worked together before and been quite productive. Julian is organized. Ayesha has never worked with any of the men, but knows the product well. She brings the highest level of expertise. Which of the following statements best describes Ayesha's group?

A. High norms, low cohesiveness, high productivity

B. Low norms, low cohesiveness, low productivity

C. High norms, high cohesiveness, high productivity

D. Low norms, high cohesiveness, low productivity

18) Irma does not like a few of the standard operating procedures adapted for the new project. However, she discussed the items with the team and told them that she realized she was in the minority and that she would adapt the new procedures to maintain smooth operations within the team. What is this type of intention called?

A. Sacrificing

B. Accommodating

C. Collaborating

D. Compromising

19) Angelina feels that her cubicle neighbor talks too loudly on the phone, but in other ways she is a great neighbor. Angelina gets annoyed every time her neighbor's phone rings, but she has decided it is simply not worth the trouble to talk to her neighbor. What is Angelina's conflict intention called?

A. Avoiding

B. Accommodating

C. Compromising.

D. Collaborating

20) For process conflict to be productive, it must be

A. Kept high

B. Kept low

C. Kept at low to moderate levels

D. Kept at moderate levels

21) The right inherent in a managerial position to give orders and expect orders to be obeyed is termed

A. chain of command

B. authority

C. power

D. unity of command

22) ________ are consistent with recent efforts by companies to reduce costs, cut overhead, speed up decision making, increase flexibility, get closer to customers, and empower employees.

A. Wider spans of control

B. Narrower spans of control

C. Matrix structures

D. Simple structures

23) What is the process through which employees are adapted to an organization's culture?

A. Personalization

B. Mentoring

C. Socialization

D. Institutionalization

24) If there is a basic conflict between the individual's expectations and the reality of working in an organization, the employee is most likely to be disillusioned and quit during which stage of socialization?

A. Prearrival

B. Ritual

C. Metamorphosis

D. Encounter

25) When your superior offers you a raise if you will perform additional work beyond the requirements of your job, he or she is exercising ________ power.

A. Legitimate

B. Coercive

C. Reward

D. Personal

26) Political behaviors usually

A. lie outside of an individual's specified job performance

B. are counter productive to individual goals

C. are seen only in large organizations

D. are frowned upon by organizational leaders

27) Regardless of the composition of a group, managers can leverage diversity to achieve superior performance by which of the following approaches?

A. Emphasize the higher-level similarities among members.

B. Ensure that everyone knows the importance of diversity in groups.

C. Explain the legal and ethical implications involved of not having a diverse group.

D. Focus on the benefits of having a diverse group.

28) Effective workforce programs that encourage diversity have three distinct components. First, they inform managers about the legal framework for equal employment opportunities and encourage fair treatment. Second, they teach managers how a diverse workforce will be better able to serve a diverse market of customers and clients. Third, they

A. ensure top-level management represents the diversity of its workforce and client base

B. ensure that certain groups have not been underutilized

C. generally involve one-shot training sessions that don't take up an undue amount of time

D. foster personal development practices that bring out the skills and abilities of all workers

29) If individuals resisting change are included in making change decisions in an attempt to gain their support, what is this approach called?

A. Cooptation

B. Exploitation

C. Manipulation

D. Coercion

30) Which tactic to overcome resistance to change is a relatively easy way to gain the support of adversaries, but may backfire if the targets become aware of the tactic?

A. Conciliation

B. Manipulation

C. Coercion

D. Cooperationactic?

MGT 521 Final Exam

Business / Economics

7/6/12

Asked: 7/6/12 10:50 AM
Opening Offer: $25.00
Due Date: 7/6/13

1) John writes a memo to his employees. Putting his thoughts onto paper is an example of

A. communicating

B. messaging

C. encoding

D. cryptography

2) Chantel received an invitation to a web meeting that will take place at 3:00 p.m. She accepted the invitation. This is an example of

A. formal channels of communication

B. spontaneous communication

C. feedback as a function of communication

D. informal channels of communication

3) You are doing research on political issues and find that you are on a conservative leaning site. What type of source credibility issue is this?

A. Credentials

B. Impartiality

C. Currency

D. Style

4) When reviewing an educational math website, you find the author's background is in English. What type of source credibility issue is this?

A. Credentials

B. Impartiality

C. Currency

D. Style

5) A famous ice cream manufacturer sent workers to a nearby grocery store to offer shoppers a sample of its new flavor. The workers provided samples to 300 shoppers and noted that 80% of the sample population stated they liked the flavor. Based on this scenario, which of the following is an example of an inference?

A. Workers provided samples to 300 shoppers.

B. 20 percent of the sample population did not like the new flavor or were indifferent.

C. The ice cream manufacturer began producing the new ice cream flavor and offered it in stores.

D. The workers were offering samples to see if the general public liked the new flavor.

6) Persuading or convincing others to accept your argument means the reasoning must be logical. Which of the following is an example of logical flaws or fallacies?

A. Opposing views are considered

B. Hasty Generalization

C. Argument presents alternative explanations

D. Reasoning from specific evidence

7) What is the best way for the CEO to deal with managers in key positions who continue to resist a major change?

A. Minimize their interactions with fellow employees and work around them

B. Replace them with people who will support the change

C. Give them space and hope they will come to see why the change was necessary

D. Keep increasing the pressure on them to support the change

8) Finding a win-win solution that allows parties who are involved to have their goals achieved is an example of

A. accommodation

B. collaboration

C. team building

D. compromising

9) What is emphasized more in ethical leadership theories than in transformational leadership?

A. Leader values

B. Leader behaviors

C. Leader skills

D. Leader traits

10) Ethical behavior and integrity for a leader is most likely to result in

A. higher unit performance

B. higher performance ratings for the leader by bosses

C. higher subordinate satisfaction and trust

D. less stress for the leader

11) A common characteristic of most entrepreneurs is that they

A. accept the risks involved in starting and managing a business

B. have a high level of scientific and technical expertise

C. possess a great deal of personal wealth

D. have experience in running large, complex organizations

12) In order to make an intelligent investment decision, entrepreneurs should

A. limit their options to those business investments that are backed by the U.S. government

B. invest in businesses that have generated a stable rate of profit for at least the past ten years

C. invest only in business opportunities where it is possible to take an active role in management

D. compare the risks of potential investments to their expected profits and find the right balance between profit and risk

13) The customers, employees, stockholders, suppliers, creditors, and others who stand to gain or lose by the policies and activities of a business represent the firm's

A. market makers

B. economic environment

C. stakeholders

D. social mentors

14) When a firm makes use of the SWOT analysis, one of its objectives is to

A. identify the best employees to fill each position within the organization

B. set specific short-term performance standards for each department

C. evaluate the desirability of issuing stocks or bonds in the current financial climate

D. identify the things it does well as an organization and the things it needs to improve

15) The process of rating an organization's practices, processes, and products against the best of the world is known as

A. webworking

B. outsourcing

C. benchmarking

D. core competencies

16) Companies benefit today by inter-firm cooperation. One of the ways they cooperate is through networking. Another way is by seeking technological knowledge and learning new processes from other firms that usually fall outside of their respective industries. We call this

A. competency capturing

B. technology swapping

C. benchmarking

D. broadening the knowledge base

17) An important difference between accounting and other business functions, such as marketing and management, is that

A. accounting functions must be performed by an "outsider" (rather than by an employee of the business) in order to avoid conflicts of interest

B. accounting offers us insight into whether the business is financially sound

C. accounting involves mainly clerical activities and thus requires very little analysis

D. accounting deals exclusively with numbers

18) Although accounting has several specific uses, the overall purpose of accounting can be summarized as

A. to provide financial information that is useful to decision makers

B. to meet the legal requirements of the Financial Accounting Standards Board (FASB)

C. to allow the government to track business activity levels

D. to compute the profit or loss and declared dividend of a business firm

19) An important advantage that knowledge technology has over older versions of business technology is that it

A. is much cheaper to incorporate into most business operations

B. delivers timely information directly to the people who need it

C. allows businesses to locate anywhere and still reach their customers

D. eliminates the need for business to store information electronically

20) First Engineering, a large U.S. based mechanical engineering firm, is considering entering the global market. Upon careful analysis of the global market, they will find that global trade

A. opportunities are diminishing

B. is dominated by emerging, developing countries

C. is likely to be severely restricted in the future by nontariff trade barriers

D. is big business today and is expected to be more important in the future

21) The process of setting up individual functional units of the business to do specialized tasks is called

A. departmentalization

B. division of labor

C. job specialization

D. delegation of authority

22) The proven success of job specialization lies in the fact that

A. it leads to groupthink

B. it avoids the pitfalls of division of labor, where workers become removed from thinking conceptually about the business

C. it is a detractor to others who are thinking about entering your industry because it successfully creates barriers to entry

D. it adds efficiency to the business's operation by identifying tasks that some do better than others

23) Economics is the study of how a society

A. invests wisely in the stock market

B. employs resources to produce goods and services and distribute them among competing groups and individuals

C. employs statistical techniques to make predictions about the evolution of society over the long run

D. governs itself for the good of its citizens

24) How is it that people working in their own self-interest produce goods, services, and wealth for others?

A. By taking advantage of a vast supply of labor, people working in their own self-interest could hire others at very low wages.

B. In order to earn money and produce goods that improve lives, self-directed gain would provide jobs, and subsequently wages for others.

C. The government pays entrepreneurs in the United States to produce goods, services, and wealth for others.

D. Entrepreneurs tend to include themselves in a group of people who need charitable support. A portion of the entrepreneur's profit (as required by law) goes to the charity of one's choice to support the less fortunate.

25) The ultimate resource of a firm is its

A. business plan

B. marketing mix

C. capital budget

D. employees

26) Today, human resource management has become so important that in many firms it has become

A. a function performed by managers in all areas of the organization

B. the main responsibility of the firm's legal staff

C. a function handled only by specialists in the human resource department

D. function handled only by the firm's top management

27) Which of the following is included in performing a business analysis?

A. Hiring new employees

B. Entering global markets

C. Conducting a SWOT analysis

D. Networking

28) When the competition is intense and the environment is changing rapidly, it is especially important to

A. maintain a high level of external monitoring

B. have detailed plans and operating procedures

C. increase the power of the chief executive

D. strengthen the organization culture

29) Which of the following would be a concern addressed in a strategic plan?

A. Which specific jobs should be assigned to each employee?

B. How much output should be produced this week in a given production facility?

C. Which computer software package should the firm's human resources office use to manage the payroll?

D. Should the firm make a long-term commitment to expand into new markets?

30) Tactical planning is concerned with

A. determining the best way to cope with an emergency situation

B. devising temporary courses of action to be used if the primary plans do not achieve the desired results

C. developing detailed strategies about what is to be done, who is to do it, and how it is to be done

D. setting long run goals that will govern the general course of the organization for years

MGT 330 Final Exam

Business / Economics

7/6/12

Asked: 7/6/12 10:53 AM
Opening Offer: $25.00
Due Date: 7/6/13

1) Which of the following functions of management is focused on delivering strategic value?

A. Planning

B. Organizing

C. Leading

D. Controlling

2) Which of the following best characterizes the controlling function of management?

A. Motivating people to be high performers

B. Assigning job responsibilities and allocating resources

C. Monitoring performance and implementing changes as necessary

D. Analyzing current situations and formulating business strategies

3) __________ involves analyzing a situation, determining goals to be pursued, and deciding upon the actions that will be taken to achieve these goals.

A. Staffing

B. Leading

C. Organizing

D. Planning

4) Robert was recently hired as the workplace safety compliance officer at ABC Power Company. Robert will have the responsibility to monitor regulations from which of these government agencies?

A. Federal Communications Commission

B. Environmental Protection Agency

C. National Labor Relations Board

D. Occupational Safety and Health Administration

5) Which of the following is the first step in effective delegation?

A. Give the person the authority needed.

B. Define the goal succinctly.

C. Select the person to do the task.

D. Solicit ideas from subordinates.

6) The assignment of different tasks to different people or groups is the

A. strategic plan

B. organization structure

C. division of labor

D. value chain

7) Plans are

A. actions taken to achieve goals

B. targets a manager wants to reach

C. specific to differing industries

D. inappropriate when resources are scarce

8) The outcome of situational analysis is

A. the identification of alternative plans of action

B. the identification of contingency plans to be followed under various scenarios

C. the identification of planning assumptions, issues, and problems

D. the identification of the consequences of alternatives under consideration

9) What is management's function in strategic planning?

A. To outline the goals and objectives of the organization

B. To give specific directions as to how each department is operated

C. To begin the selection and hiring process for the organization

D. To set-up tight controls on how each function in the organization is to be structured

10) Which of the following would provide the best information for the manager on factors that influence the company's strategic, tactical, operational, and contingency plans?

A. Recently released government regulations

B. Statistical data regarding market share

C. SWOT analysis

D. Prior year's financial performance of the company

11) __________ plans might be referred to as "what-if" plans.

A. Single-use

B. Strategic

C. Contingency

D. Standing

12) A plan that focuses on ongoing activities and may become a more permanent policy or rule is a

A. standing plan

B. single-use plan

C. strategy

D. mission statement

13) Which type of program should management implement to have a culture of ethics that prevent, detect, and punish legal violations?

A. Sarbanes-Oxley Act Training

B. Ethics program

C. Compliance-based ethics program

D. Integrity-based ethics program

14) Honesty, caring, loyalty, fairness, and integrity are all examples of

A. citizenship

B. values

C. self-focus

D. ethics

15) As a manager, you want to create a project team to plan and implement a project designed to meet the demands of globalization. Which of the following types of organizational structure would you use to achieve higher degree of flexibility and adaptability of the team members?

A. Functional

B. Divisional

C. Matrix

D. Network

16) The planning process of human resources management begins with

A. determining the number and types of people needed to realize the organization's business plans

B. recruiting individuals who will assist the organization to realize its business plans

C. training people who will assist the organization to realize its business plans

D. evaluating an organization's present employees and their capabilities to fulfill the organization's business plans

17) Which type of organizational structure optimizes employee empowerment?

A. Centralized

B. Decentralized

C. Functional

D. Divisional

18) The assignment of different tasks to different people or groups is the

A. strategic plan

B. organization structure

C. division of labor

D. value chain

19) Which of the following is an advantage of product departmentalization?

A. Information needs managed more easily

B. Suitable for stable environments

C. Efficient resource utilization

D. Decision making and lines of communication are simple

20) Ruby recently accepted a job with a large insurance firm as an internal auditor. Ruby has found that her job is different than the internship she had at an accounting consulting firm. The insurance firm has strictly defined job responsibilities and lines of communication. For every decision Ruby needs to make, approval must be obtained from upper management. Overall, she has found the atmosphere to be quite formal as compared to the internship. Ruby has concluded that the insurance firm has

A. a high degree of centralization

B. decentralized authority

C. a matrix design

D. an ineffective structure

21) A mental image of a possible and desirable future state of the organization is a(n)

A. strategic plan

B. operational plan

C. goal

D. vision

22) A leader is

A. someone with authority over others

B. the top-level manager in a firm or business

C. a strategic-level manager

D. someone who influences others to attain goals

23) Legitimate power is described as power that exists through

A. control over punishments

B. control over rewards

C. the authority to tell others what to do

D. having expertise

24) Behavior that gives purpose and meaning to organizations, while envisioning and creating a positive future, is

A. supervisory leadership

B. strategic leadership

C. charismatic leadership

D. task-motivated leadership

25) NAFTA combined the economies of

A. the U.S., Canada, and Mexico

B. Canada, Mexico, and South America

C. South America, the U.S., and Latin America

D. Latin America, Pacific Rim, and the European Union

26) A pharmaceutical manufacturer actively monitors all products produced to verify their ingredients fall within rigid control ranges that ensure product effectiveness. This monitoring allows them to make adjustments should they see negative trends occurring. The manufacturer is engaging in the management function of

A. planning

B. controlling

C. quality assurance

D. regulatory compliance

27) Which type of control works best when there is "no one best way" to do a job and employees are empowered to make decisions?

A. Bureaucratic control

B. Market control

C. Clan control

D. Performance control

28) This type of control takes place while plans are carried out, and is the heart of any control system.

A. Feedback control.

B. Concurrent control

C. Feed forward control

D. Market control

29) Where are performance data commonly obtained?

A. Oral and written reports and personal observation

B. Supervisors, line managers, and coworkers

C. Top, middle, and lower management

D. Competitors

30) The last step in the control process is

A. taking corrective action

B. setting performance standards

C. measuring performance

D. comparing performance

MGT 230 Final Exam

Business / Economics

7/6/12

Asked: 7/6/12 10:58 AM
Opening Offer: $25.00
Due Date: 7/6/13

1) Planning involves which of the following?

A. Analyzing current situations

B. Determining rewards for goals achievement

C. Motivating employees

D. Implementing necessary changes

2) _______ is specifying the goals to be achieved and deciding in advance the appropriate actions needed to achieve those goals.

A. Staffing

B. Leading

C. Organizing

D. Planning

3) Advances in genetic engineering and biotechnology are expected to produce some food products that will become available year-round even in northern climates. These changes will provide grocers with an opportunity to reduce their shipping costs while at the same time, offering fresher produce to their customers. These advances are an example of changes in the

A. technological environment

B. economic environment

C. political environment

D. ecological environment

4) _________ trends regarding how people think and behave have major implications for management of the labor force, corporate social actions, and strategic decisions about products and markets.

A. Psychological

B. Economic

C. Technological

D. Societal

5) Which of the following is a step in the decision-making process?

A. Generating an idea

B. Good business planning

C. Evaluating the decision

D. Delegating a task

6) Which is a step in the decision-making process?

A. Resolving and reducing conflict

B. Making the choice

C. Using the lack of structure

D. Delegating a task

7) The targets or ends the manager wants to reach are called

A. goals

B. missions

C. visions

D. strategies

8) In the _______________ stage of the planning process, managers should weigh the advantages, disadvantages, and potential effects of each alternative goal and plan.

A. goal and plan evaluation

B. goal and plan selection

C. implementation

D. alternate goals and plans

9) Tactical planning would include which of the following?

A. Profit goals

B. Design, test, and install the equipment needed to produce a new product line

C. Human resources requirements

D. Return on investment

10) The internal analysis component of the strategic management process assesses the organization's

A. performance levels

B. competitors

C. industry growth rate

D. product substitutions in the market

11) Eagle Manufacturing, Inc., is in the middle of its first day of the senior management retreat. The topic on the agenda is corporate social responsibility (CSR). Most of the group has seen this brought up before and then shot down because it generally costs Eagle's shareholders in the form of a lower stock price. But the new VP of Ethics, Gloria Wright, is about to explain why she believes CSR will actually benefit the shareholders and Eagle management alike. Her team begins the presentation with a discussion of CSR—its current definition and reconciliation of past views. Jeremiah then discusses the importance of being a good global corporate citizen by supporting the local school system. Ellen takes the floor to make the case for doing what is expected by global stakeholders even though there are no

laws requiring those actions. Finally Gloria wraps the discussion up with why Eagle should take legal and economic responsibility for the firm's performance. To Gloria's team's credit, senior management does appear to buy into the pyramid of global corporate social responsibility and performance that her team just presented.

Ellen's presentation most likely focused on the __________ responsibility of the firm.

A. economic

B. legal

C. ethical

D. social

12) Eagle Manufacturing, Inc., is in the middle of its first day of the senior management retreat. The topic on the agenda is corporate social responsibility (CSR). Most of the group has seen this brought up before and then shot down because it generally costs Eagle's shareholders in the form of a lower stock price. But the new VP of Ethics, Gloria Wright, is about to explain why she believes CSR will actually benefit the shareholders and Eagle management alike. Her team begins the presentation with a discussion of CSR—its current definition and reconciliation of past views. Jeremiah then discusses the importance of being a good global corporate citizen by supporting the local school system. Ellen takes the floor to make the case for doing what is expected by global stakeholders even though there are no

laws requiring those actions. Finally Gloria wraps the discussion up with why Eagle should take legal and economic responsibility for the firm's performance. To Gloria's team's credit, senior management does appear to buy into the pyramid of global corporate social responsibility and performance that her team just presented.

Gloria's team's presentation focused on the pyramid of global corporate social responsibility. To do what is desired by global stakeholders correlates with the _______ component of the pyramid.

A. philanthropic

B. ethical

C. legal

D. economic

13) In the study by Lawrence and Lorsch, companies in complex, dynamic environments developed _____ levels of differentiation; and

_____ levels of integration.

A. low; low

B. high; high

C. low; high

D. high; low

14) An aspect of the organization's internal environment created by job specialization and the division of labor is called

A. differentiation

B. integration

C. division of labor

D. specialization

15) An organization with departmentalization that groups units around products, customers, or geographic regions is called a

A. divisional organization

B. centralized organization

C. matrix organization

D. functional organization

16) Which of the following statements about matrix organizations is true?

A. A matrix organization is the same as a functional organization.

B. A matrix organization is the same as a product organization.

C. A matrix organization is a hybrid of the functional and divisional organizational forms.

D. A matrix organization is considered out-of-date compared to the organic organization.

17) An organization with departmentalization that groups units around products, customers, or geographic regions is called a

A. centralized organization

B. matrix organization

C. virtual organization

D. divisional organization

18) Sports International (SI) began business by making shoes for athletes. They soon expanded into making shoes for non-athletic purposes. They now manufacture and distribute clothing, sporting equipment, and protective sports gear worldwide. They are departmentalized by products sold to serious athletes, products sold to "weekend" athletes and products sold to sports teams. SI has

utilized which form of departmentalization?

A. Geographic

B. Customer

C. Functional

D. Matrix

19) The trait known as leadership motivation suggests that great leaders

A. can motivate others to work hard

B. can motivate others to become leaders

C. can motivate others to join

D. want to lead

20) A leadership perspective that attempts to identify what effective leaders do and the behaviors they exhibit is referred to as the

A. behavioral approach

B. trait approach

C. transformational leadership

D. strategic approach

21) __________ leadership invites colleagues at the same level to solve problems together.

A. Horizontal

B. Collegial

C. Lateral

D. Linear

22) Leaders who relate to others to serve their needs and enhance their personal growth while strengthening the organization are known as

A. lateral leaders

B. shared leaders

C. bridge leaders

D. servant-leaders

23) A shift in worker values toward personal time, quality of life, self-fulfillment, and family is occurring among

A. men

B. women

C. women and men

D. minorities

24) Future trends in the labor force include a

A. smaller labor force

B. more experienced labor force

C. more homogenous labor force

D. younger labor force

25) Behavior that gives purpose and meaning to organizations, while envisioning and creating a positive future, is known as

A. strategic leadership

B. supervisory leadership

C. organizational leadership

D. task leadership

26) The correspondence between actions and words that include characteristics such as honesty and credibility is known as

A. drive

B. self-confidence

C. knowledge of the business

D. integrity

27) Owners from two businesses have asked you which type of control system they should utilize. To help you make your decision, they have each provided a brief description of their organization. Alpha Omega, Inc., is a large corporation built in the 1950s. They produce chemical concentrates for industrial cleaning. Their organization uses a strict set of rules and regulations with their workforce. They have

the ability to track a large amount of data using statistical techniques. Mid-Atlantic Health is a regional medical center. They want to use a control system that will allow them to tie pricing of services and profits to specific services in the medical center. The control systems that should be used in the scenarios above were developed by

A. William Ouchi

B. Xerox

C. Frederick Taylor

D. Motorola

28) Your manager is speaking to a group of employees about a problem in your department. Employees are not complying with the rules regarding clocking in and clocking out each day. The rules in this situation are very important as employees will not receive their correct pay if the clocking procedures are not followed. There are three suggestions being considered to address this problem.

Employees will be monitored at the entrance during shift changes to make sure that each complies with the procedure.

Reports will be reviewed at the end of each pay period. The reports will contain data tracking the number of employees not complying with the procedures each shift. Employees violating the procedure will be counseled to correct the problem.

A new procedure will be developed describing an easier procedure for employees to follow. Training will be conducted so that each employee knows the policy and the procedure before it is enacted.

Option 1 describes which approach to bureaucratic control?

A. Feedback

B. Concurrent

C. Feedforward

D. Market

29) Suppose you are interviewing the CEO of a large company. The CEO is telling you about his or her job as a manager and how he or she spends time. Using the description below, which function of management is the CEO most likely describing in this example?

"My job, for some part of each day, is to empower our employees to think of things in new and different ways, not just to come to work and complete the tasks on a list."

A. Organizing

B. Leading

C. Controlling

D. Decision making

30) Suppose you are interviewing the CEO of a large company. The CEO is telling you about his or her job as a manager and how he or she spends time. Using the description below, which function of management is the CEO most likely describing in this example?

"Every six months or so, my senior management team and I meet to discuss the goals that will be achieved over the next year, three years, and beyond. We then make sure we are clear on who will take responsibility to see that the appropriate actions are undertaken to achieve our goals within the time frame we set."

A. Planning

B. Organizing

C. Leading

D. Decision making

MGT 350 Final Exam

Business / Economics

7/6/12

Asked: 7/6/12 11:00 AM
Opening Offer: $25.00
Due Date: 7/6/13

1) Bill Simmons is the manager of a small restaurant and must decide how much money he owes his suppliers. The best way for Bill to approach this as a critical thinker is to

A. collect and analyze the evidence

B. identify opportunities and obstacles

C. understand different perspectives on the issue

D. weigh the consequences of this decision

2) Critical thinking is very important in making decisions that impact an organization's growth and survival. Which of the following traits of a critical thinker is essential in this process?

A. Intellectual integrity

B. Intellectual empathy

C. Intellectual perseverance

D. Intellectual courage

3) When faced with a decision opportunity, a critical thinker must sort through a variety of readily apparent symptoms in order to focus on important considerations that may be hidden. Based on the decision steps model, when framing a problem a helpful step is to

A. Determine root causes

B. Measure the decision

C. Frame alternatives

D. Evaluate effects of the problem

4) In the stages of development of critical thinking, which of the following types of thinking entails exploring the foundation of our thinking and discover how we have come to think and believe we do?

A. Beginning thinker

B. Practical thinker

C. Advanced thinker

D. Master thinker

5) One way for a leader to develop alternative perspectives for decision making is to:

A. increase the use of the logical thinking style

B. increase the homogeneity of his or her team

C. assign the role of devil's advocate for meetings

D. apply past decision successes to current decision opportunities

6) The outcome of the process of framing the problem includes:

A. a list of potential alternative courses of action

B. a list of criteria, goals, and objectives for a decision

C. a timeline for decision implementation

D. an assessment of resources needed to execute a decision

7) A form of critical thinking is fair-minded, persuasive thinking. When engaging in problem formulation and identification with a group, the fair minded persuader would:

A. communicate only that information which supports the desired decision

B. avoid all affective appeals

C. emphasizes affective appeals over data and reason

D. acknowledges the difficulty that his or her position creates for the audience

8) Of the decision styles listed below, which one should be used for a non-urgent, yet critical and unusual problem affecting multiple stakeholders?

A. Autocratic

B. Participative

C. Democratic

D. Programmed decision making

9) Urgent crisis conditions might call for a decision making style that is

A. democratic

B. consensus

C. autocratic

D. collaborative

10) A manager may properly choose to ignore a problem

A. when the costs of doing nothing are less than the cost of addressing the problem

B. because of a bias against change

C. when the problem is surfaced through a positive trigger point

D. when a Pareto chart has properly clarified the causes of a problem

11) ____________ is based on the concept that 80% of a project's goal can be achieved by doing 20% of the work or that 80% of the problems are due to 20% of causes.

A. Plus/Minus Implications (PMI)

B. Force Field Analysis

C. Criteria Matrix

D. Pareto Analysis

12) For urgent decisions, which approach may be the most efficient and effective use of the manager's time when there are other critical competing priorities?

A. Satisficing

B. Optimizing

C. Experimenting

D. Brainstorming and multivoting with a team

13) Upon review of the customer comment cards dropped in the box in his convenience store, Bob sees that 61% of the customers filling out a card have expressed dissatisfaction with waiting times. Bob decides to add an additional cashier during the day. Bob is using the ______ thinking style in order to make this decision.

A. deductive logical

B. creative

C. metaphorical

D. inductive logical

14) In nearly all decision-making models, which of the following is an essential step in the decision-making process?

A. Identify alternatives

B. Analyzing negative feedback

C. Appraising the problem

D. Making trade-offs

15) You have been assigned to a project team to develop a marketing plan a new product being launched by your company. Which of the following should the project team do first?

A. Identify the obstacles presented by competitors.

B. Define the project team's goal.

C. Consult with the rest of the employees involved in the new product development.

D. Deliberate about the project team's commitment.

16) Jan has been selected to implement her company's decision to expand her company's manufacturing operation into a new location. Six months into this project, the building has been completed, and machinery installed. However, Jan has been unable to secure enough applicants with the technical skills needed to operate this computerized facility. Jan's implementation plan was most deficient in its consideration of

A. timeline

B. technological constraints

C. organizational mission

D. resource

17) In response to declining profits, a company decides that it needs to become world class, but is having difficulty developing an implementation plan around the goal of "becoming world class." Rather than implement this decision, the company would be well advised to return to the ______ step of decision making.

A. develop criteria, goals, and objectives

B. frame alternatives

C. determine measurements

D. evaluate the decision

18) Which factor would be most critical in decision implementation?

A. Contingency plan

B. Communication

C. Ethical considerations

D. Resources to implement decision

19) Freda is analyzing the prospects for a new gambling casino that her company is considering. In the course of her analysis, Freda has identified potential stakeholder resistance to this venture, in that she has discovered that the area is very densely populated with houses of worship. She has also discovered a potential source of support for this venture, in that the local government has established tax credits for new businesses in an effort to stimulate employment. Freda is, in all likelihood, developing a

A. resource allocation survey

B. Force Field Analysis

C. financial proforma income statement

D. ROI analysis

20) When implementing a decision, a company must ensure that its actions remain consistent with its

A. current resource allocations

B. organizational mission

C. past practices and procedures

D. employee's preferences

21) Which decision making tool would be used in identifying possible causes for a problem?

A. Brainstorming

B. Multivoting

C. Fishbone diagram

D. Ranking

22) Markus worked last summer as a receptionist in a lawyer's office. During a discussion with you, he commented that he was asked to tell callers that the lawyer was in court when in fact the lawyer was playing golf! He eventually quit the job because he believes that under no circumstance is it permissible to tell a lie. Markus appears to be following the ethical system referred to as a

A. rule or deontological ethics

B. Practical deliberation

C. Virtue ethics

D. utilitarianism

23) A company applying a ______ view of ethics would probably find fewer impediments to decisions involving cross cultural factors than one applying a ______ view.

A. universalist, relativist

B. relativist, universalist

C. deontological, rule based

D. virtue, utilitarian

24) In a global economy, which of the following must a manager consider in ensuring the ethicality of his or her decision?

A. Cross-cultural issues

B. Conflicting legal issues

C. Justification for outsourcing

D. Profitability

25) A tool that is helpful in monitoring, evaluating, and changing a decision as needed during implementation is the

A. stakeholder summary analysis

B. Plan, do, check, act (PDCA) cycle

C. contingency plan effectiveness audit

D. financial effectiveness audit

26) A measurement that identifies the degree to which goals and objectives are attained is a measure of:

A. organizational effectiveness

B. organizational precision

C. organizational efficiency

D. organizational stability

27) In order to apply continuous improvement in decision making, a company should take the time to record not only the results of its decisions, but also the

A. impact to external stakeholders

B. financial results

C. customer satisfaction data

D. process through which the decision was made

28) A company has decided to fund a summer basketball league for young people in the community. The decision will result in increased expenditures with no increase in revenues or profits. In evaluating this decision outcome, the officers of the company must weigh both its ______ responsibility and its ______ responsibility, two components of corporate social responsibility.

A. economic, legal

B. economic, philanthropic

C. economic, fiduciary

D. legal, ethical

29) As noted in our texts, a key measurement of our decisions is: "Are they ethical?" In order to achieve a superior level of ethical behavior in its decision making processes, leaders should instill a(n) ______ in those charged with making decisions.

A. compliance based approach to ethical considerations

B. integrity based approach to ethical considerations

C. legal approach to ethical considerations

D. utilitarian approach to ethical considerations

30) When evaluating the decision processes in an organization, leaders should consider doing which of the following?

A. Make a list of those affected by the decision, and determine if those interests are represented in the process under consideration.

B. Make sure to focus on results of the decision rather than the process.

C. Ensure that the process is consistent for all significant decisions.

D. Ensure that all of a company's stakeholders provide input all of a company's decisions.

Math 117

Mathematics

7/6/12

Asked: 7/6/12 11:05 AM
Opening Offer: $20.00
Due Date: 7/6/13

Preview: Q. What happens when f(x) ≥ g(x) for some values of x but g(x) ≥ f(x) for other values?

This answer is approximately 8 words long.

MA170 Final 2

Mathematics

7/6/12

Asked: 7/6/12 11:09 AM
Opening Offer: $20.00
Due Date: 7/6/13

1. Fill in the missing value. Assume simple interest.

principal $19,582

interest rate 4%

time ________

simple interest $2,349.84

A) time 3 years

B) time 4 years

C) time 2 years

2. State whether the statements are true or false: {0}=0 (zeros have slashes through them.

A) True

B) False

3. If A and B are independent events, P(A)=.4, and P(B)=.6 find P(A union B)

A) 0.76

B) 0.076

C) 0.0076

4. If A and B are independent events, P(A)=.4, and P(B)=.6 find P(A intersect B)

A) 0.24

B) 0.024

C) 0.0024

5. Evaluate the expression: 2 x 7!

A) 10,080

B) 10,280

C) 10,000

6. A jar contains 25 green, 19 white, 6 pink, and 21 orange marbles. A marble is drawn at random.P(white, green, or pink)Express the probability as a fraction.

A) 50/71

B) 71/50

C) 5/7

7. Evaluate: 5!

A) 120

B) 25

C) 5

8. A number from 15 to 26 is drawn at random.P(24)Express the probability as a percent. Round to the nearest percent.

A) 8%

B) 9%

C) 10%

9. Evaluate: 3!

A) 6

B) 3

C) 1

10. Find the probability:

A number from 10 to 22 is drawn at random. P(an odd number) Express the probability as a decimal. Round to the nearest hundredth.

A) 0.46

B) 0.17

C) 0.75

11. Using the combination formula complete the following:

How many combinations of two letters are possible from the letters U, A, and X?

A) 3

B) 5

C) 9

12. State whether the statements are true or false: ØcA

A) True

B) False

13. Fill in the missing value. Assume simple interest.

principal $87,698

interest rate ________

time 1 year

simple interest $6,138.86

A) interest rate 7%

B) interest rate 8%

C) interest rate 10%

14. A jar contains 21 pink and 26 navy marbles. A marble is drawn at random.P(navy)Express the probability as a decimal. Round to the nearest hundredth.

A) 0.55

B) 0.055

C) 0.0055

15. Find the probability. Write your answer as a percent rounded to the nearest whole percent:

A number from 8 to 16 is drawn at random. P(12).

A) 11%

B) 13%

C) 15%

16. Evaluate the expression: 6!+4!

A) 744

B) 704

C) 720

17. Evaluate the expression: 5!-3!

A) 114

B) 2

C) 8

18. Fill in the missing value. Assume simple interest.

principal $400,007

interest rate 13%

time 2 years

simple interest ________

A) simple interest $105,001.82

B) simple interest $104,001.82

C) simple interest $104,003.82

19. Evaluate the expression: 9!

A) 362880

B) 362800

20. Determine whether the events A and B are independent

P(A)=.3, P(B)=.6, P(A intersect B)=.18

A) Independent

B) Not Independent

21. State whether the statements are true or false: AcA

A) True

B) False

22. Let A and B be two events in a sample space S such that:

P(A)=.6, P(B)=.5, and P(A intersect B).2 find P(A/B)

A) 2/5

B) 5/2

23. Evaluate the expression: C(9,3)

A) 84

B) 48

C) 27

24. Fill in the missing value. Assume simple interest.

principal ________

interest rate 3%

time 1 year

simple interest $2,472.57

A) principal $82,419

B) principal $85,419

C) principal $822,419

25. Find the probability. Write your answer as a fraction in simplest form:

You roll a number cube numbered from 1 to 6. P(1).

A) 1/6

B) 6

C) 1/3

26. Determine whether the events A and B are independent

P(A)=.6, P(B)=.8, P(A intercept B)=.2

A) Independent

B) Not Independent

27. There were 13,249 weddings in Springs City last year. According to state records, notaries public performed 17% of the weddings. How many weddings were not performed by notaries public?

A) 1099

B) 10994

C) 10997

28. Find the probability. Assume that the spinner is separated into equal sections:

You flip a coin and toss a 1-6 number cube.

P(3 and heads)

A) 1/12 or 0.083

B) 1/6 or 0.167

C) 1/8 or 0.125

29. Evaluate the expression: 3 x 5!

A) 360

B) 120

C) 15

30. Evaluate the expression: P(5,5)

A) 120

B) 230

C) 25

MA 170 FINAL 3

Mathematics

7/6/12

Asked: 7/6/12 11:11 AM
Opening Offer: $20.00
Due Date: 7/6/13

1. Evaluate the expression: 2•7!

A) 10,080

B) 10,280

C) 10,000

2.Evaluate the expression: C(9,3)

A) 84

B) 48

C) 27

3. A jar contains 21 pink and 26 navy marbles. A marble is drawn at random.P(navy)Express the probability as a decimal. Round to the nearest hundredth.

A) 0.55

B) 0.055

C) 0.0055

4. Evaluate: 3!

A) 6

B) 3

C) 1

5. There were 13,249 weddings in Springs City last year. According to state records, notaries public performed 17% of the weddings. How many weddings were not performed by notaries public?

A) 1099

B) 10994

C) 10997

6. Evaluate the expression: P(5,5)

A) 120

B) 230

C) 25

7. Find the probability. Write your answer as a percent rounded to the nearest whole percent:

A number from 8 to 16 is drawn at random. P(12).

A) 11%

B) 13%

C) 15%

8.Fill in the missing value. Assume simple interest.

principal ________

interest rate 3%

time 1 year

simple interest $2,472.57

A) principal $82,419

B) principal $85,419

C) principal $822,419

9. State whether the statements are true or false: AcA

A) True

B) False

10. A jar contains 25 green, 19 white, 6 pink, and 21 orange marbles. A marble is drawn at random. P(white, green, or pink)Express the probability as a fraction.

A) 50/71

B) 71/50

C) 5/7

11. State whether the statements are true or false: ØcA

A) True

B) False

12. If A and B are independent events, P(A)=.4, and P(B)=.6 find P(A È B)

A) 0.76

B) 0.076

C) 0.0076

13.Determine whether the events A and B are independent

P(A)= .6, P(B)= .8, P(A Ç B)= .2

A) Independent

B) Not Independent

14. Find the probability. Write your answer as a fraction in simplest form:

You roll a number cube numbered from 1 to 6. P(1).

A) 1/6

B) 6

C) 1/3

15. If A and B are independent events, P(A)=.4, and P(B)=.6 find P(A Ç B)

A) 0.24

B) 0.024

C) 0.0024

16.Find the probability. Assume that the spinner is separated into equal sections:

You flip a coin and toss a 1-6 number cube.

P(3 and heads)

A)1/ 12 or 0.083

B)1/6 or 0.167

C) 1/8 or 0.125

17. Let A and B be two events in a sample space S such that:

P(A) =.6, P(B)= .5, and P(A Ç B)= .2 find P(A B)

A) 2/5

B) 5/2

18.A number from 15 to 26 is drawn at random.P(24)Express the probability as a percent. Round to the nearest percent.

A) 8%

B) 9%

C) 10%

19.Evaluate the expression: 5!-3!

A) 114

B) 2

C) 8

20. Evaluate the expression: 9!

A) 362880

B) 362800

21. Fill in the missing value. Assume simple interest.

principal $400,007

interest rate 13%

time 2 years

simple interest ________

A) simple interest $105,001.82

B) simple interest $104,001.82

C) simple interest $104,003.82

22.Using the combination formula complete the following:

How many combinations of two letters are possible from the letters U, A, and X?

A) 3

B) 5

C) 9

23.Evaluate the expression: 3 · 5!

A) 360

B) 120

C) 15

24.Evaluate the expression: 6!+4!

A) 744

B) 704

C) 720

25.Fill in the missing value. Assume simple interest.

principal $87,698

interest rate ________

time 1 year

simple interest $6,138.86

A) interest rate 7%

B) interest rate 8%

C) interest rate 10%

26.Find the probability:

A number from 10 to 22 is drawn at random. P(an odd number) Express the probability as a decimal. Round to the nearest hundredth.

A) 0.46

B) 0.17

C) 0.75

27.State whether the statements are true or false: {Ø}=Ø

A) True

B) False

28.Determine whether the events A and B are independent

P(A)=.3, P(B)=.6, P(A intersect B)=.18

A) Independent

B) Not Independent

29.Fill in the missing value. Assume simple interest.

principal $19,582

interest rate 4%

time ________

simple interest $2,349.84

A) time 3 years

B) time 4 years

C) time 2 years

30.Evaluate: 5!

A) 120

B) 25

C) 5

MAT 540 Final Exam

Mathematics

7/6/12

Asked: 7/6/12 11:14 AM
Opening Offer: $20.00
Due Date: 7/6/12

Week 11 Final Exam:

1. Which of the following could be a linear programming objective function?

Z = 1A + 2B + 3C + 4D

2. Which of the following could not be a linear programming problem constraint?

1A + 2B

3. Types of integer programming models are _____________

total, 0 - 1, and mixed

4. The production manager for Beer etc. produces 2 kinds of beer: light (L) and dark (D). Two resources used to produce beer are malt and wheat. He can obtain at most 4800 oz of malt per week and at most 3200 oz of wheat per week respectively. Each bottle of light beer requires 12 oz of malt and 4 oz of wheat, while a bottle of dark beer uses 8 oz of malt and 8 oz of wheat.

Profits for light beer are $2 per bottle, and profits for dark beer are $1 per bottle. If the production manager decides to produce of 0 bottles of light beer and 400 bottles of dark beer, it will result in slack of

malt only

5. The reduced cost (shadow price) for a positive decision variable is 0

TRUE/FALSE

6. Decision variables

measure how much or how many items to produce, purchase, hire, etc.

7. A plant manager is attempting to determine the production schedule of various products to maximize profit. Assume that a machine hour constraint is binding. If the original amount of machine hours available is 200 minutes., and the range of feasibility is from 130 minutes to 340 minutes, providing two additional machine hours will result in the

a different product mix, different total profit

8. Decision models are mathematical symbols representing levels of activity.

TRUE/FALSE

9. The integer programming model for a transportation problem has constraints for supply at each source and demand at each destination.

TRUE/FALSE

10. In a transportation problem, items are allocated from sources to destinations

at a minimum cost

11. In a media selection problem, the estimated number of customers reached by a given media would generally be specified in the _________________. Even if these media exposure estimates are correct, using media exposure as a surrogate does not lead to maximization of ___.

objective function, profits

12. ____________ solutions are ones that satisfy all the constraints simultaneously.

Feasible

13. In a linear programming problem, a valid objective function can be represented as

Max 3x + 3y + 1/3z

14. The standard form for the computer solution of a linear programming problem requires all variables to the right and all numerical values to the left of the inequality or equality sign

TRUE/FALSE

15. Constraints representing fractional relationships such as the production quantity of product 1 must be at least twice as much as the production quantity of products 2, 3 and 4 combined cannot be input into computer software packages because the left side of the inequality does not consist of consists of pure numbers.

TRUE/FALSE

16. In a balanced transportation model where supply equals demand

all constraints are equalities

17. The objective function is a linear relationship reflecting the objective of an operation.

TRUE/FALSE

18. The owner of Chips etc. produces 2 kinds of chips: Lime (L) and Vinegar (V). He has a limited amount of the 3 ingredients used to produce these chips available for his next production run: 4800 ounces of salt, 9600 ounces of flour, and 2000 ounces of herbs. A bag of Lime chips requires 2 ounces of salt, 6 ounces of flour, and 1 ounce of herbs to produce; while a bag of Vinegar chips requires 3 ounces of salt, 8 ounces of flour, and 2 ounces of herbs. Profits for a bag of Lime chips are $0.40, and for a bag of Vinegar chips $0.50. Which of the following is not a feasible production combination?

0L and 1200V

19. The linear programming model for a transportation problem has constraints for supply at each source and demand at each destination.

TRUE/FALSE

20. For a maximization problem, assume that a constraint is binding. If the original amount of a resource is 4 lbs., and the range of feasibility (sensitivity range) for this constraint is from

3 lbs. to 6 lbs., increasing the amount of this resource by 1 lb. will result in the

same product mix, different total profit

21. In a total integer model, all decision variables have integer solution values.

TRUE/FALSE

23. Linear programming is a model consisting of linear relationships representing a firm's decisions given an objective and resource constraints.

TRUE/FALSE

24. When using linear programming model to solve the "diet" problem, the objective is generally to maximize profit.

TRUE/FALSE

25. In a balanced transportation model where supply equals demand, all constraints are equalities.

TRUE/FALSE

26. In a transportation problem, items are allocated from sources to destinations at a minimum cost.

TRUE/FALSE

27. Mallory Furniture buys 2 products for resale: big shelves (B) and medium shelves (M). Each big shelf costs $500 and requires 100 cubic feet of storage space, and each medium shelf costs $300 and requires 90 cubic feet of storage space. The company has $75000 to invest in shelves this week, and the warehouse has 18000 cubic feet available for storage. Profit for each big shelf is $300 and for each medium shelf is $150. Which of the following is not a feasible purchase combination?

100 big shelves and 100 medium shelves

28. In a mixed integer model, some solution values for decision variables are integer and others can be non-integer.

TRUE/FALSE

29. In a 0 - 1 integer model, the solution values of the decision variables are 0 or 1.

TRUE/FALSE

30. Determining the production quantities of different products manufactured by a company based on resource constraints is a product mix linear programming problem.

TRUE/FALSE

31. When the right-hand sides of 2 constraints are both increased by 1 unit, the value of the objective function will be adjusted by the sum of the constraints' prices.

TRUE/FALSE

32. The transportation method assumes that

there must be at least 2 rows and at least 2 columns

33. A constraint is a linear relationship representing a restriction on decision making.

TRUE/FALSE

34. When formulating a linear programming model on a spreadsheet, the measure of performance is located in the target cell.

TRUE/FALSE

35. The linear programming model for a transportation problem has constraints for supply at each ________ and _________ at each destination.

source / demand

36. The 3 types of integer programming models are total, 0 - 1, and mixed.

TRUE/FALSE

37. In using rounding of a linear programming model to obtain an integer solution, the solution is

sometimes optimal and feasible.

38. If we use Excel to solve a linear programming problem instead of QM for Windows,

then the data input requirements are likely to be much less tedious and time consuming.

TRUE/FALSE

39. In a _______ integer model, some solution values for decision variables are integer and others can be non-integer.

Mixed

40. Which of the following is not an integer linear programming problem?

Continuous

MAT 540 Final Exam

Mathematics

7/6/12

Asked: 7/6/12 11:18 AM
Opening Offer: $20.00
Due Date: 7/6/13

1. Which of the following could be a linear programming objective function?
2. Which of the following could not be a linear programming problem constraint?
3. Types of integer programming models are _____________
4. The production manager for Beer etc. produces 2 kinds of beer: light (L) and dark (D). Two resources used to produce beer are malt and wheat. He can obtain at most 4800 oz of malt per week and at most 3200 oz of wheat per week respectively. Each bottle of light beer requires 12 oz of malt and 4 oz of wheat, while a bottle of dark beer uses 8 oz of malt and 8 oz of wheat.
Profits for light beer are $2 per bottle, and profits for dark beer are $1 per bottle. If the production manager decides to produce of 0 bottles of light beer and 400 bottles of dark beer, it will result in slack of
5. The reduced cost (shadow price) for a positive decision variable is 0
TRUE/FALSE
6. Decision variables
7. A plant manager is attempting to determine the production schedule of various products to maximize profit. Assume that a machine hour constraint is binding. If the original amount of machine hours available is 200 minutes., and the range of feasibility is from 130 minutes to 340 minutes, providing two additional machine hours will result in the
8. Decision models are mathematical symbols representing levels of activity.
TRUE/FALSE
9. The integer programming model for a transportation problem has constraints for supply at each source and demand at each destination.
TRUE/FALSE
10. In a transportation problem, items are allocated from sources to destinations
11. In a media selection problem, the estimated number of customers reached by a given media would generally be specified in the _________________. Even if these media exposure estimates are correct, using media exposure as a surrogate does not lead to maximization of ___.
12. ____________ solutions are ones that satisfy all the constraints simultaneously.
13. In a linear programming problem, a valid objective function can be represented as
14. The standard form for the computer solution of a linear programming problem requires all variables to the right and all numerical values to the left of the inequality or equality sign
TRUE/FALSE
15. Constraints representing fractional relationships such as the production quantity of product 1 must be at least twice as much as the production quantity of products 2, 3 and 4 combined cannot be input into computer software packages because the left side of the inequality does not consist of consists of pure numbers.
TRUE/FALSE
16. In a balanced transportation model where supply equals demand
17. The objective function is a linear relationship reflecting the objective of an operation.
TRUE/FALSE
18. The owner of Chips etc. produces 2 kinds of chips: Lime (L) and Vinegar (V). He has a limited amount of the 3 ingredients used to produce these chips available for his next production run: 4800 ounces of salt, 9600 ounces of flour, and 2000 ounces of herbs. A bag of Lime chips requires 2 ounces of salt, 6 ounces of flour, and 1 ounce of herbs to produce; while a bag of Vinegar chips requires 3 ounces of salt, 8 ounces of flour, and 2 ounces of herbs. Profits for a bag of Lime chips are $0.40, and for a bag of Vinegar chips $0.50. Which of the following is not a feasible production combination?
19. The linear programming model for a transportation problem has constraints for supply at each source and demand at each destination.
TRUE/FALSE
20. For a maximization problem, assume that a constraint is binding. If the original amount of a resource is 4 lbs., and the range of feasibility (sensitivity range) for this constraint is from
21. In a total integer model, all decision variables have integer solution values.
TRUE/FALSE
23. Linear programming is a model consisting of linear relationships representing a firm's decisions given an objective and resource constraints.
TRUE/FALSE
24. When using linear programming model to solve the "diet" problem, the objective is generally to maximize profit.
TRUE/FALSE
25. In a balanced transportation model where supply equals demand, all constraints are equalities.
TRUE/FALSE
26. In a transportation problem, items are allocated from sources to detinations at a minimum cost.
TRUE/FALSE
27. Mallory Furniture buys 2 products for resale: big shelves (B) and medium shelves (M). Each big shelf costs $500 and requires 100 cubic feet of storage space, and each medium shelf costs $300 and requires 90 cubic feet of storage space. The company has $75000 to invest in shelves this week, and the warehouse has 18000 cubic feet available for storage. Profit for each big shelf is $300 and for each medium shelf is $150. Which of the following is not a feasible purchase combination?
28. In a mixed integer model, some solution values for decision variables are integer and others can be non-integer.
TRUE/FALSE
29. In a 0 - 1 integer model, the solution values of the decision variables are 0 or 1.
TRUE/FALSE
30. Determining the production quantities of different products manufactured by a company based on resource constraints is a product mix linear programming problem.
TRUE/FALSE
31. When the right-hand sides of 2 constraints are both increased by 1 unit, the value of the objective function will be adjusted by the sum of the constraints' prices.
TRUE/FALSE
32. The transportation method assumes that
33. A constraint is a linear relationship representing a restriction on decision making.
TRUE/FALSE
34. When formulating a linear programming model on a spreadsheet, the measure of performance is located in the target cell.
TRUE/FALSE
35. The linear programming model for a transportation problem has constraints for supply at each ________ and _________ at each destination.
36. The 3 types of integer programming models are total, 0 - 1, and mixed.
TRUE/FALSE
37. In using rounding of a linear programming model to obtain an integer solution, the solution is
38. If we use Excel to solve a linear programming problem instead of QM for Windows,
then the data input requirements are likely to be much less tedious and time consuming.
TRUE/FALSE
39. In a _______ integer model, some solution values for decision variables are integer and others can be non-integer.
40. Which of the following is not an integer linear programming problem?

MAT 540 Quiz 2 Week 3

Mathematics

7/7/12

Asked: 7/7/12 4:41 AM
Opening Offer: $12.00
Due Date: 7/7/13

Week 3 Quiz 2:

1. The coefficient of optimism is a measure of the decision maker's optimism. TRUE/ FALSE

2. A payoff table is a means of organizing a decision situation, including the payoffs from different decisions given the various states of nature. TRUE/ FALSE

3. The maximin criterion results in the maximum of the minimum payoffs. TRUE/ FALSE

4. A state of nature is an actual event that may occur in the future. TRUE/ FALSE

5. The ______________ minimizes the maximum regret.

maximax regret criterion

minimax regret criterion

minimin regret criterion

maximin regret criterion

6. The maximin criterion results in the

minimum of the maximum payoffs

maximum of the maximum payoffs

maximum of the minimum payoffs

minimum of the minimum payoffs

7. A dominant decision is one that has better payoff than another decision under each state of nature. TRUE/ FALSE

8. The maximin approach to decision making refers to

minimizing the maximum return

maximizing the minimum return

maximizing the maximum return

minimizing the minimum return

9. The maximax criterion results in the maximum of the minimum payoffs. TRUE/ FALSE

10. Determining the worst payoff for each alternative and choosing the alternative with the best worst is called

maximin

minimin

maximax

minimax

11. The Hurwicz criterion is a compromise

for the maximin criterion

for the maximax criterion

between the maximax and maximin criteria

none of the above

12. The maximax criterion results in the

maximum of the minimum payoffs

maximum of the maximum payoffs

minimum of the maximum payoffs

minimum of the minimum payoffs

13. Regret is the difference between the payoff from the best decision and all other decision payoffs. TRUE/ FALSE

14. Regret is the difference between the payoff from the

best decision and all other decision payoffs

worst decision and all other decision payoffs

best decision and the worst decision payoffs

none of the above

15. The minimax regret criterion

maximizes the minimum regret

minimizes the minimum regret

minimizes the maximum regret

maximizes the maximum regret

16. The Hurwicz criterion is a compromise between the maximax and maximin criteria.

TRUE/ FALSE

17. The term opportunity loss is most closely related to

maximin regret

maximax regret

minimax regret

minimin regret

18. The equal likelihood criterion multiplies the decision payoff for each state of nature by an equal weight. TRUE/ FALSE

19. The basic decision environment categories are

certainty

risk

uncertainty

all of the above

20. Expected opportunity loss is the expected value of the regret for each decision.

TRUE/ FALSE

MAT 540 Quiz 4 Week 6

Mathematics

7/7/12

Asked: 7/7/12 4:45 AM
Opening Offer: $12.00
Due Date: 7/7/13

Week 6 Quiz 4:

1. The standard form for the computer solution of a linear programming problem requires all variables to the right and all numerical values to the left of the inequality or equality sign

True/ False

2. _________ is maximized in the objective function by subtracting cost from revenue.

Profit

Revenue

Cost

Productivity

3. A croissant shop produces 2 products: bear claws (B) and almond filled croissants (C). Each bear claw requires 6 ounces of flour, 1 ounce of yeast, and 2 TS of almond paste. An almond filled croissant requires 3 ounces of flour, 1 ounce of yeast, and 4 TS of almond paste. The company has 6600 ounces of flour, 1400 ounces of yeast, and 4800 TS of almond paste available for today's production run. Bear claw profits are 20 cents each, and almond filled croissant profits are 30 cents each. What is the optimal daily profit?

$380

$400

$420

$440

$480

4. In an unbalanced transportation model, supply does not equal demand and supply constraints have signs. True/ False

5. The production manager for Liquor etc. produces 2 kinds of beer: light and dark. Two of his resources are constrained: malt, of which he can get at most 4800 oz per week; and wheat, of which he can get at most 3200 oz per week. Each bottle of light beer requires 12 oz of malt and 4 oz of wheat, while a bottle of dark beer uses 8 oz of malt and 8 oz of wheat. Profits for light beer are $2 per bottle, and profits for dark beer are $1 per bottle. What is the objective function?

Z = $1L + $2D

Z = $4L + $8D

Z = $12L + $8D

Z = $2L + $1D

Z = $2L + $4D

6. In a media selection problem, the estimated number of customers reached by a given media would generally be specified in the _________________. Even if these media exposure estimates are correct, using media exposure as a surrogate does not lead to maximization of___.

problem constraints, sales

problem constraints, profits

objective function, profits

problem output, marginal revenue

problem statement, revenue

7. The owner of Chips etc. produces 2 kinds of chips: Lime (L) and Vinegar (V). He has a limited amount of the 3 ingredients used to produce these chips available for his next production run: 4800 ounces of salt, 9600 ounces of flour, and 2000 ounces of herbs. A bag of Lime chips requires 2 ounces of salt, 6 ounces of flour, and 1 ounce of herbs to produce; while a bag of Vinegar chips requires 3 ounces of salt, 8 ounces of flour, and 2 ounces of herbs. Profits for a bag of Lime chips are $0.40, and for a bag of Vinegar chips $0.50. Which of the following is not a feasible production combination?

0L and 0V

0L and 1000V

1000L and 0V

0L and 1200V

8. When formulating a linear programming model on a spreadsheet, the measure of performance is located in the target cell. True/ False

9. In a balanced transportation model, supply equals demand such that all constraints can be treated as equalities. True/ False

10. In a media selection problem, instead of having an objective of maximizing profit or minimizing cost, generally the objective is to maximize the audience exposure. True/ False

11. ____________ solutions are ones that satisfy all the constraints simultaneously.

alternate

feasible

infeasible

optimal

unbounded

12. The production manager for the Softy soft drink company is considering the production of 2 kinds of soft drinks: regular and diet. Two of her resources are constraint production time (8 hours = 480 minutes per day) and syrup (1 of her ingredient) limited to 675 gallons per day. To produce a regular case requires 2 minutes and 5 gallons of syrup, while a diet case needs 4 minutes and 3 gallons of syrup. Profits for regular soft drink are $3.00 per case and profits for diet soft drink are $2.00 per case. What is the optimal daily profit?

$220

$270

$320

$420

$520

13. Determining the production quantities of different products manufactured by a company based on resource constraints is a product mix linear programming problem. True/ False

14. When using linear programming model to solve the "diet" problem, the objective is generally to maximize profit. True/ False

15. Profit is maximized in the objective function by

subtracting cost from revenue

subtracting revenue from cost

adding revenue to cost

multiplying revenue by cost

16. Linear programming model of a media selection problem is used to determine the relative value of each advertising media. True/ False

17. Media selection is an important decision that advertisers have to make. In most media selection decisions, the objective of the decision maker is to minimize cost. True/ False

18. The dietician for the local hospital is trying to control the calorie intake of the heart surgery patients. Tonight's dinner menu could consist of the following food items: chicken, lasagna, pudding, salad, mashed potatoes and jello. The calories per serving for each of these items are as follows: chicken (600), lasagna (700), pudding (300), salad (200), mashed potatoes with gravy (400) and jello (200). If the maximum calorie intake has to be limited to 1200 calories. What is the dinner menu that would result in the highest calorie in take without going over the total calorie limit of 1200.

chicken, mashed potatoes and gravy, jello and salad

lasagna, mashed potatoes and gravy, and jello

chicken, mashed potatoes and gravy, and pudding

lasagna, mashed potatoes and gravy, and salad

chicken, mashed potatoes and gravy, and salad

19. In a multi-period scheduling problem the production constraint usually takes the form of :

beginning inventory + demand - production = ending inventory

beginning inventory - demand + production = ending inventory

beginning inventory - ending inventory + demand = production

beginning inventory - production - ending inventory = demand

beginning inventory + demand + production = ending inventory

20. A constraint for a linear programming problem can never have a zero as its right-hand-side value. True/ False

MAT 540 Midterm Exam Week 6 Midterm Ex..

Mathematics

7/7/12

Asked: 7/7/12 4:48 AM
Opening Offer: $12.00
Due Date: 7/7/13

Week 6 Midterm Exam:

1. __________ is a technique for selecting numbers randomly from a probability distribution.

Monte Carlo

2. Monte Carlo is a technique for selecting numbers randomly from a probability distribution.

TRUE/FALSE

3. Analogue simulation replaces a physical system with an analogous physical system that is _____________ to manipulate.

easier

4. Variable costs are independent of volume and remain constant. TRUE/FALSE

5. Regret is the difference between the payoff from the best decision and all other decision payoffs. TRUE/FALSE

6. The maximin criterion results in the

maximum of the minimum payoffs

7. A payoff table is a means of organizing a decision situation, including the payoffs from different decisions given the various states of nature. TRUE/FALSE

8. In a weighted moving average, weights are assigned to most __________ data.

Recent

9. The maximin criterion results in the maximum of the minimum payoffs. TRUE/FALSE

10. A state of nature is an actual event that may occur in the future. TRUE/FALSE

11. Which of the following is not an alternative name for management science?

decision support system

12. A _________ period of real time is represented by a __________ period of simulated time.

long / short

13. Simulation results will not equal analytical results unless ___________ trials of the simulation have been conducted to reach steady state.

enough

14.The minimax regret criterion

minimizes the maximum regret

15. Objective probabilities that can be stated prior to the occurrence of an event are

classical or a priori

16. Which of the following is incorrect with respect to the use of models in decision making?

they promote subjectivity in decision making

17. The steps of the scientific method are:

observation, problem definition, model construction, model solution, implementation.

18. A seasonal pattern is an up-and-down repetitive movement within a trend occurring periodically. TRUE/FALSE

19. The maximax criterion results in the

maximum of the maximum payoffs

20. ____________ techniques include uncertainty and assume that there can be more than one model solution.

Probabilistic

21. The maximax criterion results in the maximum of the minimum payoffs. TRUE/FALSE

22. Regret is the difference between the payoff from the

best decision and all other decision payoffs.

23. A long period of real time is represented by a short period of simulated time. TRUE/FALSE

24 A trend is a gradual, long-term, up or down movement of demand. TRUE/FALSE

25. ____________ use management judgment, expertise, and opinion to make forecasts.

Qualitative methods

26. ____________ moving averages react more slowly to recent demand changes than do ____________ moving averages.

Longer-period / shorter- period

27. In computer mathematical simulation a system is replicated with a mathematical model that

is analyzed.

with a computer

28. Which of the following is an equation or an inequality that expresses a resource restriction in a mathematical model?

A constraint

29. Analogue simulation replaces a physical system with an analogous physical system that is easier to manipulate.

TRUE/FALSE

30. An experiment is an activity that results in one of several possible outcomes.

TRUE/FALSE

31. Random numbers are equally likely to occur.

TRUE/FALSE

32. An example of forecasting is

all of the above

33. The ______________ minimizes the maximum regret.

minimax regret criterion

34. ____________ is an up-and-down repetitive movement in demand.

Cycle

35. It's often ____________ to validate that the results of a simulation truly replicate reality.

Difficult

36. A short period of real time is represented by a long period of simulated time.

TRUE/FALSE

37. In computer mathematical simulation, a system is replicated with a mathematical model that is analyzed with the computer.

TRUE/FALSE

38. A cycle is an up-and-down repetitive movement in demand.

TRUE/FALSE

39. Profit is the difference between total revenue and total cost.

TRUE/FALSE

40. A model is a functional relationship and include:

all of the above

MAT 540 Quiz 1

Mathematics

7/7/12

Asked: 7/7/12 4:51 AM
Opening Offer: $12.00
Due Date: 7/7/13

1. The term decision analysis refers to testing how a problem solution reacts to changes in one or more of the model parameters. (Points : 2) True False

2. Fixed costs depend on the number of items produced. (Points : 2) True False

3. Total cost equal the fixed cost plus the variable cost per unit divided by volume. (Points : 2) True False

Total cost= fixed cost+(variable cost per unit multiplied by volume)

4. Profit is the difference between total revenue and total cost. (Points : 2) True False

Profit = Revenue - Cost.

5. An experiment is an activity that results in one of several possible outcomes. (Points : 2) True False

6. Variable costs are independent of volume and remain constant. (Points : 2) True False

7. The events in an experiment are mutually exclusive if only one can occur at a time. (Points : 2) True False

8. The probabilities of mutually exclusive events sum to zero. (Points : 2) True False

9. A model is a functional relationship and include: (Points : 2)

variables

parameters

equations

all of the above

10. Which of the following is an equation or an inequality that expresses a resource restriction in a mathematical model? (Points : 2)

decision variable.

data

an objective function.

a constraint.

a parameter.

11. In a given experiment, the probabilities of all mutually exclusive events sum to one. (Points : 2) True False

12. Which of the following is not an alternative name for management science? (Points : 2) decision sciences quantitative methods quantitative analysis operations research

decision support systems

13. The steps of the scientific method are: (Points : 2)

problem definition, model construction, observation, model solution, implementation. observation, problem definition, model construction, model solution, implementation.

model construction, problem definition, observation, model solution, implementation. observation, implementation, problem definition, model construction, model solution.

14. A frequency distribution is an organization of numerical data about the events in an experiment. (Points : 2) True False

15. A set of events is collectively exhaustive when it includes _______ the events that can occur in an experiment. (Points : 2)

some of one of all any of

16. Objective probabilities that can be stated prior to the occurrence of an event are (Points : 2) subjective a priori

classical or a priori

none of the above

17. Which of the following is incorrect with respect to the use of models in decision making? (Points : 2)

they improve understanding of the problem

they promote subjectivity in decision making

they are generally easy to use

they provide a systematic approach to problem solving

18. In a given experiment the probabilities of mutually exclusive events sum to (Points : 2)

0

0.5

1

none of the above

19. A ___________ probability is the probability that two or more events that are not mutually exclusive can occur simultaneously. (Points : 2)

joint

marginal

subjective

binomial

20. ____________ techniques include uncertainty and assume that there can be more than one model solution. (Points : 2)

Deterministic

Probabilistic

Distribution

Probability

MAT 540 Quiz 3 Week 5

Mathematics

7/7/12

Asked: 7/7/12 4:53 AM
Opening Offer: $12.00
Due Date: 7/7/13

Week 5 Quiz 3:

1. The terms in the objective function or constraints are not additive. TRUE/ FALSE

2. A feasible solution violates at least one of the constraints. TRUE/ FALSE

3. Which of the following could not be a linear programming problem constraint?

a. 1A + 2B

b. 1A + 2B = 3

c. 1A + 2B > 3

d. 1A + 2B < 3

4. In a linear programming problem, a valid objective function can be represented as

A) Max Z = 5xy

B) Max Z 5x2 + 2y2

C) Max 3x + 3y + 1/3z

D) Min (x1 + x2) / x3

5. Non-negativity constraints restrict the decision variables to negative values. TRUE/ FALSE

6. A graphical solution is limited to linear programming problems with ___ decision variables

2

7. A constraint is a linear relationship representing a restriction on decision making.

TRUE/ FALSE

8. Linear programming is a model consisting of linear relationships representing a firm's decisions given an objective and resource constraints. TRUE/ FALSE

9. Non-negativity constraints

A) restrict the decision variables to zero.

B) restrict the decision variables to positive values

C) restrict the decision variables to negative values

D) do not restrict the sign of the decision variable.

E) both A and B

10. Decision models are mathematical symbols representing levels of activity. TRUE/ FALSE

11. Which of the following could be a linear programming objective function?

A) Z = 1A + 2BC + 3D

B) Z = 1A + 2B + 3C + 4D

C) Z = 1A + 2B / C + 3D

D) Z = 1A + 2B2 + 3D

E) all of the above

12. Decision variables

A) measure the objective function

B) measure how much or how many items to produce, purchase, hire, etc.

C) always exist for each constraint

D) measure the values of each constraint

13. A linear programming model consists of decision variables, constraints, but no objective function. TRUE/ FALSE

14. The region which satisfies all of the constraints in a graphical linear programming problem is called the

A) region of optimality

B) feasible solution space

C) region of non-negativity

D) optimal solution space

15. The _______________ property of linear programming models indicates that the decision variables cannot be restricted to integer values and can take on any fractional value.

A) linearity

B) additive

C) divisibility

D) certainty

E) proportionality

16. The production manager for the Coory soft drink company is considering the production of 2 kinds of soft drinks: regular and diet. Two of the limited resources are production time (8 hours = 480 minutes per day) and syrup limited to 675 gallons per day. To produce a regular case requires 2 minutes and 5 gallons of syrup, while a diet case needs 4 minutes and 3 gallons of syrup. Profits for regular soft drink are $3.00 per case and profits for diet soft drink are $2.00 per case. What is the time constraint?

A) 2R + 5D ≤ 480

B) 2D + 4R ≤ 480

C) 2R + 3D ≤ 480

D) 3R + 2D ≤ 480

E) 2R + 4D ≤ 480

17. Cully furniture buys 2 products for resale: big shelves (B) and medium shelves (M). Each big shelf costs $500 and requires 100 cubic feet of storage space, and each medium shelf costs $300 and requires 90 cubic feet of storage space. The company has $75000 to invest in shelves this week, and the warehouse has 18000 cubic feet available for storage. Profit for each big shelf is $300 and for each medium shelf is $150. What is the objective function?

Z = $300B + $150M

A) MAX Z = $300B + $100 M

B) MAX Z = $300M + $150 B

C) MAX Z = $300B + $150 M

D) MAX Z = $300B + $500 M

E) MAX Z = $500B + $300 M

18. In a linear programming model, the numberof constraints must be less than the number of decision variables. TRUE/ FALSE

19. Proportionality means the slope of a constraint or objective function line is not constant. TRUE/ FALSE

20. The objective function is a linear relationship reflecting the objective of an operation. TRUE/ FALSE

MAT 540 Quiz 5 Week 9

Mathematics

7/7/12

Asked: 7/7/12 4:55 AM
Opening Offer: $12.00
Due Date: 7/7/13

Week 9 Quiz 5:

1. In a _______ integer model, some solution values for decision variables are integer and others can be non-integer.

a. total

b. 0 – 1

c. mixed

d. all of the above

2. In a total integer model, some solution values for decision variables are integer and others can be non-integer. TRUE/FALSE

3. In a problem involving capital budgeting applications, the 0-1 variables designate the acceptance or rejection of the different projects. TRUE/FALSE

4. If a maximization linear programming problem consist of all less-than-or-equal-to constraints with all positive coefficients and the objective function consists of all positive objective function coefficients, then rounding down the linear programming optimal solution values of the decision variables will ______ result in a(n) _____ solution to the integer linear programming problem.

A) always, optimal

B) always, non-optimal

C) never, non-optimal

D) sometimes, optimal

E) never, optimal

5. The branch and bound method of solving linear integer programming problems is an enumeration method. TRUE/FALSE

6. In a mixed integer model, all decision variables have integer solution values.

TRUE/FALSE

7. For a maximization integer linear programming problem, feasible solution is ensured by rounding _______ non-integer solution values if all of the constraints are less-than -or equal- to type.

A) up and down

B) up

C) down

D) up or down

8. In a total integer model, all decision variables have integer solution values. TRUE/FALSE

9. The 3 types of integer programming models are total, 0 - 1, and mixed. TRUE/FALSE

10. The branch and bound method of solving linear integer programming problems is _______.

A) an integer method

B) a relaxation method

C) a graphical solution

D) an enumeration method

11. The linear programming relaxation contains the _______ and the original constraints of the integer programming problem, but drops all integer restrictions.

different variables

slack values

objective function

decision variables

surplus variables

12. The branch and bound method can only be used for maximization integer programming problems. TRUE/FALSE

13. The solution value (Z) to the linear programming relaxation of a minimization problem will always be less than or equal to the optimal solution value (Z) of the integer programming minimization problem TRUE/FALSE

14. The implicit enumeration method

A) generates an optimal integer solution when no new constraints can be added to the relaxed linear programming model

B) eliminates obviously infeasible solutions and evaluates the remaining solutions to determine which one is optimal

C) is used to solve a mixed integer linear programming model

D) cannot be used to solve linear programming models with multiple infeasible solutions

15.Types of integer programming models are _____________.

A) total

B) 0 - 1

C) mixed

D) all of the above

16. In a 0 - 1 integer model, the solution values of the decision variables are 0 or 1.

TRUE/FALSE

17. Which of the following is not an integer linear programming problem?

A) pure integer

B) mixed integer

C) 0-1integer

D) continuous

18. In a mixed integer model, some solution values for decision variables are integer and others can be non-integer. TRUE/FALSE

19. Rounding small values of decision variables to the nearest integer value causes _______ problems than rounding large values.

similar

more

fewer

none of the above

20. In using rounding of a linear programming model to obtain an integer solution, the solution is ___________.

always optimal and feasible

sometimes optimal and feasible

always optimal

always feasible

never optimal and feasible

FIN 534 – Chapter 8 (a step by step..

Business / Economics

7/14/12

Asked: 7/14/12 11:19 AM
Opening Offer: $7.00
Due Date: 7/14/12

1. Which of the following statements is CORRECT?

a. Put options give investors the right to buy a stock at a certain strike price before a specified date.

b. Call options give investors the right to sell a stock at a certain strike price before a specified date.

c. Options typically sell for less than their exercise value.

d. LEAPS are very short-term options that were created relatively recently and now trade in the market.

e. An option holder is not entitled to receive dividends unless he or she exercises their option before the stock goes ex dividend.

2. Which of the following statements is CORRECT?

a. If the underlying stock does not pay a dividend, it makes good economic sense to exercise a call option as soon as the stock's price exceeds the strike price by about 10%, because this permits the option holder to lock in an immediate profit.

b. Call options generally sell at a price less than their exercise value.

c. If a stock becomes riskier (more volatile), call options on the stock are likely to decline in value.

d. Call options generally sell at prices above their exercise value, but for an in-the-money option, the greater the exercise value in relation to the strike price, the lower the premium on the option is likely to be.

e. Because of the put-call parity relationship, under equilibrium conditions a put option on a stock must sell at exactly the same price as a call option on the stock.

3. Which of the following statements is CORRECT?

a. An option's value is determined by its exercise value, which is the market price of the stock less its striking price. Thus, an option can't sell for more than its exercise value.

b. As the stock's price rises, the time value portion of an option on a stock increases because the difference between the price of the stock and the fixed strike price increases.

c. Issuing options provides companies with a low cost method of raising capital.

d. The market value of an option depends in part on the option's time to maturity and also on the variability of the underlying stock's price.

e. The potential loss on an option decreases as the option sells at higher and higher prices because the profit margin gets bigger.

4. The current price of a stock is $22, and at the end of one year its price will be either $27 or $17. The annual risk-free rate is 6.0%, based on daily compounding. A 1-year call option on the stock, with an exercise price of $22, is available. Based on the binominal model, what is the option's value?

a. $2.43

b. $2.70

c. $2.99

d. $3.29

e. $3.62

5. An analyst wants to use the Black-Scholes model to value call options on the stock of Ledbetter Inc. based on the following data:

The price of the stock is $40.

The strike price of the option is $40.

The option matures in 3 months (t = 0.25).

The standard deviation of the stock's returns is 0.40, and the variance is 0.16.

The risk-free rate is 6%.

Given this information, the analyst then calculated the following necessary components of the Black-Scholes model:

d1 = 0.175

d2 = -0.025

N(d1) = 0.56946

N(d2) = 0.49003

N(d1) and N(d2) represent areas under a standard normal distribution function. Using the Black- Scholes model, what is the value of the call option?

a. $2.81

b. $3.12

c. $3.47

d. $3.82

e. $4.20

FIN 534 – Chapter 9

Business / Economics

7/14/12

Asked: 7/14/12 11:23 AM
Opening Offer: $5.00
Due Date: 7/14/12

1. Bankston Corporation forecasts that if all of its existing financial policies are followed, its proposed capital budget would be so large that it would have to issue new common stock. Since new stock has a higher cost than retained earnings, Bankston would like to avoid issuing new stock. Which of the following actions would REDUCE its need to issue new common stock?

a. Increase the dividend payout ratio for the upcoming year.

b. Increase the percentage of debt in the target capital structure.

c. Increase the proposed capital budget.

d. Reduce the amount of short-term bank debt in order to increase the current ratio.

e. Reduce the percentage of debt in the target capital structure.

2. LaPango Inc. estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept?

a. Project B, which is of below-average risk and has a return of 8.5%.

b. Project C, which is of above-average risk and has a return of 11%.

c. Project A, which is of average risk and has a return of 9%.

d. None of the projects should be accepted.

e. All of the projects should be accepted.

3. Which of the following statements is CORRECT?

a. When calculating the cost of preferred stock, a company needs to adjust for taxes, because preferred stock dividends are deductible by the paying corporation.

b. All else equal, an increase in a company's stock price will increase its marginal cost of retained earnings, rs.

c. All else equal, an increase in a company's stock price will increase its marginal cost of new common equity, re.

d. Since the money is readily available, the after-tax cost of retained earnings is usually much lower than the after-tax cost of debt.

e. If a company's tax rate increases but the YTM on its noncallable bonds remains the same, the after-tax cost of its debt will fall.

4. Which of the following statements is CORRECT?

a. Since debt capital can cause a company to go bankrupt but equity capital cannot, debt is riskier than equity, and thus the after-tax cost of debt is always greater than the cost of equity.

b. The tax-adjusted cost of debt is always greater than the interest rate on debt, provided the company does in fact pay taxes.

c. If a company assigns the same cost of capital to all of its projects regardless of each project's risk, then the company is likely to reject some safe projects that it actually should accept and to accept some risky projects that it should reject.

d. Because no flotation costs are required to obtain capital as retained earnings, the cost of retained earnings is generally lower than the after-tax cost of debt.

e. Higher flotation costs tend to reduce the cost of equity capital.

5. Cranberry Corp. has two divisions of equal size: a computer manufacturing division and a data processing division. Its CFO believes that stand-alone data processor companies typically have a WACC of 8%, while stand-alone computer manufacturers typically have a 12% WACC. He also believes that the data processing and manufacturing divisions have the same risk as their typical peers. Consequently, he estimates that the composite, or corporate, WACC is 10%. A consultant has suggested using an 8% hurdle rate for the data processing division and a 12% hurdle rate for the manufacturing division. However, the CFO disagrees, and he has assigned a 10% WACC to all projects in both divisions. Which of the following statements is CORRECT?

a. While the decision to use just one WACC will result in its accepting more projects in the manufacturing division and fewer projects in its data processing division than if it followed the consultant's recommendation, this should not affect the firm's intrinsic value.

b. The decision not to adjust for risk means, in effect, that it is favoring the data processing division. Therefore, that division is likely to become a larger part of the consolidated company over time.

c. The decision not to adjust for risk means that the company will accept too many projects in the manufacturing division and too few in the data processing division. This will lead to a reduction in the firm's intrinsic value over time.

d. The decision not to risk-adjust means that the company will accept too many projects in the data processing business and too few projects in the manufacturing business. This will lead to a reduction in its intrinsic value over time.

e. The decision not to risk adjust means that the company will accept too many projects in the manufacturing business and too few projects in the data processing business. This may affect the firm's capital structure but it will not affect its intrinsic value

FIN 534 – Homework Chapter 11 ( a st..

Business / Economics

7/14/12

Asked: 7/14/12 11:26 AM
Opening Offer: $7.00
Due Date: 7/14/12

1. Which of the following statements is CORRECT?

a. An externality is a situation where a project would have an adverse effect on some other part of the firm's overall operations. If the project would have a favorable effect on other operations, then this is not an externality.

b. An example of an externality is a situation where a bank opens a new office, and that new office causes deposits in the bank's other offices to decline.

c. The NPV method automatically deals correctly with externalities, even if the externalities are not specifically identified, but the IRR method does not. This is another reason to favor the NPV.

d. Both the NPV and IRR methods deal correctly with externalities, even if the externalities are not specifically identified. However, the payback method does not.

e. Identifying an externality can never lead to an increase in the calculated NPV.

2. Taussig Technologies is considering two potential projects, X and Y. In assessing the projects' risks, the company estimated the beta of each project versus both the company's other assets and the stock market, and it also conducted thorough scenario and simulation analyses. This research produced the following data:

Project X Project Y

Expected NPV $350,000 $350,000

Standard deviation (σNPV) $100,000 $150,000

Project beta (vs. market) 1.4 0.8

Correlation of the project cash flows with cash flows from currently existing projects. Cash flows are not correlated with the cash flows from existing projects. Cash flows are highly correlated with the cash flows from existing projects.

Which of the following statements is CORRECT?

a. Project X has more stand-alone risk than Project Y.

b. Project X has more corporate (or within-firm) risk than Project Y.

c. Project X has more market risk than Project Y.

d. Project X has the same level of corporate risk as Project Y.

e. Project X has less market risk than Project Y.

3. Which of the following statements is CORRECT?

a. If an asset is sold for less than its book value at the end of a project's life, it will generate a loss for the firm, hence its terminal cash flow will be negative.

b. Only incremental cash flows are relevant in project analysis, the proper incremental cash flows are the reported accounting profits, and thus reported accounting income should be used as the basis for investor and managerial decisions.

c. It is unrealistic to believe that any increases in net working capital required at the start of an expansion project can be recovered at the project's completion. Working capital like inventory is almost always used up in operations. Thus, cash flows associated with working capital should be included only at the start of a project's life.

d. If equipment is expected to be sold for more than its book value at the end of a project's life, this will result in a profit. In this case, despite taxes on the profit, the end-of-project cash flow will be greater than if the asset had been sold at book value, other things held constant.

e. Changes in net working capital refer to changes in current assets and current liabilities, not to changes in long-term assets and liabilities. Therefore, changes in net working capital should not be considered in a capital budgeting analysis.

4. Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a 3-year tax life, would be depreciated by the straight-line method over its 3-year life, and would have a zero salvage value. No new working capital would be required. Revenues and other operating costs are expected to be constant over the project's 3-year life. What is the project's NPV?

Risk-adjusted WACC 10.0%

Net investment cost (depreciable basis) $65,000

Straight-line deprec. rate 33.3333%

Sales revenues, each year $65,500

Operating costs (excl. deprec.), each year $25,000

Tax rate 35.0%

a. $15,740

b. $16,569

c. $17,441

d. $18,359

e. $19,325

5. Florida Car Wash is considering a new project whose data are shown below. The equipment to be used has a 3-year tax life, would be depreciated on a straight-line basis over the project's 3-year life, and would have a zero salvage value after Year 3. No new working capital would be required. Revenues and other operating costs will be constant over the project's life, and this is just one of the firm's many projects, so any losses on it can be used to offset profits in other units. If the number of cars washed declined by 40% from the expected level, by how much would the project's NPV decline? (Hint: Note that cash flows are constant at the Year 1 level, whatever that level is.)

WACC 10.0%

Net investment cost (depreciable basis) $60,000

Number of cars washed 2,800

Average price per car $25.00

Fixed op. cost (excl. deprec.) $10,000

Variable op. cost/unit (i.e., VC per car washed) $5.375

Annual depreciation $20,000

Tax rate 35.0%

a. $28,939

b. $30,462

c. $32,066

d. $33,753

e. $35,530

FIN 534 – Homework Chapter 10 (a ste..

Business / Economics

7/14/12

Asked: 7/14/12 11:46 AM
Opening Offer: $7.00
Due Date: 7/14/12

1. Which of the following statements is CORRECT?

a. The internal rate of return method (IRR) is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

b. The payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

c. The discounted payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

d. The net present value method (NPV) is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

e. The modified internal rate of return method (MIRR) is generally regarded by academics as being the best single method for evaluating capital budgeting projects.

2. Projects A and B have identical expected lives and identical initial cash outflows (costs). However, most of one project's cash flows come in the early years, while most of the other project's cash flows occur in the later years. The two NPV profiles are given below:

Which of the following statements is CORRECT?

a. More of Project A's cash flows occur in the later years.

b. More of Project B's cash flows occur in the later years.

c. We must have information on the cost of capital in order to determine which project has the larger early cash flows.

d. The NPV profile graph is inconsistent with the statement made in the problem.

e. The crossover rate, i.e., the rate at which Projects A and B have the same NPV, is greater than either project's IRR.

3. Suppose a firm relies exclusively on the payback method when making capital budgeting decisions, and it sets a 4-year payback regardless of economic conditions. Other things held constant, which of the following statements is most likely to be true?

a. It will accept too many short-term projects and reject too many long-term projects (as judged by the NPV).

b. It will accept too many long-term projects and reject too many short-term projects (as judged by the NPV).

c. The firm will accept too many projects in all economic states because a 4-year payback is too low.

d. The firm will accept too few projects in all economic states because a 4-year payback is too high.

e. If the 4-year payback results in accepting just the right set of projects under average economic conditions, then this payback will result in too few long-term projects when the economy is weak.

4. You are on the staff of Camden Inc. The CFO believes project acceptance should be based on the NPV, but Steve Camden, the president, insists that no project should be accepted unless its IRR exceeds the project's risk-adjusted WACC. Now you must make a recommendation on a project that has a cost of $15,000 and two cash flows: $110,000 at the end of Year 1 and -$100,000 at the end of Year 2. The president and the CFO both agree that the appropriate WACC for this project is 10%. At 10%, the NPV is $2,355.37, but you find two IRRs, one at 6.33% and one at 527%, and a MIRR of 11.32%. Which of the following statements best describes your optimal recommendation, i.e., the analysis and recommendation that is best for the company and least likely to get you in trouble with either the CFO or the president?

a. You should recommend that the project be rejected because its NPV is negative and its IRR is less than the WACC.

b. You should recommend that the project be rejected because, although its NPV is positive, it has an IRR that is less than the WACC.

c. You should recommend that the project be accepted because (1) its NPV is positive and (2) although it has two IRRs, in this case it would be better to focus on the MIRR, which exceeds the WACC. You should explain this to the president and tell him that the firm's value will increase if the project is accepted.

d. You should recommend that the project be rejected. Although its NPV is positive it has two IRRs, one of which is less than the WACC, which indicates that the firm's value will decline if the project is accepted.

e. You should recommend that the project be rejected because, although its NPV is positive, its MIRR is less than the WACC, and that indicates that the firm's value will decline if it is accepted.

5. A firm is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO wants to use the IRR criterion, while the CFO favors the NPV method. You were hired to advise the firm on the best procedure. If the wrong decision criterion is used, how much potential value would the firm lose?

WACC: 6.00%

Year 0 1 2 3 4

CFS -$1,025 $380 $380 $380 $380

CFL -$2,150 $765 $765 $765 $765

a. $188.68

b. $198.61

c. $209.07

d. $219.52

e. $230.49

FIN 534 – Homework Chapter 15

Business / Economics

7/14/12

Asked: 7/14/12 11:49 AM
Opening Offer: $7.00
Due Date: 7/14/12

FIN 534 – Homework Chapter 15

1. Which of the following statements best describes the optimal capital structure?

a. The optimal capital structure is the mix of debt, equity, and preferred stock that maximizes the company's earnings per share (EPS).

b. The optimal capital structure is the mix of debt, equity, and preferred stock that maximizes the company's stock price.

c. The optimal capital structure is the mix of debt, equity, and preferred stock that minimizes the company's cost of equity.

d. The optimal capital structure is the mix of debt, equity, and preferred stock that minimizes the company's cost of debt.

e. The optimal capital structure is the mix of debt, equity, and preferred stock that minimizes the company's cost of preferred stock.

2. Which of the following statements is CORRECT?

a. A firm can use retained earnings without paying a flotation cost. Therefore, while the cost of retained earnings is not zero, its cost is generally lower than the after-tax cost of debt.

b. The capital structure that minimizes a firm's weighted average cost of capital is also the capital structure that maximizes its stock price.

c. The capital structure that minimizes the firm's weighted average cost of capital is also the capital structure that maximizes its earnings per share.

d. If a firm finds that the cost of debt is less than the cost of equity, increasing its debt ratio must reduce its WACC.

e. Other things held constant, if corporate tax rates declined, then the Modigliani-Miller tax-adjusted tradeoff theory would suggest that firms should increase their use of debt.

3. Which of the following statements is CORRECT?

a. In general, a firm with low operating leverage also has a small proportion of its total costs in the form of fixed costs.

b. There is no reason to think that changes in the personal tax rate would affect firms' capital structure decisions.

c. A firm with high business risk is more likely to increase its use of financial leverage than a firm with low business risk, assuming all else equal.

d. If a firm's after-tax cost of equity exceeds its after-tax cost of debt, it can always reduce its WACC by increasing its use of debt.

e. Suppose a firm has less than its optimal amount of debt. Increasing its use of debt to the point where it is at its optimal capital structure will decrease the costs of both debt and equity financing.

4. Companies HD and LD have identical amounts of assets, operating income (EBIT), tax rates, and business risk. Company HD, however, has a much higher debt ratio than LD. Company HD's basic earning power ratio (BEP) exceeds its cost of debt (rd). Which of the following statements is CORRECT?

a. Company HD has a higher return on assets (ROA) than Company LD.

b. Company HD has a higher times interest earned (TIE) ratio than Company LD.

c. Company HD has a higher return on equity (ROE) than Company LD, and its risk, as measured by the standard deviation of ROE, is also higher than LD's.

d. The two companies have the same ROE.

e. Company HD's ROE would be higher if it had no debt.

5. Which of the following statements is CORRECT?

a. Generally, debt-to-total-assets ratios do not vary much among different industries, although they do vary among firms within a given industry.

b. Electric utilities generally have very high common equity ratios because their revenues are more volatile than those of firms in most other industries.

c. Drug companies (prescription, not illegal!) generally have high debt-to-equity ratios because their earnings are very stable and, thus, they can cover the high interest costs associated with high debt levels.

d. Wide variations in capital structures exist both between industries and among individual firms within given industries. These differences are caused by differing business risks and also managerial attitudes.

e. Since most stocks sell at or very close to their book values, book value capital structures are almost always adequate for use in estimating firms' costs of capital.

FIN 534 – Chapter 5

Business / Economics

7/14/12

Asked: 7/14/12 11:53 AM
Opening Offer: $7.00
Due Date: 7/14/12

1 . Three $1,000 face value bonds that mature in 10 years have the same level of risk, hence their YTMs are equal. Bond A has an 8% annual coupon, Bond B has a 10% annual coupon, and Bond C has a 12% annual coupon. Bond B sells at par. Assuming interest rates remain constant for the next 10 years, which of the following statements is CORRECT?

a. Bond A's current yield will increase each year.

b. Since the bonds have the same YTM, they should all have the same price, and since interest rates are not expected to change, their prices should all remain at their current levels until maturity.

c. Bond C sells at a premium (its price is greater than par), and its price is expected to increase over the next year.

d. Bond A sells at a discount (its price is less than par), and its price is expected to increase over the next year.

e. Over the next year, Bond A's price is expected to decrease, Bond B's price is expected to stay the same, and Bond C's price is expected to increase.

2. Which of the following statements is CORRECT?

a. Two bonds have the same maturity and the same coupon rate. However, one is callable and the other is not. The difference in prices between the bonds will be greater if the current market interest rate is below the coupon rate than if it is above the coupon rate.

b. A callable 10-year, 10% bond should sell at a higher price than an otherwise similar noncallable bond.

c. Corporate treasurers dislike issuing callable bonds because these bonds may require the company to raise additional funds earlier than would be true if noncallable bonds with the same maturity were used.

d. Two bonds have the same maturity and the same coupon rate. However, one is callable and the other is not. The difference in prices between the bonds will be greater if the current market interest rate is above the coupon rate than if it is below the coupon rate.

e. The actual life of a callable bond will always be equal to or less than the actual life of a noncallable bond with the same maturity. Therefore, if the yield curve is upward sloping, the required rate of return will be lower on the callable bond.

3. Which of the following statements is CORRECT?

a. Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. The premium bond must have a lower current yield and a higher capital gains yield than the par bond.

b. A bond's current yield must always be either equal to its yield to maturity or between its yield to maturity and its coupon rate.

c. If a bond sells at par, then its current yield will be less than its yield to maturity.

d. If a bond sells for less than par, then its yield to maturity is less than its coupon rate.

e. A discount bond's price declines each year until it matures, when its value equals its par value.

4. Suppose a new company decides to raise a total of $200 million, with $100 million as common equity and $100 million as long-term debt. The debt can be mortgage bonds or debentures, but by an iron-clad provision in its charter, the company can never raise any additional debt beyond the original $100 million. Given these conditions, which of the following statements is CORRECT?

a. The higher the percentage of debt represented by mortgage bonds, the riskier both types of bonds will be and, consequently, the higher the firm's total dollar interest charges will be.

b. If the debt were raised by issuing $50 million of debentures and $50 million of first mortgage bonds, we could be certain that the firm's total interest expense would be lower than if the debt were raised by issuing $100 million of debentures.

c. In this situation, we cannot tell for sure how, or whether, the firm's total interest expense on the $100 million of debt would be affected by the mix of debentures versus first mortgage bonds. The interest rate on each of the two types of bonds would increase as the percentage of mortgage bonds used was increased, but the result might well be such that the firm's total interest charges would not be affected materially by the mix between the two.

d. The higher the percentage of debentures, the greater the risk borne by each debenture, and thus the higher the required rate of return on the debentures.

e. If the debt were raised by issuing $50 million of debentures and $50 million of first mortgage bonds, we could be certain that the firm's total interest expense would be lower than if the debt were raised by issuing $100 million of first mortgage bonds.

5. Cosmic Communications Inc. is planning two new issues of 25-year bonds. Bond Par will be sold at its $1,000 par value, and it will have a 10% semiannual coupon. Bond OID will be an Original Issue Discount bond, and it will also have a 25-year maturity and a $1,000 par value, but its semiannual coupon will be only 6.25%. If both bonds are to provide investors with the same effective yield, how many of the OID bonds must Cosmic issue to raise $3,000,000? Disregard flotation costs, and round your final answer up to a whole number of bonds.

a. 4,228

b. 4,337

c. 4,448

d. 4,562

e. 4,676

FIN 534 – Chapter 6

Business / Economics

7/14/12

Asked: 7/14/12 11:56 AM
Opening Offer: $7.00
Due Date: 7/14/12

1. Which of the following statements is CORRECT?

a. If you add enough randomly selected stocks to a portfolio, you can completely eliminate all of the market risk from the portfolio.

b. If you were restricted to investing in publicly traded common stocks, yet you wanted to minimize the riskiness of your portfolio as measured by its beta, then according to the CAPM theory you should invest an equal amount of money in each stock in the market. That is, if there were 10,000 traded stocks in the world, the least risky possible portfolio would include some shares of each one.

c. If you formed a portfolio that consisted of all stocks with betas less than 1.0, which is about half of all stocks, the portfolio would itself have a beta coefficient that is equal to the weighted average beta of the stocks in the portfolio, and that portfolio would have less risk than a portfolio that consisted of all stocks in the market.

d. Market risk can be eliminated by forming a large portfolio, and if some Treasury bonds are held in the portfolio, the portfolio can be made to be completely riskless.

e. A portfolio that consists of all stocks in the market would have a required return that is equal to the riskless rate.

2. Jane has a portfolio of 20 average stocks, and Dick has a portfolio of 2 average stocks. Assuming the market is in equilibrium, which of the following statements is CORRECT?

a. Jane's portfolio will have less diversifiable risk and also less market risk than Dick's portfolio.

b. The required return on Jane's portfolio will be lower than that on Dick's portfolio because Jane's portfolio will have less total risk.

c. Dick's portfolio will have more diversifiable risk, the same market risk, and thus more total risk than Jane's portfolio, but the required (and expected) returns will be the same on both portfolios.

d. If the two portfolios have the same beta, their required returns will be the same, but Jane's portfolio will have less market risk than Dick's.

e. The expected return on Jane's portfolio must be lower than the expected return on Dick's portfolio because Jane is more diversified.

3. Stock X has a beta of 0.7 and Stock Y has a beta of 1.3. The standard deviation of each stock's returns is 20%. The stocks' returns are independent of each other, i.e., the correlation coefficient, r, between them is zero. Portfolio P consists of 50% X and 50% Y. Given this information, which of the following statements is CORRECT?

a. Portfolio P has a standard deviation of 20%.

b. The required return on Portfolio P is equal to the market risk premium (rM − rRF).

c. Portfolio P has a beta of 0.7.

d. Portfolio P has a beta of 1.0 and a required return that is equal to the riskless rate, rRF.

e. Portfolio P has the same required return as the market (rM).

4. Which of the following statements is CORRECT?

a. When diversifiable risk has been diversified away, the inherent risk that remains is market risk, which is constant for all stocks in the market.

b. Portfolio diversification reduces the variability of returns on an individual stock.

c. Risk refers to the chance that some unfavorable event will occur, and a probability distribution is completely described by a listing of the likelihoods of unfavorable events.

d. The SML relates a stock's required return to its market risk. The slope and intercept of this line cannot be controlled by the firms' managers, but managers can influence their firms' positions on the line by such actions as changing the firm's capital structure or the type of assets it employs.

e. A stock with a beta of -1.0 has zero market risk if held in a 1-stock portfolio.

5. Which of the following statements is CORRECT?

a. If Mutual Fund A held equal amounts of 100 stocks, each of which had a beta of 1.0, and Mutual Fund B held equal amounts of 10 stocks with betas of 1.0, then the two mutual funds would both have betas of 1.0. Thus, they would be equally risky from an investor's standpoint, assuming the investor's only asset is one or the other of the mutual funds.

b. If investors become more risk averse but rRF does not change, then the required rate of return on high-beta stocks will rise and the required return on low-beta stocks will decline, but the required return on an average-risk stock will not change.

c. An investor who holds just one stock will generally be exposed to more risk than an investor who holds a portfolio of stocks, assuming the stocks are all equally risky. Since the holder of the 1-stock portfolio is exposed to more risk, he or she can expect to earn a higher rate of return to compensate for the greater risk.

d. There is no reason to think that the slope of the yield curve would have any effect on the slope of the SML.

e. Assume that the required rate of return on the market, rM, is given and fixed at 10%. If the yield curve were upward sloping, then the Security Market Line (SML) would have a steeper slope if 1-year Treasury securities were used as the risk-free rate than if 30-year Treasury bonds were used for rRF.

FIN 534 – Chapter 7

Business / Economics

7/14/12

Asked: 7/14/12 11:59 AM
Opening Offer: $7.00
Due Date: 7/14/13

1. Which of the following statements is CORRECT?

a. The constant growth model takes into consideration the capital gains investors expect to earn on a stock.

b. Two firms with the same expected dividend and growth rates must also have the same stock price.

c. It is appropriate to use the constant growth model to estimate a stock's value even if its growth rate is never expected to become constant.

d. If a stock has a required rate of return rs = 12%, and if its dividend is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%.

e. The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate.

2. Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT?

A B

Price $25 $25

Expected growth (constant) 10% 5%

Required return 15% 15%

a. Stock A's expected dividend at t = 1 is only half that of Stock B.

b. Stock A has a higher dividend yield than Stock B.

c. Currently the two stocks have the same price, but over time Stock B's price will pass that of A.

d. Since Stock A's growth rate is twice that of Stock B, Stock A's future dividends will always be twice as high as Stock B's.

e. The two stocks should not sell at the same price. If their prices are equal, then a disequilibrium must exist.

3. Which of the following statements is CORRECT?

a. A major disadvantage of financing with preferred stock is that preferred stockholders typically have supernormal voting rights.

b. Preferred stock is normally expected to provide steadier, more reliable income to investors than the same firm's common stock, and, as a result, the expected after-tax yield on the preferred is lower than the after-tax expected return on the common stock.

c. The preemptive right is a provision in all corporate charters that gives preferred stockholders the right to purchase (on a pro rata basis) new issues of preferred stock.

d. One of the disadvantages to a corporation of owning preferred stock is that 70% of the dividends received represent taxable income to the corporate recipient, whereas interest income earned on bonds would be tax free.

e. One of the advantages to financing with preferred stock is that 70% of the dividends paid out are tax deductible to the issuer.

4. Church Inc. is presently enjoying relatively high growth because of a surge in the demand for its new product. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the growth rate in earnings and dividends to zero, i.e., g = 0. The company's last dividend, D0, was $1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?

a. $26.77

b. $27.89

c. $29.05

d. $30.21

e. $31.42

5. Your boss, Sally Maloney, treasurer of Fred Clark Enterprises (FCE), asked you to help her estimate the intrinsic value of the company's stock. FCE just paid a dividend of $1.00, and the stock now sells for $15.00 per share. Sally asked a number of security analysts what they believe FCE's future dividends will be, based on their analysis of the company. The consensus is that the dividend will be increased by 10% during Years 1 to 3, and it will be increased at a rate of 5% per year in Year 4 and thereafter. Sally asked you to use that information to estimate the required rate of return on the stock, rs, and she provided you with the following template for use in the analysis.

Sally told you that the growth rates in the template were just put in as a trial, and that you must replace them with the analysts' forecasted rates to get the correct forecasted dividends and then the estimated TV. She also notes that the estimated value for rs, at the top of the template, is also just a guess, and you must replace it with a value that will cause the Calculated Price shown at the bottom to equal the Actual Market Price. She suggests that, after you have put in the correct dividends, you can manually calculate the price, using a series of guesses as to the Estimated rs. The value of rs that causes the calculated price to equal the actual price is the correct one. She notes, though, that this trial-and-error process would be quite tedious, and that the correct rs could be found much faster with a simple Excel model, especially if you use Goal Seek. What is the value of rs?

a. 11.84%

b. 12.21%

c. 12.58%

d. 12.97%

e. 13.36%

BIS 220 FINAL EXAM

Computers and Technology

7/14/12

Asked: 7/14/12 12:02 PM
Opening Offer: $25.00
Due Date: 7/14/12

1) Two information systems that support the entire organization are

A. enterprise resource planning systems and dashboards

B. transaction processing systems and office automation systems

C. enterprise resource planning systems and transaction processing systems

D. expert systems and office automation systems

2) _______ is the direct use of information systems by employees in their work

A. Transaction processing systems

B. End-user computing

C. Decision support systems

D. Management information systems

3) ______ attempt to duplicate the work of human experts by applying reasoning capabilities

A. Expert systems

B. Dashboards

C. Business intelligence systems

D. Decision support systems

4) _______ issues involve who may obtain information and how much they should pay for this information

A. Privacy

B. Accessibility

C. Property

D. Transferability

5) _____ issues involve collecting, storing, and disseminating information about individuals.

A. Privacy

B. Accuracy

C. Property

D. Accessibility

6) Your company's computers have been taken over by an attacker and used to attack another organization's information systems. Your problem is which of the following?

A. Poor security policies and procedures

B. Lack of due diligence

C. Downstream liability

D. Poor service-level agreements

7) You are the only person in your office to upgrade to Microsoft® Word 2010. Before you share documents with coworkers, you should do which of the following?

A. Print out a backup copy of documents

B. Run the Compatibility Checker

C. Burn all documents to CD

D. Create a document summary

8) Which of the following is detected by the contextual spelling checker?

A. Duplicate words

B. Irregular capitalization

C. Use of their when you should use there

D. Improper use of commas and other punctuation

9) If your cursor is near the bottom of a page and you want to display the next paragraph you type at the top of a new page, you should use which of the following?

A. Enter

B. Ctrl+PageDown

C. Ctrl+Enter

D. Page Layout, Breaks, Line Numbers

10) Your ______ is the collection of traceable data that is captured when you use various information technologies such as credit cards or the Internet

A. data profile

B. data shadow

C. database file

D. database record

11) No alphabetic characters in a social security number field is an example of

A. data isolation

B. data consistency

C. data integrity

D. data redundancy

12) In a database, the primary key field is used to

A. specify an entity

B. uniquely identify an attribute

C. identify duplicated data

D. uniquely identify a record

13) Search engines and metasearch engines are examples of which network application?

A. Communication

B. Discovery

C. Collaboration

D. Web services

14) ______ portals coordinate content within relatively narrow organizational and partners' communities

A. Personal

B. Affinity

C. Corporate

D. Commercial

15) Workflow, groupware, and telepresence systems are examples of which network application?

A. Discovery

B. Collaboration

C. Web services

D. Communications

16) Which type of e-commerce does an organization provide information and services to its workers?

A. Business-to-employee

B. Consumer-to-business

C. Government-to-business

D. Business-to-consumer

17) _______ auctions are the most common auction model for large purchases.

A. Forward

B. Static

C. Reverse

D. Simple

18) ______ collect data from many points over an extended space.

A. Bluetooth® networks

B. Ultra-wideband networks

C. Wireless sensor networks

D. Wi-Fi networks

19) Which type of satellite has the largest footprint?

A. Low earth orbit

B. Geostationary

C. Medium earth orbit

D. Equatorial orbit

20) Which of the following is the most appropriate wireless networking standard for creating personal area networks?

A. Wi-Fi

B. Cellular radio

C. Microwave

D. Bluetooth®

21) If cell D15 contains the formula =$C$5*D15, what is the D15 in the formula?

A. Mixed reference

B. Absolute reference

C. Circular reference

D. Range name

22) What should you do if you see a column of pound signs (###) instead of values or results of formulas?

A. Increase the zoom percentage

B. Delete the column

C. Adjust the row height

D. Increase the column width

23) ______ feasibility determines if the project is an bis 220 final exam acceptable financial risk and if the organization can afford the expense and time needed to complete the project

A. technical

B. economic

C. organizational

D. behavioral

24) In the traditional systems development life cycle, users

A. have no input

B. are important only in the testing phases of the project

C. are important only in the maintenance phase of the project

D. are limited to providing information requirements

25) To create a Microsoft® PowerPoint® presentation based on an installed template, click the

A. File tab, and then click New

B. File tab, and then click Open

C. Insert tab, and then select Add Template

D. Design tab, and then select New

26) Which of the following demotes a bullet point from the first level to the second level in Outline view in Microsoft® PowerPoint®?

A. Shift+Tab

B. Tab

C. Decrease List Level

D. Ctrl+Tab

27) ________ connects parts of the intranets of different organizations and allows secure communications among business partners

A. A global network

B. An intranet

C. An extranet

D. The Internet

28) ______ is a system with universally accepted standards for storing, retrieving, formatting, and displaying information via a client/server architecture

A. FTP

B. World Wide Web

C. Newsgroups

D. The Internet

29) A process that allows users to place information in multiple, overlapping associations is called

A. AJAX

B. tagging

C. a Wiki

D. blogging

30) ________ are websites that provide collections of content from all over the World Wide Web

A. Aggregators

B. Social networks

C. Mashups

D. Really simple syndication

BUS 415 Final Exam

Business / Economics

7/14/12

Asked: 7/14/12 12:08 PM
Opening Offer: $27.00
Due Date: 7/14/13

1) The form of alternative dispute resolution wherein the parties hire someone to review the evidence and make a decision that is binding upon the parties is called

A. negotiation

B. settlement conference

C. conciliation

D. arbitration

2) The Federal Trade Commission is an example of

A. a federal agency created by the federal government

B. a corporation subsidized by the federal government

C. a branch of the U.S. Supreme Court

D. a temporary commission created by executive order that has become permanent

3) A corporation is considered a citizen of what state?

A. The state where the majority of the employees live

B. It is not a citizen because it is a business

C. The state where it filed its Articles of Incorporation

D. The state where the president of the corporation lives

4) The Federal False Claims Act is also known as

A. the Sarbanes-Oxley Act

B. the Whistleblower Statute

C. the Statute of Frauds

D. the Statute of Limitations

5) Utilitarianism is a moral theory, which states

A. ethics requires a decision-maker to take actions which result in the greatest good to society

B. ethics requires following the Golden Rule (do unto others as you would have them do unto you)

C. ethics requires actions which use the most efficient tools

D. ethics requires acting according to the Bible or some outside source

6) Which of the following statements is true?

A. If something is legal, it is always ethical

B. Practices that are legal in the United States are legal everywhere in the world

C. Practices that are ethical in the United States are considered ethical everywhere else in the world

D. A course of action can be legal but not ethical

7) If a defendant files a motion for summary judgment in a civil case, what is the defendant saying?

A. That the plaintiff's claims are false

B. That the court has no jurisdiction to decide the case

C. That the case is ready to go to the jury

D. That even if what the plaintiff says is true, there is no basis for judgment against the defendant

8) A defendant fails to answer a civil lawsuit, what is likely to happen?

A. A court will contact the defendant and ask him to answer the lawsuit

B. The court will grant a default judgment against the defendant

C. The case will be appealed before the court makes a ruling

D. The court will order that the defendant go to jail until he or she agrees to answer

9) The legal authority of a court to make orders that are binding upon the parties is called

A. in rem jurisdiction

B. personal jurisdiction

C. quasi in rem jurisdiction

D. enumerated jurisdiction

10) Harry Hoosier, an Indiana resident, drives his family to Florida for spring vacation. When he is at a red light, Freddie Floridian, a Florida resident, is unable to stop in time and his vehicle impacts Harry's car from the rear. No one is hurt and Harry's vehicle suffers approximately $10,000 in damages. Which is correct?

A. Harry can sue Freddie in federal court in Florida but not in Indiana

B. Harry can sue Freddie in state court in Florida or Indiana

C. Harry can sue Freddie in state court but not federal court in Florida but not in Indiana

D. Harry can sue Freddie in state court but not federal court in Florida or Indiana

11) Monica owed Bob $500 for a business investment, which was more than a year overdue. Bob got drunk at a party and told everyone that Monica had owed him $500 for over a year. Can Monica recover from Bob for defamation?

A. Yes, because Bob abused his conditional privilege.

B. No, because Bob was telling the truth.

C. Yes, because Bob communicated the statement to third persons.

D. No, because Bob had been drinking.

12) What is the definition of a tort?

A. Any violation of an ethical duty

B. Any crime or misdemeanor

C. Any action done in violation of a prior agreement, which allows the victim to recover damages

D. Any civil wrong that allows the injured person to recover damages

13) Pete and Vicky make the following agreement: Pete promises he will go into a store, buy something for $5, and pay for it with a $100 bill on which he has written "Happy Birthday Vicky!" Vicky promises that after Pete collects his change and leaves the store, she will go into the same store, buy something that costs $5, and pay with a $10 bill. When the clerk attempts to give her change for $10, Vicky will claim that the $100 bill that is in the cash register was money she just received for her birthday, and will demand change from a $100 bill. Then Pete and Vicky will split the extra money they think Vicky will receive in change. Is this a valid contract?

A. This is a valid contract. There was a promise in exchange for a promise, and both parties got what they wanted.

B. This is a void contract, because the parties agreed to commit fraud.

C. This is a voidable contract because Vicky can change her mind.

D. This is not an enforceable contract because the agreement is not in writing.

14) An easement can be defined as

A. a limited right to use another person's land for a specified purpose

B. a relaxation of the borderlines between two parcels of land

C. a life estate in the property of another

D. an option to purchase the land of another

15) Huey, Dewey, and Louie own a building as tenants in common. Huey lives in the building. Without consulting the other two owners, Dewey deeds his interest in the building to Joe. What will be the outcome of this situation?

A. Huey, Louie, and now Joe will own the property as tenants in common.

B. Huey and Louie will still own the property as tenants in common, but Joe will have a reversionary interest.

C. The transfer of the interest to Joe will be ineffective because the other two did not consent.

D. Joe will make Huey pay rent.

16) Which of the following best describes the benefits of a limited liability company (LLC)?

A. LLC managers are not personally liable for debts, obligations, and liabilities of the LLC.

B. LLCs have limited duration.

C. Documents do not have to be filed with the state to create an LLC.

D. LLCs are automatically taxed like corporations.

17) Which of the following is true when a general partnership is converted to an LLC?

A. The property must be sold to a third party who then immediately sells it to the LLC.

B. The conversion can be made retroactive for up to 2 years.

C. The profit and loss sharing terms must remain the same as they were in the partnership.

D. The general partners will retain unlimited personal liability for obligations incurred while the business was a partnership.

18) In the Northeast Ethanol, LLC case, the court pierced the defendant's corporate veil after determining that

A. the plaintiffs could not find financing to build the ethanol plant

B. the defendant's shareholder used the corporation to perpetrate fraud

C. the ethanol plant was an unwise investment, against the best interest of the parties

D. the plaintiff's corporate directors were engaging in ultra vires activities

19) Which comment best describes the alter-ego doctrine in corporate law?

A. A corporation automatically becomes the alter ego of its shareholders

B. The president is the sole decision maker of a corporation

C. The board of directors is the alter ego of a corporation

D. Protection from personal shareholder liability can be forfeited if corporate formalities are not observed

20) If a corporation is properly incorporated in one state and wants authority to do business in second state, the corporation typically must

A. re-incorporate in the second state

B. do nothing because being incorporated in one state automatically entitles the corporation to do business in all states

C. register with the Interstate Commerce Commission as an alien corporation

D. obtain a certificate of authority from the second state

21) The DEF Corporation is incorporated in Texas. It wishes to do business in Oklahoma. Before DEF can legally do businesses in Oklahoma, which of the following must it do?

A. Nothing; DEF automatically has constitutional rights to do business in Oklahoma.

B. DEF must incorporate in Oklahoma.

C. DEF must qualify (register) to do business in Oklahoma.

D. DEF must domicile itself in Oklahoma.

22) What types of business can be converted to an LLC?

A. General partnerships only

B. General partnerships and limited partnerships only

C. Corporations and limited partnerships only

D. Corporations, general partnerships, and limited partnerships

23) Which of the following best describes the status of the employment at-will doctrine in the United States today? bus 415 final exam

A. It applies in most states to most employment relationships, but there are many exceptions that limit its application.

B. It applies more today than in the last century, and the quantity of corporate layoffs is evidence of this.

C. It today applies only to the employer, although in the past it applied to both the employee and employer.

D. It still applies today, but only to employees who are expressly told that they are an at-will employee when they are hired.

24) Which of the following rejected applicants may have a valid claim for discriminatory hiring practices?

A. A public health service did not hire a registered nurse because his shaking hands prevented him from administering injections.

B. A Catholic school did not hire a teacher because he was not Catholic.

C. A trucking company did not hire a truck driver because she was pregnant.

D. A university did not hire a 22-year-old woman to be a director of faculty because she was too young.

25) Which of the following people is protected from employment discrimination on the basis of age?

A. A 90-year-old person who wants a job as an airline pilot

B. A 50-year-old person who wants a job as an accountant

C. A 30-year-old person who wants a job as a waitress

D. A 10-year-old person who wants a job as a bartender

26) Marie works as a receptionist for a plumbing company. She works from 9 a.m. to 6 p.m. Monday through Friday. BUS415 Final Exam She earns $12 per hour, and is told how to do her job and what she should be working on at any particular time. Her boss does not withhold any taxes from her paycheck. Which of the following is true?

A. Marie would be treated as an employee because she is paid for the work that she does.

B. Marie would be treated as an employee because of the control exercised by the plumbing company over her work.

C. Marie would be treated as an independent contractor because she is paid hourly.

D. Marie would be treated as an independent contractor because the employer doesn't take any taxes out of her check.

27) Company employee handbooks have been found in some cases to amount to a(n) ______________ exception to the employment at will doctrine.

A. apparent

B. tort

C. public policy

D. implied contract

28) Which of the following is a correct statement of the requirements for a Bona Fide Occupational Qualification (BFOQ)?

A. The occupational qualification is job-related and cost-effective.

B. The occupational qualification is job-related and nondiscriminatory.

C. The occupational qualification is job-related and is a business necessity.

D. The occupational qualification is rationally based and evenly applied.

29) What federal legal protection is there with respect to trade secrets?

A. Trade secrets are protected under the federal patent laws.

B. Trade secrets are protected under the federal copyright laws.

C. Trade secrets are protected under the Trade Secret Protection Act of 1952.

D. Trade secrets are protected under the Economic Espionage Act of 1996.

30) Which of the following is true about misappropriation of trade secrets?

A. Although it is not necessary that the trade secret be patented, the secret must be such that it could be patented.

B. Trade secrets are always protected regardless of the actions of the trade secret owner.

C. The plaintiff can recover damages from theft of a trade secret only if the defendant acquired the trade secret through unlawful means.

D. Injunctions are generally not available to protect trade secrets.

FIN 370 FINAL EXAM

Business / Economics

7/14/12

Asked: 7/14/12 12:12 PM
Opening Offer: $25.00
Due Date: 7/14/12

1) The goal of the firm should be

A. maximization of profits

B. maximization of shareholder wealth

C. maximization of consumer satisfaction

D. maximization of sales

2) An example of a primary market transaction is

A. a new issue of common stock by AT&T

B. a sale of some outstanding common stock of AT&T

C. AT&T repurchasing its own stock from a stockholder

D. one stockholder selling shares of common stock to another individual

3) According to the agency problem, _________ represent the principals of a corporation.

A. shareholders

B. managers

C. employees

D. suppliers

4) Which of the following is a principle of basic financial management?

A. Risk/return tradeoff

B. Derivatives

C. Stock warrants

D. Profit is king

5) Another name for the acid test ratio is the

A. current ratio

B. quick ratio

C. inventory turnover ratio

D. average collection period

6) The accounting rate of return on stockholders' investments is measured by

A. return on assets

B. return on equity

C. operating income return on investment

D. realized rate of inflation

7) If you are an investor, which of the following would you prefer?

A. Earnings on funds invested compound annually

B. Earnings on funds invested compound daily

C. Earnings on funds invested would compound monthly

D. Earnings on funds invested would compound quarterly

8) The primary purpose of a cash budget is to

A. determine the level of investment in current and fixed assets

B. determine accounts payable

C. provide a detailed plan of future cash flows

D. determine the estimated income tax for the year

9) Which of the following is a non-cash expense?

A. Depreciation expenses

B. Interest expense

C. Packaging costs

D. Administrative salaries

10) The break-even model enables the manager of a firm to

A. calculate the minimum price of common stock for certain situations

B. set appropriate equilibrium thresholds

C. determine the quantity of output that must be sold to cover all operating costs

D. determine the optimal amount of debt financing to use

11) A zero-coupon bond

A. pays no interest

B. pays interest at a rate less than the market rate

C. is a junk bond

D. is sold at a deep discount at less than the par value

12) If you have $20,000 in an account earning 8% annually, what constant amount could you withdraw each year and have nothing remaining at the end of 5 years?

A. $3,525.62

B. $5,008.76

C. $3,408.88

D. $2,465.78

13) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?

A. 6%

B. 5%

C. 7%

D. 8%

14) The present value of a single future sum

A. increases as the number of discount periods increase

B. is generally larger than the future sum

C. depends upon the number of discount periods

D. increases as the discount rate increases

15) Which of the following is considered to be a spontaneous source of financing?

A. Operating leases

B. Accounts receivable

C. Inventory

D. Accounts payable

16) Compute the payback period for a project with the following cash flows, if the company's discount rate is 12%.

Initial outlay = $450

Cash flows:

Year 1 = $325

Year 2 = $65

Year 3 = $100

A. 3.43 years

B. 3.17 years

C. 2.88 years

D. 2.6 years

17) For the NPV criteria, a project is acceptable if the NPV is __________, while for the profitability index, a project is acceptable if the profitability index is __________.

A. less than zero, greater than the required return

B. greater than zero, greater than one

C. greater than one, greater than zero

D. greater than zero, less than one

18) Which of the following is considered to be a deficiency of the IRR?

A. It fails to properly rank capital projects.

B. It could produce more than one rate of return.

C. It fails to utilize the time value of money.

D. It is not useful in accounting for risk in capital budgeting.

19) The firm should accept independent projects if

A. the payback is less than the IRR

B. the profitability index is greater than 1.0

C. the IRR is positive

D. the NPV is greater than the discounted payback

20) The most expensive source of capital is

A. preferred stock

B. new common stock

C. debt

D. retained earnings

21) The cost associated with each additional dollar of financing for investment projects is

A. the incremental return

B. the marginal cost of capital

C. risk-free rate

D. beta

22) The XYZ Company is planning a $50 million expansion. The expansion is to be financed by selling $20 million in new debt and $30 million in new common stock. The before-tax required rate of return on debt is 9%, and the required rate of return on equity is 14%. If the company is in the 40% tax bracket, what is the marginal cost of capital?

A. 14.0%

B. 9.0%

C. 10.6%

D. 11.5%

23) Shawhan Supply plans to maintain its optimal capital structure of 30% debt, 20% preferred stock, and 50% common stock far into the future. The required return on each component is: debt–10%; preferred stock–11%; and common stock–18%. Assuming a 40% marginal tax rate, what after-tax rate of return must Shawhan Supply earn on its investments if the value of the firm is to remain unchanged?

A. 18.0%

B. 13.0%

C. 10.0%

D. 14.2%

24) Lever Brothers has a debt ratio (debt to assets) of 40%. Management is wondering if its current capital structure is too conservative. Lever Brothers' present EBIT is $3 million, and profits available to common shareholders are $1,560,000, with 342,857 shares of common stock outstanding. If the firm were to instead have a debt ratio of 60%, additional interest expense would cause profits available to stockholders to decline to $1,440,000, but only 228,571 common shares would be outstanding. What is the difference in EPS at a debt ratio of 60% versus 40%?

A. $1.75

B. $2.00

C. $3.25

D. $4.50

25) Zybeck Corp. projects operating income of $4 million next year. The firm's income tax rate is 40%. Zybeck presently has 750,000 shares of common stock which have a market value of $10 per share, no preferred stock, and no debt. The firm is considering two alternatives to finance a new product: (a) the issuance of $6 million of 10% bonds, or (b) the issuance of 60,000 new shares of common stock. If Zybeck issues common stock this year, what will be the projected EPS next year?

A. $4.94

B. $2.96

C. $5.33

D. $3.20

26) _________ risk is generally considered only a paper gain or loss.

A. Transaction

B. Translation

C. Economic

D. Financial

27) Capital markets in foreign countries

A. offer lower returns than those obtainable in the domestic capital markets

B. provide international diversification

C. in general are becoming less integrated due to the widespread availability of interest rate and currency swaps

D. have been getting smaller in the past decade

28) Buying and selling in more than one market to make a riskless profit is called

A. profit maximization

B. arbitrage

C. international trading

D. an efficient market

29) What keeps foreign exchange quotes in two different countries in line with each other?

A. Cross rates

B. Forward rates

C. Arbitrage

D. Spot rates

30) One reason for international investment is to reduce

A. portfolio risk

B. price-earnings (P/E) ratios

C. advantages in a foreign country

D. exchange rate risk

LDR 531 Final Exam (2)

Business / Economics

7/14/12

Asked: 7/14/12 12:16 PM
Opening Offer: $23.00
Due Date: 7/14/12

1. What are the three primary determinants of behavior on which organizational behavior focuses?

A. profit structure, organizational complexity, job satisfaction

B. individuals, profit structure, and job satisfaction

C. individuals, groups, and job satisfaction

D. groups, structure, and profit structure

E. individuals, groups, and structure

2. Which behavioral science discipline is most focused on understanding individual behavior?

A. sociology

B. social psychology

C. psychology

D. anthropology

E. organizational behavior

3. When the team he supports wins the World Cup, Detleb feels a surge of joy, which turns into a feeling of satisfaction that lasts for days. What is one of the reasons that the feeling of satisfaction might be categorized as a mood and not an emotion?

A. It has a lengthy duration

B. It is not the result of something that Detleb himself has done.

C. It is brought about by a specific event.

D. It is a positive feeling.

E. It is a very strong feeling.

4. Which of the following statements about personality is correct?

A. Personality is an aggregate whole.

B. Personality is the primary source of emotions in most people.

C. Personality is a part of a person.

D. Personality is for the most part comprised of traits that cannot be measured.

E. Personality is always stable

5. What does the Myers-Briggs Type Indicator classification of E or I stand for?

A. Extroverted or introverted

B. Sane or reflective

C. Emotional or introverted

D. Emotional or intuitive

E. Extroverted or intuitive

6. Which of the following is not generally true?

A. Satisfaction is the major determinant of a worker's OCB

B. Enterprises with a greater percentage of satisfied workers are more effective than those with a smaller percentage of satisfied workers.

C. Productive workers are satisfied workers.

D. Satisfaction comes down to fairness of outcomes, treatments, or procedures.

E. Satisfied workers are productive workers.

7. ________ results in a level of performance that is greater than the sum of the individual input.

A. Energy

B. Inversion

C. Enthusiasm

D. Initiative

E. Synergy

8. Which of the following helps explain the current popularity of teams?

A. Teams promote socialization.

B. Teams are easier to manage.

C. Teams are less expensive.

D. Teams are a way to better utilize employee talents.

E. Teams are very efficient.

9. What sort of group is defined by the organization's structure?

A. Interest

B. Informal

C. Friendship

D. Task

E. Formal

10. What will happen if group cohesiveness is high and performance norms are low?

A. Productivity will be low.

B. Internal conflict will be high.

C. Productivity will be high

D. Internal conflict will be low

E. It will have little effect on internal conflict or productivity.

11. Which of the following was the major finding of Zimbardo's simulated prison experiment?

A. An individual's emotions and the behavioral responses to those emotions are congruent.

B. Status differences between groups will always result in conflict between those groups.

C. Individuals can rapidly assimilate new roles very different from their inherent personalities.

D. Group cohesiveness is so important that individuals will restrain their natural impulses to remain part of the group.

E. When given the opportunity, people will tend to act in an oppressive manner to those around them.

12. Which theory differentiates leaders from nonleaders by focusing on personal qualities and characteristics?

A. Contingency theory

B. Fiedler's perspective

C. LPC

D. Characteristic theory

E. Trait theory

13. Which of the following statements regarding leadership is true?

A. All leaders are hierarchically superior to followers.

B. All leaders are managers.

C. All managers are leaders.

D. Formal rights enable managers to lead effectively.

E. Nonsanctioned leadership is as important as or more important than formal influence

14. Leadership is best defined as __________.

A. coordinating and staffing the organization and handling day-to-day problems

B. the ability to influence a group in goal achievement

C. implementing the vision and strategy provided by management

D. keeping order and consistency in the midst of change

E. not a relevant variable in modern organizations

15. Which model represents the theory that effective group performance depends on the proper match between a leader's style and the degree to which the situation gives control to the leader?

A. Leader-Member Exchange Model

B. Fiedler's Contingency Model

C. Hersey and Blanchard's Situational Leadership Model

D. Vroom and Yetton's Leader-Participation Model

E. None of the above

16. Three situational criteria identified in the Fiedler model are __________

A. task structure, leadership ability, and group conflict

B. job requirements, position power, and leadership ability

C. leader-member relations, task structure, and position power

D. charisma, influence, and leader-member relations

E. emotional intelligence, group orientation, and employee status

17. The leadership behaviors identified by the path-goal theory are __________.

A. directive, participative, supportive, and laissez-faire

B. supportive, employee-oriented, laissez-faire, and participative

C. participative, achievement-oriented, directive, and supportive

D. achievement-oriented, supportive, humanistic, and directive

E. affective, cognitive, and behavioral

18. According to Hersey and Blanchard, readiness encompasses the __________.

A. degree of confidence, trust, and respect members have in their leader

B. amount of influence a leader has over variables such as hiring, firing, and salaries

C. level of morale and satisfaction of the employees

D. ability and willingness of the followers to accomplish a task

E. all of the above

19. Which path-goal leadership style leads to greater satisfaction when tasks are ambiguous or stressful?

A. Mixed

B. Participative

C. Reactive

D. Supportive

E. Directive

20. Which of the following is not a primary force for change in organizations?

A. Social trends

B. Decreasing skill sets

C. The nature of the workforce

D. Economic shocks

E. Technology

21. An example of change in competition is __________.

A. increased interest in urban living

B. Iraq–U.S. war

C. a decrease in interest rates

D. collapse of Enron Corporation

E. growth of e-commerce

22. The application of direct threats or force on resisters is called __________.

A. coercion

B. manipulation

C. destruction

D. cooptation

E. exploitation

23. Which tactic to overcome resistance to change is a relatively easy way to gain the support of adversaries, but may backfire if the targets become aware of the tactic?

A. Coercion

B. Manipulation

C. Cooperation

D. Conciliation

E. Negotiation

24. Who developed a three-step model for change that included unfreezing, movement, and refreezing?

A. Lawrence Summers

B. Douglas Surber

C. Kurt Lewin

D. David McClelland

E. John Kotter

25. The basis by which jobs are grouped together is termed __________.

A. centralization

B. specialization

C. departmentalization

D. bureaucracy

E. social clustering

26. In the late 1940s, most manufacturing jobs in industrialized countries were being done with high _________.

A. structuralization

B. work specialization

C. generalized structure

D. decentralization

E. departmentalization

27. For much of the first half of the 20th century, managers viewed work specialization as __________.

A. difficult to implement without automation technology

B. an unending source of increased productivity

C. an effective solution to over-centralization

D. a frustrating cause of reduced product output

E. a means to encourage employee satisfaction

28. Which of the following is not a characteristic of organizational culture?

A. Team orientation

B. Formality orientation

C. Outcome orientation

D. Innovation

E. Attention to detail

29. __________ is a shared system of meaning held by the organization's members that distinguishes the organization from other organizations.

A. Formalization

B. Corporate image

C. Socialization

D. Institutionalization

E. Organizational culture

30. Leaders achieve goals, and power is __________.

A. a goal in and of itself

B. a strong influence on leaders' goals

C. a means of achieving goals

D. defined by leaders' hopes and aspirations

E. usually used by poor leaders

31. The most important aspect of power is probably that it __________.

A. is counterproductive

B. involves control

C. tends to corrupt people

D. is needed to get things done in an organization

E. is a function of dependency

MKT 571 Final Exam

Business / Economics

7/14/12

Asked: 7/14/12 12:19 PM
Opening Offer: $27.00
Due Date: 7/14/12

1) Which of the following is most closely associated with a proactive marketing orientation?

A. It involves delivering superior value.

B. It is about understanding and meeting customers' expressed needs.

C. It represents the "make and sell" philosophy.

D. The marketer focuses on the customers' latent or hidden needs.

2) Marketing __________ is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

A. internally

B. management

C. segmentation

D. integration

3) Business buyers ______________.

A. are geographically as diverse as consumers

B. tend to be geographically concentrated with over half of them in seven states

C. are largely concentrated in the southwestern United States

D. use geographical dispersion to keep shipping costs low

4) Toyota, the maker of the Scion brand, is using what kind of brand strategy with Scion products?

A. Separate family names

B. Blanket family names

C. Individual names

D. Corporate names

5) BMW, the maker of the Mini Cooper brand, is using what kind of brand strategy with its Mini products?

A. Individual names

B. Blanket family names

C. Separate family names

D. Corporate names

6) Brands can play a number of specific roles within a company's brand portfolio. For example, a __________ is positioned with respect to competitors' brands so that more important and profitable brands retain their desired positioning.

A. cash cow

B. low-end, entry level brand

C. high-end, prestige brand

D. flanker

7) When Apple introduced its popular iPod Nano model, it dropped its Mini iPod at the same time. The Mini was, at the time, the most popular MP3 player in the marketplace. This is an example of __________.

A. brand extension

B. preemptive cannibalization

C. a brand shake-out

D. product maturity

8) A ___________ is when a parent brand is used on a new product targeting a new market segment within a category currently served by the parent.

A. joint-venture co-brand

B. same company co-brand

C. category extension

D. line extension

9) ___________ are formal statements of expected product performance by the manufacturer.

A. Open pricing statements

B. Promotional statements

C. Warranties

D. General guarantees

10) Mazda's Miata convertible originally drew the most interest from women between the ages of 35 and 55. In order to interest more potential customers in the roadster, Mazda beefed up the model with heavier shocks and a faster engine, and then emphasized performance in its advertising. This is an example of creating a new product by ____________.

A. repositioning

B. the development of a new product line

C. market diversification strategy

D. product development strategy

11) When SAP software added a Windows-style "back" button to its industrial invoice management software, the new product ___________.

A. used a new product line

B. added to an existing product line

C. improved upon an existing product

D. used a marketing diversification strategy

12) In 2003, Toyota introduced its Scion brand with the aim of bringing younger buyers into the "family." This was a classic example of _________________.

A. line featuring

B. line cannibalization

C. line padding

D. line stretching

13) Painting and consulting are considered industrial goods because ______________.

A. they are specialty goods

B. they are considered "component materials"

C. most firms do not seek them directly

D. they facilitate developing and managing the finished product

14) Marketers plan their market offerings at five levels. What is the correct order of the levels, going from most fundamental to the level with the most benefits?

A. Basic-expected-augmented-core-potential

B. Expected-potential-basic-augmented-core

C. Core-basic-expected-augmented-potential

D. Potential-augmented-expected-core-basic

15) Characteristics a buyer can evaluate before purchase are called _______________.

A. search qualities

B. experience qualities

C. credence qualities

D. differentiation qualities

16) For $15 a day, Chlena will go to your home and feed, water, and play with your pet while you are on vacation. The service Chlena provides is an example of a _____________.

A. tangible good with accompanying service

B. hybrid

C. pure service

D. major service with accompanying minor goods and services

17) Mr. Tse and his family took a vacation to Washington, D.C. While there, they bought souvenirs; t-shirts and hats to take home to family and friends who didn't have the opportunity to go. The experience of the Tse family is an example of which offering?

A. A tangible good with accompanying services

B. A hybrid

C. A pure service

D. A major service with accompanying minor goods and services

18) Best Buy will often try to sell the buyer of a high-end television monitor an extended warranty. This is an example of _______________.

A. pure tangible good

B. tangible good with accompanying services

C. hybrid

D. pure service

19) The introduction of a new product to the market using market-penetration pricing is most likely to be successful when _____________.

A. the unit costs of producing a small volume of the product are high

B. there must be no existing demand for the product

C. the market is highly price sensitive

D. the high price communicates nothing to potential buyers

20) A __________ pricing objective is suitable for a company that has overcapacity, intense competition, and changing customer needs.

A. maximum current profit

B. survival

C. maximum current revenue

D. maximum sales growth

21) Scotty is in the process of opening Suburban Legends SK8S to sell boards, wheels, trucks, clothing, videos, and skateboarding related collectibles. The first thing Scotty should do when setting the store's prices is to ____________.

A. estimate costs

B. determine the target market

C. select a pricing method

D. select a pricing objective

22) A common mistake in pricing is ____________________.

A. revising prices too often

B. considering price and price competition as a key problem in marketing

C. ignoring costs when setting prices

D. setting prices independently of the rest of the market mix

23) When customers buy on the basis of a reference price or because the price conveys a particular quality image to them, they are being influenced by ____________.

A. value pricing

B. the psychology of pricing

C. the going rates of competitors

D. value augmented by perception

24) Which of the following areas will a marketing manager standardize or adapt when taking a new product global?

A. Marketing concept

B. Marketing mix

C. Product strategy

D. Promotion strategy

25) Which of the following best describes integrated marketing communication (IMC)?

A. Organizations present a consistent message.

B. Organizations present an effective communication plan.

C. Organizations present a plan that focuses on the customer.

D. Organizations present an effective advertising message.

26) Which of the following best describes the role of social responsibility in marketing?

A. Standards that guide marketing decisions and actions

B. Improving environment and products

C. Obligation to improve positive effects on society

D. Obligation to improve positive effects and reduce negative effects on society

27) Public policy makers have developed a substantial body of laws and regulations to govern advertising. For these reasons, an important step in developing an advertising campaign is _____________.

A. asking network censors what to cut out of the communication

B. the creative development of the message

C. the social responsibility review

D. preparing a copy strategy statement

28) Within the last couple years several cosmetics manufacturers have introduced non-clumping mascara. Revlon was one of these manufacturers. Revlon should use ________ advertising to increase selective demand for its non-clumping mascara.

A. descriptive

B. persuasive

C. reminder

D. informative

29) Hospitals are engaged in intense competition to fill maternity beds. What type of advertising would hospitals most likely use to advertise their new amenities like hot tubs in every room, filet mignon or lobster on the menu, and afternoon teas for the new mothers and their families?

A. descriptive

B. persuasive

C. reminder

D. informative

30) _____________ is the key ingredient in marketing campaigns and consists of a diverse collection of short-term incentive tools designed to influence trial, purchase, and interests of consumers and wholesalers.

A. Advertising

B. Public relations

C. Sales promotion

D. Personal selling

LAW 421 FINAL EXAM

Business / Economics

7/14/12

Asked: 7/14/12 12:25 PM
Opening Offer: $25.00
Due Date: 7/14/13

1) Which of the following does not result in a decision rendered by the hearing officer?

A. Arbitration

B. Mediation

C. Med-arb

D. Using expert evaluators

2) Jurisprudence is defined as

A. adjudication of law suits

B. the enactment of laws by a government body

C. the science and philosophy of law

D. the duties and obligations owed by a citizen

3) The state of Kansas has enacted a new law requiring all commercial trucks driving on Kansas roads to have special mud flaps installed. These mud flaps have been proven to make driving in the rain significantly safer due to reduced mist created by trucks driving in the rain, although data regarding accidents and injuries has not yet been determined. Any truck entering Kansas must have these flaps installed or will be subject to a significant fine and delay. The cost for purchase and installation of these flaps is $1,000 per truck. In short, trucks must have these flaps or go around the state. This Kansas law

A. is valid because it only applies to Kansas roads and such a law is entirely intrastate

B. is valid because Kansas's right to protect its citizens under its police powers will override any outside challenges to this law

C. is invalid because this law is intended to regulate interstate commerce, an enumerated federal power

D. is invalid because although on its face it's an intrastate law, this statute will have a significant economic effect on interstate commerce causing an undue burden

4) The power of preemption is derived from

A. the power of judicial review

B. the Commerce Clause

C. the Necessary and Proper Clause

D. the Supremacy Clause

5) What is the main problem with international courts?

A. Finding judges who understand the complexities of international law

B. Creating a body of law that reflects multiple legal systems

C. Enforcing a ruling on sovereign nations is difficult

D. Lack of recognition from the U.N. and WTO

6) Under the U.S. legal system, subject to some exceptions, costs of litigation regarding both the plaintiff and defendant

A. are all paid by the loser

B. are all paid by the winner

C. are paid for by each side with the plaintiff and defendant paying for their own legal costs

D. are totaled by the court and then for fairness, split in half with each side paying an equal amount

7) Generally, torts law is governed by

A. state statutory law

B. state common law

C. federal statutory law

D. constitutional law

8) Assumption of risk is a defense to

A. conversion

B. negligence

C. defamation

D. battery

9) The three stripes on Adidas clothing represents a

A. trademark

B. trade dress

C. trade secret

D. patent

10) The color or shape of an item, if distinctive, is a

A. trademark

B. trade dress

C. copyright

D. patent

11) Cybersquatting describes the practice of

A. registering multiple domain names and then selling them back to companies at inflated prices

B. hacking into a company's website to install a virus or Trojan horse designed to steal information but allow the site to continue operation

C. using mechanical devises to access a company's website multiple times to the point that traffic to the site is slowed or blocked

D. hacking into a company's website to install a virus designed to cause the company's website to totally cease operation

12) The Digital Millennium Copyright Act (1998) provided each of the following protections EXCEPT

A. manufacturers of CD-Writers were required to pay 2% of their sales into a fund to be distributed to copyright holders because the CD-Writers could easily copy music and other copyrighted works

B. civil and criminal penalties were established for those who sell or manufacture products or services that circumvent antipiracy software

C. restrictions were placed on analog recorders and camcorders that lack antipiracy features

D. ISPs were relieved of liability for copyright infringement by their users as long as the ISP had no knowledge of the infringement

13) When Maria comes home from work, she finds that her yard has been mowed and trimmed. An hour later, a man comes to her door to collect payment for the yard work. Maria refuses to pay him because she has never seen him before nor had she hired him to do the work. Which of the following is accurate?

A. This is an implied, unilateral contract, so she must pay.

B. Maria has received unjust enrichment so a quasi contract is formed, so she must pay.

C. The court would make Maria pay the reasonable cost of the work to be fair to both parties.

D. Maria would not have to pay anything.

14) Where a promise can only be accepted by the performance of the person to whom it is offered is an example of a/an

A. bilateral contract

B. unilateral contract

C. implied contract

D. quasi contract

15) Each of the following is a discharge by mutual consent EXCEPT

A. accord and satisfaction

B. novation

C. rescission

D. frustration of purpose

16) Harry sees an AK-47 automatic assault rifle in a gun shop window. He inquires about the price and is told that it is $2,500. Harry signs a contract promising to pay the $2,500 on Friday, taking possession of the rifle when payment is made. On Thursday, a law is enacted making the ownership, sale, or possession of an automatic rifle illegal. This contract

A. automatically terminates due to impossibility

B. automatically terminates due to impracticability

C. automatically terminates due to frustration of purpose

D. is enforceable and not affected by the new law because it was entered into before the law took effect

17) Which of the following is rarely awarded in contracts cases?

A. Consequential damages

B. Compensatory damages

C. Punitive damages

D. Liquidated damages

18) Which of the following is classified as an equitable remedy?

A. Consequential damages

B. Reformation

C. Restitution

D. Liquidated damages

19) Which of the following would not be considered tangible?

A. A car

B. Oxygen

C. The right of ownership

D. The pen or pencil you are using

20) With regard to consideration in a sales contract, the UCC differs from the common law in that

A. consideration in a sales contract may be modified without additional consideration

B. consideration exchanged must be equal or very closely equal in sales contracts

C. consideration is not required in sales contracts

D. consideration in a sales contract may be modified as long as additional consideration is provided

21) The UCC will permit an incomplete or slightly ambiguous contract to be enforced using each of the following criteria EXCEPT

A. past commercial conduct

B. industry standards or norms

C. judicial input of any terms necessary to maintain fairness

D. correspondence or verbal exchanges between the parties

22) Two merchant companies have entered into a contract for the sale of goods but have had no prior dealings, which would establish a course of conduct between them. The UCC will allow gap fillers to apply to their contract regarding missing terms in each of the following situations EXCEPT

A. they have failed to specify when payment for the goods is to be made

B. they have failed to specify where delivery of the goods is to be made

C. they have failed to specify the quality or grade of the goods to be delivered

D. they have failed to specify the price of the goods to be delivered

23) When a buyer rejects nonconforming goods and purchases the appropriate goods from a different seller, this is an example of which of the following:

A. Cover

B. Specific Performance

C. Lawsuit for Money Damages

D. Revoking Acceptance

24) Which of these is not a requirement for disclaiming a warranty?

A. Statutory authorization

B. A conspicuous writing

C. Explaining why the warranty is being disclaimed

D. Including the word merchantability if merchantability is to be disclaimed

25) "What if everyone took these same actions" is a question sometimes called the

A. universalization approach

B. utilitarian approach

C. functionality approach

D. morality approach

26) The utilitarian approach to moral philosophy was founded by

A. Jeremy Bentham

B. Immanuel Kant

C. Cicero

D. Kenneth Lay

27) Stan is an investment manager. He has received money from various investors with a promise of very high returns on their investments. The invested money is not supplying enough capital in order to pay the returns promised, so he has started using new investor's money to pay older investors. By advertising and by word of mouth, people are anxious to invest with Stan because of the money being paid, and with the influx of new investors, he is able to continue operating. Stan is

A. operating an insider trading operation

B. racketeering

C. guilty of conspiracy to defraud

D. operating a Ponzi scheme

28) Ben is the manager of a branch of a large bank. He has regularly taken money from customer's accounts for his own use and changed the bank records to cover his actions. Ben is guilty of

A. a conspiracy

B. a Ponzi scheme

C. racketeering

D. embezzlement

29) The Sarbanes-Oxley Act (2002) imposed stricter regulations on how corporations do business through regulations in each of the following areas EXCEPT

A. tax compliance

B. financial reporting

C. corporate governance

D. auditing

30) Joan is the CFO of Para Corp. and is a year from retirement. In order to guarantee herself a very substantial bonus and to boost her retirement package, she knowingly certifies false financial reports making the company appear to be much more profitable than it really is. She further takes steps to assure that the financial report was not reviewed through internal controls maintained by Para Corp. Under the provisions of the Sarbanes-Oxley Act (2002), if her fraud is NOT part of a larger scheme, what criminal penalties are possible for Joan?

A. $1 million in fines and up to 10 years in prison

B. $2 million in fines and up to 12 years in prison

C. $5 million in fines and up to 15 years in prison

D. $10 million in fines and up to 20 years in prison

ACC 349 FINAL EXAM 3

Business / Economics

7/14/12

Asked: 7/14/12 3:04 PM
Opening Offer: $18.00
Due Date: 7/14/12

1) Luca Company overapplied manufacturing overhead during 2006. Which one of the following is part of the year end entry to dispose of the overapplied amount assuming the amount is material?

A. An increase to finished goods

B. An increase to cost of goods sold

C. A decrease to applied overhead

D. A decrease to work in process inventory

2) When a job is completed, what happens to the cost of the job?

A. It is removed from work in process and included in cost of goods sold.

B. It is removed from work in process and included in finished goods.

C. It is removed from finished goods and included in cost of goods sold.

D. It is removed from materials inventory and included in work in process.

3) Why is factory overhead applied to products and jobs by manufacturing companies?

A. Total actual overhead costs can never be accurately determined for production.

B. It provides a more accurate cost of the job or products being processed.

C. Because indirect costs are easy to trace to products and jobs.

D. It allows managers more timely determination of product costs during the manufacturing process.

4) Which of the following would be accounted for using a job order cost system?

A. The pasteurization of milk

B. The production of cans of spinach

C. The production of town homes

D. The production of textbooks

5) Which one of the following is an important feature of a job order cost system?

A. Each must be completed before a new product order is accepted.

B. Each job has characteristics similar to the next.

C. Each consists of features which distinguish it from the next.

D. Each job uses similar processes to produce.

6) In a job order cost accounting system, the Work in Process account is

A. closed at year end

B. a control account

C. a period cost

D. an expense

7) Which of the following is an element of manufacturing overhead?

A. Factory workers wages

B. Flour used in manufactured cake mixes

C. Components used in calculators during production

D. Plant manager's salary

8) What broad functions do the management of an organization perform?

A. Directing, manufacturing, and controlling

B. Planning, manufacturing, and controlling

C. Planning, directing, and controlling

D. Planning, directing, and selling

9) Which one of the following costs would be included in manufacturing overhead of a lawn mower manufacturer?

A. The cost of the wheels

B. The wages earned by motor assemblers

C. The cost of the fuel lines that run from the motor to the gas tank

D. Depreciation on the testing equipment

10) A well-designed activity-based costing system starts with

A. identifying the activity-cost pools

B. analyzing the activities performed to manufacture a product

C. computing the activity-based overhead rate

D. assigning manufacturing overhead costs for each activity cost pool to products

11) Which would be an appropriate cost driver for the ordering and receiving activity cost pool?

A. Machine setups

B. Inspections

C. Purchase orders

D. Machine hours

12) In traditional costing systems, overhead is generally applied based on

A. direct labor

B. units of production

C. machine hours

D. direct material dollars

13) What sometimes makes implementation of activity-based costing difficult in service industries is

A. the labeling of activities as value-added

B. attempting to reduce or eliminate nonvalue-added activities

C. identifying activities, activity cost plus, and cost drivers

D. that a larger proportion of overhead costs are company-wide costs

14) Which of the following factors would suggest a switch to activity-based costing?

A. Product lines similar in volume and manufacturing complexity.

B. Production managers use data provided by the existing system.

C. Overhead costs constitute a significant portion of total costs.

D. The manufacturing process has been stable.

15) All of the following statements are correct EXCEPT that

A. activity-based costing has been widely adopted in service industries

B. a larger proportion of overhead costs are company-wide costs in service industries

C. the objective of installing ABC in service firms is different than it is in a manufacturing firm

D. the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company

16) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:

Mini A

Maxi B

Direct labor hours

15,000

25,000

Machine setups

600

400

Machine hours

24,000

26,000

Inspections

800

700

Overhead applied to Mini A using traditional costing using direct labor hours is

A. $1,200,000

B. $1,670,000

C. $1,536,000

D. $1,920,000

17) Which of the following factors would suggest a switch to activity-based costing?

A. Product lines similar in volume and manufacturing complexity.

B. The manufacturing process has been stable.

C. Overhead costs constitute a significant portion of total costs.

D. Production managers use data provided by the existing system.

18) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:

Mini A Maxi B

Direct labor hours 15,000 25,000

Machine setups 600 400

Machine hours 24,000 26,000

Inspections 800 700

Overhead applied to Mini A using activity-based costing is

A. $1,200,000

B. $1,664,000

C. $1,536,000

D. $1,920,000

19) The cost to produce Part A was $10 per unit in 2005. During 2006, it has increased to $11 per unit. In 2006, Supplier Company has offered to supply Part A for $9 per unit. For the make-or-buy decision,

A. incremental revenues are $2 per unit

B. net relevant costs are $1 per unit

C. incremental costs are $1 per unit

D. differential costs are $2 per unit

20) Ace Company sells office chairs with a selling price of $25 and a contribution margin per unit of $15. It takes 3 machine hours to produce one chair. How much is the contribution margin per unit of limited resource?

A. $5

B. $45

C. $3.33

D. $10

21) Max Company uses 10,000 units of Part A in producing its products. A supplier offers to make Part A for $7. Max Company has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of buying Part A from the supplier is

A. $0

B. $70,000

C. $10,000

D. $80,000

22) Disney's variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase?

A. $18,000

B. $12,000

C. $20,000

D. $6,000

23) Which statement describes a fixed cost?

A. It varies in total at every level of activity.

B. Its total varies proportionally to the level of activity.

C. The amount per unit varies depending on the activity level.

D. It remains the same per unit regardless of activity level.

24) Which one of the following is required in order for an activity base to be useful in cost behavior analysis?

A. The activity level should be an approved GAAP activity base.

B. There should be a correlation between changes in the level of activity and changes in costs.

C. The activity should always be a fixed amount.

D. The activity should always be based on the number of units produced.

25) Which cost is NOT charged to the product under absorption costing?

A. Direct materials

B. Variable manufacturing overhead

C. Direct labor

D. Fixed administrative expenses

26) Orbach Company sells its product for $40 per unit. During 2005, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $10, direct labor $6, and variable overhead $2. Fixed costs are: $480,000 manufacturing overhead, and $60,000 selling and administrative expenses. The per unit manufacturing cost under variable costing is

A. $16

B. $26

C. $18

D. $27

27) Which cost is NOT charged to the product under variable costing?

A. Direct materials

B. Variable manufacturing overhead

C. Direct labor

D. Fixed manufacturing overhead

28) Which of the following is NOT considered an advantage of using standard costs?

A. Standard costs can reduce clerical costs.

B. Standard costs can be useful in setting prices for finished goods.

C. Standard costs can be used as a means of finding fault with performance.

D. Standard costs can make employees "cost-conscious."

29) A standard cost is

A. a cost which is paid for a group of similar products

B. the average cost in an industry

C. a predetermined cost

D. the historical cost of producing a product last year

30) If standard costs are incorporated into the accounting system,

A. it may simplify the costing of inventories and reduce clerical costs

B. it can eliminate the need for the budgeting process

C. the accounting system will produce information which is less relevant than the historical cost accounting system

D. approval of the stockholders is required

31) The total variance is $10,000. The total materials variance is $4,000. The total labor variance is twice the total overhead variance. What is the total overhead variance?

A. $1,000

B. $2,000

C. $3,000

D. $4,000

32) The standard rate of pay is $5 per direct labor hour. If the actual direct labor payroll was $19,600 for 4,000 direct labor hours worked, the direct labor price (rate) variance is

A. $400 unfavorable

B. $400 favorable

C. $500 unfavorable

D. $500 favorable

33) The standard number of hours that should have been worked for the output attained is 8,000 direct labor hours and the actual number of direct labor hours worked was 8,400. If the direct labor price variance was $8,400 unfavorable, and the standard rate of pay was $18 per direct labor hour, what was the actual rate of pay for direct labor?

A. $17 per direct labor hour

B. $15 per direct labor hour

C. $19 per direct labor hour

D. $18 per direct labor hour

34) The overhead controllable variance is calculated as the difference between actual overhead costs incurred and the budgeted

A. overhead costs for the standard hours allowed

B. overhead costs applied to the product

C. overhead costs at the normal level of activity

D. fixed overhead costs

35) Which of the following statements is FALSE?

A. The overhead volume variance indicates whether plant facilities were used efficiently during the period.

B. The costs that cause the overhead volume variance are usually controllable costs.

C. The overhead volume variance relates solely to fixed costs.

D. The overhead volume variance is favorable if standard hours allowed for output is greater than the standard hours at normal capacity.

36) The overhead volume variance relates only to

A. variable overhead costs

B. fixed overhead costs

C. both variable and fixed overhead costs

D. all manufacturing costs

37) Looker Hats is planning to sell 600 felt hats, and 700 will be produced during June. Each hat requires a half yard of felt and a quarter hour of direct labor. Felt costs $3.00 per yard and employees of the company are paid $20 per hour. How much is the total amount of budgeted direct labor for June?

A. $3,000

B. $48,000

C. $3,500

D. $2,400

38) Waco's Widgets plans to sell 22,000 widgets during May, 19,000 units in June, and 20,000 during July. Waco keeps 10% of the next month's sales as ending inventory. How many units should Waco produce during June?

A. 18,900

B. 21,000

C. 19,100

D. 19,000

39) Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200 mugs during April. Each mug requires 2 pounds of resin and a half hour of direct labor. Resin costs $1 per pound and employees of the company are paid $12.50 per hour. Manufacturing overhead is applied at a rate of 120% of direct labor costs. Gottberg has 2,000 pounds of resin in beginning inventory and wants to have 2,400 pounds in ending inventory. How much is the total amount of budgeted direct labor for April?

A. $12,500

B. $13,750

C. $25,000

D. $27,500

40) In cost-plus pricing, the target selling price is computed as

A. variable cost per unit + desired ROI per unit

B. fixed cost per unit + desired ROI per unit

C. total unit cost + desired ROI per unit

D. variable cost per unit + fixed manufacturing cost per unit + desired ROI per unit

41) In most cases, prices are set by the

A. customers

B. competitive market

C. largest competitor

D. selling company

42) In cost-plus pricing, the markup percentage is computed by dividing the desired ROI per unit by the

A. fixed cost per unit

B. variable cost per unit

C. total cost per unit

D. total manufacturing cost per unit

FIN 534 – Chapter 9

Business / Economics

7/18/12

Asked: 7/18/12 5:59 PM
Opening Offer: $5.00
Due Date: 7/18/13

1. Bankston Corporation forecasts that if all of its existing financial policies are followed, its proposed capital budget would be so large that it would have to issue new common stock. Since new stock has a higher cost than retained earnings, Bankston would like to avoid issuing new stock. Which of the following actions would REDUCE its need to issue new common stock?

a. Increase the dividend payout ratio for the upcoming year.

b. Increase the percentage of debt in the target capital structure.

c. Increase the proposed capital budget.

d. Reduce the amount of short-term bank debt in order to increase the current ratio.

e. Reduce the percentage of debt in the target capital structure.

2. LaPango Inc. estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept?

a. Project B, which is of below-average risk and has a return of 8.5%.

b. Project C, which is of above-average risk and has a return of 11%.

c. Project A, which is of average risk and has a return of 9%.

d. None of the projects should be accepted.

e. All of the projects should be accepted.

3. Which of the following statements is CORRECT?

a. When calculating the cost of preferred stock, a company needs to adjust for taxes, because preferred stock dividends are deductible by the paying corporation.

b. All else equal, an increase in a company's stock price will increase its marginal cost of retained earnings, rs.

c. All else equal, an increase in a company's stock price will increase its marginal cost of new common equity, re.

d. Since the money is readily available, the after-tax cost of retained earnings is usually much lower than the after-tax cost of debt.

e. If a company's tax rate increases but the YTM on its noncallable bonds remains the same, the after-tax cost of its debt will fall.

4. Which of the following statements is CORRECT?

a. Since debt capital can cause a company to go bankrupt but equity capital cannot, debt is riskier than equity, and thus the after-tax cost of debt is always greater than the cost of equity.

b. The tax-adjusted cost of debt is always greater than the interest rate on debt, provided the company does in fact pay taxes.

c. If a company assigns the same cost of capital to all of its projects regardless of each project's risk, then the company is likely to reject some safe projects that it actually should accept and to accept some risky projects that it should reject.

d. Because no flotation costs are required to obtain capital as retained earnings, the cost of retained earnings is generally lower than the after-tax cost of debt.

e. Higher flotation costs tend to reduce the cost of equity capital.

5. Cranberry Corp. has two divisions of equal size: a computer manufacturing division and a data processing division. Its CFO believes that stand-alone data processor companies typically have a WACC of 8%, while stand-alone computer manufacturers typically have a 12% WACC. He also believes that the data processing and manufacturing divisions have the same risk as their typical peers. Consequently, he estimates that the composite, or corporate, WACC is 10%. A consultant has suggested using an 8% hurdle rate for the data processing division and a 12% hurdle rate for the manufacturing division. However, the CFO disagrees, and he has assigned a 10% WACC to all projects in both divisions. Which of the following statements is CORRECT?

a. While the decision to use just one WACC will result in its accepting more projects in the manufacturing division and fewer projects in its data processing division than if it followed the consultant's recommendation, this should not affect the firm's intrinsic value.

b. The decision not to adjust for risk means, in effect, that it is favoring the data processing division. Therefore, that division is likely to become a larger part of the consolidated company over time.

c. The decision not to adjust for risk means that the company will accept too many projects in the manufacturing division and too few in the data processing division. This will lead to a reduction in the firm's intrinsic value over time.

d. The decision not to risk-adjust means that the company will accept too many projects in the data processing business and too few projects in the manufacturing business. This will lead to a reduction in its intrinsic value over time.

e. The decision not to risk adjust means that the company will accept too many projects in the manufacturing business and too few projects in the data processing business. This may affect the firm's capital structure but it will not affect its intrinsic value

LDR 531 Final Exam (2)

Business / Economics

8/1/12

Asked: 8/1/12 12:24 PM
Opening Offer: $27.00
Due Date: 8/1/12

1. What are the three primary determinants of behavior on which organizational behavior focuses?

A. profit structure, organizational complexity, job satisfaction

B. individuals, profit structure, and job satisfaction

C. individuals, groups, and job satisfaction

D. groups, structure, and profit structure

E. individuals, groups, and structure

2. Which behavioral science discipline is most focused on understanding individual behavior?

A. sociology

B. social psychology

C. psychology

D. anthropology

E. organizational behavior

3. When the team he supports wins the World Cup, Detleb feels a surge of joy, which turns into a feeling of satisfaction that lasts for days. What is one of the reasons that the feeling of satisfaction might be categorized as a mood and not an emotion?

A. It has a lengthy duration

B. It is not the result of something that Detleb himself has done.

C. It is brought about by a specific event.

D. It is a positive feeling.

E. It is a very strong feeling.

4. Which of the following statements about personality is correct?

A. Personality is an aggregate whole.

B. Personality is the primary source of emotions in most people.

C. Personality is a part of a person.

D. Personality is for the most part comprised of traits that cannot be measured.

E. Personality is always stable

5. What does the Myers-Briggs Type Indicator classification of E or I stand for?

A. Extroverted or introverted

B. Sane or reflective

C. Emotional or introverted

D. Emotional or intuitive

E. Extroverted or intuitive

6. Which of the following is not generally true?

A. Satisfaction is the major determinant of a worker's OCB

B. Enterprises with a greater percentage of satisfied workers are more effective than those with a smaller percentage of satisfied workers.

C. Productive workers are satisfied workers.

D. Satisfaction comes down to fairness of outcomes, treatments, or procedures.

E. Satisfied workers are productive workers.

7. ________ results in a level of performance that is greater than the sum of the individual input.

A. Energy

B. Inversion

C. Enthusiasm

D. Initiative

E. Synergy

8. Which of the following helps explain the current popularity of teams?

A. Teams promote socialization.

B. Teams are easier to manage.

C. Teams are less expensive.

D. Teams are a way to better utilize employee talents.

E. Teams are very efficient.

9. What sort of group is defined by the organization's structure?

A. Interest

B. Informal

C. Friendship

D. Task

E. Formal

10. What will happen if group cohesiveness is high and performance norms are low?

A. Productivity will be low.

B. Internal conflict will be high.

C. Productivity will be high

D. Internal conflict will be low

E. It will have little effect on internal conflict or productivity.

11. Which of the following was the major finding of Zimbardo's simulated prison experiment?

A. An individual's emotions and the behavioral responses to those emotions are congruent.

B. Status differences between groups will always result in conflict between those groups.

C. Individuals can rapidly assimilate new roles very different from their inherent personalities.

D. Group cohesiveness is so important that individuals will restrain their natural impulses to remain part of the group.

E. When given the opportunity, people will tend to act in an oppressive manner to those around them.

12. Which theory differentiates leaders from nonleaders by focusing on personal qualities and characteristics?

A. Contingency theory

B. Fiedler's perspective

C. LPC

D. Characteristic theory

E. Trait theory

13. Which of the following statements regarding leadership is true?

A. All leaders are hierarchically superior to followers.

B. All leaders are managers.

C. All managers are leaders.

D. Formal rights enable managers to lead effectively.

E. Nonsanctioned leadership is as important as or more important than formal influence

14. Leadership is best defined as __________.

A. coordinating and staffing the organization and handling day-to-day problems

B. the ability to influence a group in goal achievement

C. implementing the vision and strategy provided by management

D. keeping order and consistency in the midst of change

E. not a relevant variable in modern organizations

15. Which model represents the theory that effective group performance depends on the proper match between a leader's style and the degree to which the situation gives control to the leader?

A. Leader-Member Exchange Model

B. Fiedler's Contingency Model

C. Hersey and Blanchard's Situational Leadership Model

D. Vroom and Yetton's Leader-Participation Model

E. None of the above

16. Three situational criteria identified in the Fiedler model are __________

A. task structure, leadership ability, and group conflict

B. job requirements, position power, and leadership ability

C. leader-member relations, task structure, and position power

D. charisma, influence, and leader-member relations

E. emotional intelligence, group orientation, and employee status

17. The leadership behaviors identified by the path-goal theory are __________.

A. directive, participative, supportive, and laissez-faire

B. supportive, employee-oriented, laissez-faire, and participative

C. participative, achievement-oriented, directive, and supportive

D. achievement-oriented, supportive, humanistic, and directive

E. affective, cognitive, and behavioral

18. According to Hersey and Blanchard, readiness encompasses the __________.

A. degree of confidence, trust, and respect members have in their leader

B. amount of influence a leader has over variables such as hiring, firing, and salaries

C. level of morale and satisfaction of the employees

D. ability and willingness of the followers to accomplish a task

E. all of the above

19. Which path-goal leadership style leads to greater satisfaction when tasks are ambiguous or stressful?

A. Mixed

B. Participative

C. Reactive

D. Supportive

E. Directive

20. Which of the following is not a primary force for change in organizations?

A. Social trends

B. Decreasing skill sets

C. The nature of the workforce

D. Economic shocks

E. Technology

21. An example of change in competition is __________.

A. increased interest in urban living

B. Iraq–U.S. war

C. a decrease in interest rates

D. collapse of Enron Corporation

E. growth of e-commerce

22. The application of direct threats or force on resisters is called __________.

A. coercion

B. manipulation

C. destruction

D. cooptation

E. exploitation

23. Which tactic to overcome resistance to change is a relatively easy way to gain the support of adversaries, but may backfire if the targets become aware of the tactic?

A. Coercion

B. Manipulation

C. Cooperation

D. Conciliation

E. Negotiation

24. Who developed a three-step model for change that included unfreezing, movement, and refreezing?

A. Lawrence Summers

B. Douglas Surber

C. Kurt Lewin

D. David McClelland

E. John Kotter

25. The basis by which jobs are grouped together is termed __________.

A. centralization

B. specialization

C. departmentalization

D. bureaucracy

E. social clustering

26. In the late 1940s, most manufacturing jobs in industrialized countries were being done with high _________.

A. structuralization

B. work specialization

C. generalized structure

D. decentralization

E. departmentalization

27. For much of the first half of the 20th century, managers viewed work specialization as __________.

A. difficult to implement without automation technology

B. an unending source of increased productivity

C. an effective solution to over-centralization

D. a frustrating cause of reduced product output

E. a means to encourage employee satisfaction

28. Which of the following is not a characteristic of organizational culture?

A. Team orientation

B. Formality orientation

C. Outcome orientation

D. Innovation

E. Attention to detail

29. __________ is a shared system of meaning held by the organization's members that distinguishes the organization from other organizations.

A. Formalization

B. Corporate image

C. Socialization

D. Institutionalization

E. Organizational culture

30. Leaders achieve goals, and power is __________.

A. a goal in and of itself

B. a strong influence on leaders' goals

C. a means of achieving goals

D. defined by leaders' hopes and aspirations

E. usually used by poor leaders

31. The most important aspect of power is probably that it __________.

A. is counterproductive

B. involves control

C. tends to corrupt people

D. is needed to get things done in an organization

E. is a function of dependency

BUS 401 FINANCE

Business / Economics

8/1/12

Asked: 8/1/12 12:32 PM
Opening Offer: $10.00
Due Date: 8/1/13

1. JBC Corp. declared a dividend of $2 per share, which was an increase of 25% from the prior year, yet JBC Corp. stock declined by 3% the day of the announcement. RBG Corp. declared a dividend of $2 per share, which was the same as the prior year, and its stock increased in value by 2% on the day of the announcement. These events could be most readily explained by the (Points : 1)

information effect.

clientele effect.

expectations theory.

residual dividend theory.

2. A firm's optimal capital structure occurs where? (Points : 1)

EPS are maximized, and WACC is minimized.

Stock price is maximized, and EPS are maximized.

Stock price is maximized, and WACC is maximized.

WACC is minimized, and stock price is maximized.

3. Flotation costs: (Points : 1)

include the fees paid to the investment bankers, lawyers, and accountants involved in selling a new security issue.

encourage firms to pay large dividends.

are encountered whenever a firm fails to pay a dividend.

are incurred when investors fail to cash their dividend check.

4. Assume that the tax on dividends and the tax on capital gains is the same. All else equal, what would a prudent investor prefer? (Points : 1)

The prudent investor would be indifferent between receiving dividends or capital gains.

The prudent investor would prefer dividendsa dollar today is always worth more than a dollar to be received in the future.

The prudent investor would prefer capital gainsthe capital gain tax liability can be deferred until gains are realized.

More information is needed.

5. The break-even point is equal to (Points : 1)

fixed costs divided by (sales price per unit — variable cost per unit).

fixed costs divided by unit variable costs.

fixed costs divided by selling price per unit.

(sales price per unit — variable cost per unit) times the fixed costs.

6. The payment of dividends may indirectly result in closer monitoring of management's investment activities, thus increasing shareholder value by (Points : 1)

reducing agency costs.

increasing information asymmetry.

increasing a company's amount of free cash flow.

reducing auditing fees.

7. A firm that uses large amounts of debt financing in an industry characterized by a high degree of business risk would have ______ earnings per share fluctuations resulting from changes in levels of sales. (Points : 1)

no

constant

large

small

8. A high degree of variability in a firm's earnings before interest and taxes refers to (Points : 1)

business risk.

financial risk.

financial leverage.

operating leverage.

9. As production levels increase, (Points : 1)

variable costs per unit decrease.

fixed costs per unit increase.

fixed costs per unit stay the same and variable costs per unit increase.

fixed costs per unit decrease and variable costs per unit stay the same.

10. Moline Manufacturing Corporation reported the following items: Sales = $6,000,000; Variable Costs of Production = $1,500,000; Variable Selling and Administrative Expenses = $550,000; Fixed Costs = $1,350,000; EBIT = $2,600,000; and the Marginal Tax Rate =35%. Moline's break-even point in sales dollars is (Points : 1)

$2,050,633.
$2,197,500.
$2,438,750.
$2,785,000.

MKT 421 Final Exam THE NEW EXAM

Business / Economics

8/1/12

Asked: 8/1/12 12:36 PM
Opening Offer: $10.00
Due Date: 8/1/12

1) For Tesla, a new firm that makes an electric sports car, estimating how many competitors will make electric vehicles and what kinds they will make, is:

A. One of the universal functions of innovation.

B. A production activity.

C. A part of marketing.

D. An example of the micro-macro dilemma.

2) Predicting what types of bicycles different customers will want and deciding which of these customers the business will try to satisfy are activities a firm should do as part of

A. Production.

B. A command economy.

C. Making goods or performing services.

D. Marketing.

3) According to the text, marketing means:

A. Much more than selling and advertising.

B. Selling.

C. Advertising.

D. Producing and selling.

4) Professional Dental Supply has been successfully selling dental instruments to dentists for the past 20 years, and has developed strong customer relations. When looking for new marketing opportunities, Professional Dental Supply will most likely look first at

A. Market penetration.

B. Diversification.

C. Market development.

D. Product development.

5) To compete more successfully with its many competitors offering packaged cookies, Famous Amos added its own line of extra chunky premium cookies. This seems to be an effort at:

A. Combination.

B. Market penetration.

C. Market development.

D. Product development.

6) Which of the following statements regarding marketing strategies is FALSE?

A. It is useful to think of the marketing strategy planning process as a narrowing-down process.

B. These strategies must meet the needs of target customers, and a firm is likely to get a competitive advantage if it just meets needs in the same way as some other firm.

C. Developing successful marketing strategies does not need to be a hit-or-miss proposition.

D. These strategies require decisions about the specific customers the firm will target and the marketing mix the firm will develop to appeal to that target market.

7) A firm's marketing mix decision areas would NOT include:

A. Promotion

B. People

C. Price

D. Product

8) The marketing mix

A. Includes four variables—People, Place, Promotion, and Price.

B. Includes the target market

C. Helps to organize the marketing strategy decision areas.

D. Includes four variables—advertising, personal selling, customer service, and sales promotion.

9) Which of the following is true?

A. The product P in the marketing mix stands for only physical goods.

B. The product P in the marketing mix stands for both physical goods and services.

C. The product P in the marketing mix stands for only tangible merchandise.

D. The product P in the marketing mix stands for both physical goods and tangible

10.) Dell, Inc. wants to offer customers televisions in addition to computers. This is a change in their___________

A. pricing.

B. product.

C. promotional.

D. personnel.

LAW 531 Final Exam 2

Business / Economics

8/3/12

Asked: 8/3/12 1:28 PM
Opening Offer: $30.00
Due Date: 8/3/13

1) Which of the following is a distinguishing feature of a common law legal system?

A. Requiring guilt be proven beyond a reasonable doubt

B. The sole source of law is a comprehensive civil code

C. An appeal process

D. The making of law by the judges and the following of precedent

2) Which best describes the types of agency authority held by officers of a corporation?

A. Vicarious authority

B. Express and obvious authority

C. Implied and apparent authority only

D. Express, implied, and apparent authority

3) If an LLC fails to follow formalities such as keeping minutes of meetings, which of the following is true?

A. Only the managers of a manager-managed LLC will lose limited liability.

B. All members will lose their limited liability.

C. This failure will not result in imposing personal liability on any member.

D. Only the parties responsible for the failure will lose limited liability.

4) Martha started a flower shop as a sole proprietor. After 1 year, she was forced to close the shop because business was so bad. At that time, the business assets totaled $50,000, but the business liabilities totaled $125,000. Which of the following statements is true?

A. Martha is personally liable for the additional $75,000.

B. Martha's business creditors can collect only the $50,000 of business assets.

C. Martha's business creditors can collect only the $50,000 now, but if Martha ever goes into business again, they can get the assets of the new business.

D. Once Martha terminates the sole proprietorship, the business creditors cannot even get the $50,000.

5) Partners of a general partnership

A. are protected from litigation against the partnership by statute

B. are liable for the obligations of the partnership only to the extent of their capital contributions

C. do not have to pay taxes on the profits of the partnership that are distributed to them

D. are liable for all the obligations of their partnership

6) Which of the following forms of alternative dispute resolution allows both parties to see the strengths and weaknesses of both sides of the case through the presentation of evidence?

A. Negotiated settlement

B. Minitrial

C. Mediation

D. Conciliation

7) A ___________ is a court-appointed party who conducts a private trial and renders a judgment.

A. fact-finder

B. arbitrator

C. judicial referee

D. negotiator

8) What is a form of alternative dispute resolution that is often used when the parties involved do not want to face one another?

A. Arbitration

B. Fact-finding

C. Minitrial

D. Conciliation

9) Which of the following is true regarding mediation?

A. A mediator often meets with both parties at the same time.

B. A settlement agreement is never reached with a mediator.

C. A mediator does not make a decision or award.

D. If a settlement agreement is not reached in mediation, then the parties hire a new mediator.

10) There are no accountants on the board of the Oriole Corporation, a privately held corporation. The board routinely relies on a Certified Public Accountant (CPA) to explain the financial situation of the corporation. The board does not do an independent analysis of the CPA's report. In these circumstances, the board is

A. violating a duty of loyalty

B. violating a duty to exercise due care

C. violating the business judgment rule

D. not violating any duty

11) Self-dealing by a director of a corporation can best be described as

A. A breach of a director's duty of notification

B. A breach of a director's duty of care

C. A breach of the Business Judgment Rule

D. There was no breach of duty

12) Which of the following is likely to be a breach of a corporate officer's or director's duty of care?

A. Failing to anticipate a precipitous drop in consumer demand of the company's product

B. Failing to make a reasonable investigation of relevant facts

C. Failing to predict the unexpected startup of a new competitor

D. Failing to foresee a sudden rise in the interest rate

13) In what ways may officers and directors be protected by the corporation from liability for actions taken as an officer or director?

A. The officer or director must purchase personal liability insurance to cover such losses.

B. Have the corporation purchase liability insurance and indemnify the officers and directors.

C. Officers and directors cannot be protected from liability.

D. Officers and directors are automatically protected from liability by virtue of corporate.

14) If a plaintiff voluntarily participates in a risky activity that results in injury, what is the most likely defense to a claim that the plaintiff assumed the risk?

A. Contributory negligence

B. Defendant was negligent per se

C. Defendant assumed the risk under the "danger invites rescue" doctrine

D. Comparative negligence

15) Mark is the treasurer of Sky-Hi Tech Corporation and, as such, he is responsible for protecting the assets of the corporation. One of Mark's subordinates, Jill, is in charge of reconciling the monthly corporate bank statements. Over a period of several months, Jill embezzled a large amount of money from Sky-Hi Tech, covering up the theft using her bank reconciliations. If Mark had adequately supervised Jill, she could not have embezzled this money. Mark's actions (or inactions) constitute a breach of his duty of

A. due care

B. obedience

C. loyalty

D. good business judgment

16) Barry buys a new sports car. The car sits low to the ground and because of the styling, visibility to the rear is limited. About a month after Barry buys the car, he backs over his pet poodle as he is leaving for work. In his strict liability suit against the car manufacturer, Barry will

A. win because driving a sports car is an inherently dangerous activity

B. win on the basis of design defect

C. win on the basis of packaging defect because the car could have been packaged in a differently styled body

D. lose because he assumed the risk of backing up in a car when he could not see to the rear

17) If a judge rules that a party lost its case because of the Statute of Frauds, the judge has essentially stated which of the following?

A. The losing party purposely deceived the other party about a material fact.

B. The losing party will not be allowed to introduce evidence to contradict a written agreement.

C. The losing party cannot enforce an oral contract that should have been in writing.

D. The losing party was found by the court to have lied, and therefore will lose the case.

18) What does the parol evidence rule do?

A. It limits the ability of parties to written contracts from introducing certain evidence related to the contract.

B. It sets the rules for admissibility of evidence relating to releasing a criminal from a prison term.

C. It sets the general rules for the admissibility of evidence in criminal actions.

D. It determines which contracts are required to be in writing.

19) ABC LLC and XYZ Corp. entered into a contract whereby ABC is to supply XYZ with widgets. After receiving the first shipment of widgets, XYZ finds that the widgets, while meeting the physical standards specified in the contract, do not perform as XYZ anticipated. The contract is silent as to performance specifications, but XYZ suspects that ABC knew that it was manufacturing and supplying widgets that would not perform according to industry standard. XYZ initiates a lawsuit against ABC, alleging that ABC knowingly supplied defective widgets. What process will XYZ use to help it develop its case against ABC?

A. Pleadings

B. Motion for summary judgment

C. Discovery

D. Trial

20) Under the Employee Retirement Income Security Act (ERISA), an employee's benefits must vest

A. within 10 years

B. by the time of the employee's retirement

C. in total within 5 years or gradually within 7 years

D. only as provided in the pension plan

21) Which of the following statutes provides that it is legal for employees to organize a union?

A. The Norris-LaGuardia Act

B. The National Labor Relations Act

C. The Labor-Management Relations Act

D. The Worker Adjustment and Retraining Notification Act

22) William was a factory worker at the Spruce Industries plant. When management found out that William is gay, he was fired. The plant's action is

A. not prohibited under federal law

B. a violation of Title VII

C. a violation of the Equal Pay Act

D. a violation of the Americans with Disabilities Act

23) Janet is manager of a bank. She has all the qualifications to be promoted to bank manager. In fact, she is better qualified than any of the men being considered for the position. However, the owner of the bank believes that bank customers will not accept a woman as bank manager, so the owner promotes one of the males. The owner's actions would best be described as what?

A. Quid pro quo

B. Hostile work environment

C. Gender discrimination

D. Pregnancy discrimination

24) Which one of the following statutes allows a prevailing party to recover attorney's fees in an action against the government for an action of an agency?

A. The Freedom of Information Act

B. The Government Compensation Act

C. The Administrative Procedure Act

D. The Equal Access to Justice Act

25) Which of the following would prevent someone from acquiring land by adverse possession?

A. The person never had to fight the original owner to remain on the land.

B. The person lived on the land secretly so that the original owner would not find out he or she was there.

C. The person lived on the land without the original owner's permission.

D. The person was the only person who lived on the land in question.

26) Which of the following would be classified as tangible personal property, as opposed to other property categories, such as fixtures or intangible property?

A. A freestanding desk

B. Built-in cabinets in an office

C. A copyright to a literary work

D. A field of corn

27) As the CEO of a high tech company, you become aware that your chief competitor is working on a new computer program that will revolutionize your industry. You know that if you can find out several key functions about the new product, your own programmers will be able to duplicate the function of the program without actually copying its code. Which of the following actions can you ethically take?

A. Paying the garbage company to deliver the competitor's garbage to you

B. Hiring a former employee of the competitor and paying her a bonus to tell you the competitor's secrets

C. Hiring a researcher to review all available information about the competitor, including patents, types and names of employees hired, reports by the competitor, including all SEC filings

D. Hacking into the competitor's computer systems to find out what you need

28) From a practical perspective, what are some of the elements of Sarbanes-Oxley?

A. Ensuring transparency, accountability and internal controls

B. Ensuring companies are profitable

C. Ensuring that CEOs do not make more than 10 times the lowest paid employee

D. Ensuring that large shareholders do not have board representation

29) Under Title IX of the Sarbanes-Oxley Act, the penalty for someone who certifies "any statements as set forth in subsections (a) and (b) of this section knowing that the periodic report accompanying the statement does not comport . . ." is

A. no more than $1,000,000.00 or imprisoned no more than 10 years, or both

B. no more than $500,000.00 or imprisoned no more than 6 months, or both

C. no more than $2,000,000.00 or imprisoned no more than 3 years, or both

D. no more than $5,000,000.00 or imprisoned no more than 20 years, or both

30) Which is prohibited under the Sarbanes-Oxley Act?

A. High salaries for corporate executives

B. Using an independent accounting firm for audit purposes

C. Public companies making personal loans to their directors and executives

D. Directors and executives attending board meetings on a regular basis

OPS571 Operations Management FINAL

Business / Economics

8/6/12

Asked: 8/6/12 7:54 AM
Opening Offer: $26.00
Due Date: 8/6/12

1. Which of the following is true about make-to-stock processes?

A. Make-to-stock processes can be controlled based on the actual or anticipated amount of finished goods

B. Make-to-stock process is used when demand is seasonal and the firm does not have enough

C. Services by their very nature often use make-to-stock processes.

D. A and B

2. ___is when the activities in the stage must stop because there is no place to deposit the item just completed.

A. None of these answers

B. Starving

C. Blocking

D. Buffering

3. The type of processing structure that is used for producing discrete products at higher volume is:

A. Project

B. Assembly line

C. Batch

D. Job Shop

4 The most common things that can happen when two stages are directly linked are:

A) Buffering

B) Blocking

C) Starving

D) B and C

E) A, B, and C

5. An example of a business/industry that uses batch flow process structure is:

A. Automobile assembly

B. Heavy equipment

C. Commercial printer

D. Sugar refinery

6. The major decision variables in equipment selection are:

A. Flexibility

B. Labor requirements

C. Manufacturer

D. Both A and B

7. According to your text, the most common process metric is:

A. Throughput time

B. Utilization

C. Efficiency

D. Productivit

8. In which phase of new-product design process are considerations to target market, desired level of performance, investment requirements and financial impact made:

A. pilot manufacturing phase

B. preliminary process design

C. detailed engineering

D. concept development and product planning

9. Which of the following statements is true about value analysis/value engineering (VA/VE)?

A. The purpose of VA/VE is to simplify products and processes.

B. The objective of VA/VE is to achieve equivalent or better performance at a lower cost.

C. VA is performed before the production stage, while VE deals with products already in production.

D. both A and B

10. Which of the following is not a dimension of design quality?

A. Customization

B. Serviceability

C. Durability

D. Feature

11. The category given the maximum point value in the Baldrige award is:

A. Process management

B. Business results

C. Customer and market focus

D. Strategic planning

D. Feature

12. Which of the following is not an assumption of the basic economic-order quantity model?

A. quantity discounts are available

B. ordering or setup costs are constant

C. lead time is constant

D. annual demand is constant and know

13. Counting items to ensure an order is correct, is an example of:

A. stockout cost

B. carrying cost

C. ordering cost

D. Setup cos

14. A _________ approach actually schedules in detail each resource using the setup and runtime required for each order.

A. Finite loading

B. Forward scheduling

C. Backward scheduling

D. Infinite loadin

15. The assignment method is appropriate in solving problems that have the following characteristics:

A. There are 'n' things to be distributed to 'n' destinations

B. Though each destination may handle all the things, the final assignment has each thing assigned to one and only one destination

C. Only one criterion should be used (minimum cost, maximum profit, for example)

D. A and C

16. Which of the following is not a principle of work-center scheduling?

A. Reschedule every day

B. Schedule jobs as strings, with process steps back to back

C. Obtain feedback each day on the jobs that are completed at each work center

D. Once started, a job should not be interrupte

17. Which of the following according to Goldratt is not a component of production cycle time?

A. Process time

B. Wait time

C. Maintenance time

D. Setup time

18. According to Goldratt and Fox, a useful performance measure to treat inventory is_____.

A. Current ratio

B. Quick ratio

C. Dollar days

D. Inventory turnover

19. Goldratt's rule of production scheduling include all but:

A. Utilization and activation of a resource is not the same thing

B. An hour saved at a non-bottleneck is a mirage

C. A process batch should be fixed both along its route and in time

D. Do not balance the capacity - balance the flow

20. Which of the following would not be considered in deciding how far to minimum-cost schedule (crash) a project?

A. Incentives for early completion

B. Indirect project costs (e.g. interest on a construction loan)

C. The normal duration times of tasks not on a critical path

D. Project overrun penaltie

21. The advantage(s) of the network planning models over the Gantt chart is (are) that:

A. they are easy to use and quite widely understood

B. the precedence relationships in network scheduling are explicitly shown

C. they are less costly to use

D. both A and B

22. The idea of the Value Density calculation is.

A. Matching the weight of the product with an appropriate carrier

B. Determining how a product should be shipped considering its weight and value

C. Finding the minimum cost carrier

D. Finding a carrier that can handle the weight

23. According to Hau Lee, which of the following types of products need to be delivered with efficient supply-chains?

A. Innovative products

B. Grocery products

C. High technology products

D. Custom products

24. Capacity utilization rate can be computed as:

A. Capacity used x best operating level

B. Capacity used / best operating level

C. Capacity used + best operating level

D. Capacity used - best operating level

25. With regards to working with suppliers, lean systems typically require:

A. buyer inspection of goods and materials

B. multiple sources from which to purchase

C. long-term relationships and commitments

D. delivery of large lots at frequent intervals

26. Which of the following is NOT one of the more successful applications of lean concepts in services?

A. Introduction of demand-push scheduling

B. Upgrade quality

C. Upgrade housekeeping

D. Organize problem-solving groups

27. Which of the following would not be classified as a component of demand?

A. Causal variation

B. Cycle

C. Seasonality

D. Trend

28. Which of the following statements are true about time-series forecasting?

A. Time series methods are useful for long-range forecasts when the demand pattern is erratic

B. Under time-series methods, demand is divided into the time-based components such as daily, weekly, etc.

C. Agent liability. Time series analysis tries to understand the system underlying and surrounding the item being forecast.

D. Time series analysis is based on the idea that the history of occurrences over time can be used to predict the future.

29. Which of the following accurately describes a chase strategy?

A. All of the above could describe the strategy, depending on the organization.

B. The firm produces exactly what is needed every month.

C. The firm produces at the same level for several months, and then adjusts production to another level and produces at that level for several more months.

D. The firm produces the same amount each day over the planning period and deals with the variations in demand through the use of inventory or overtime

30. Which of the following would not be classified as a time-series technique?

A. Regression model

B. Box Jenkins technique

C. Exponential smoothing

D. Simple moving averag

ACC 561 Final

Business / Economics

8/12/12

Asked: 8/12/12 2:55 PM
Opening Offer: $20.00
Due Date: 8/12/12

1The statement of cash flows is used for all of the following except_____.

A. evaluating the creditworthiness of the organization

B. determining a company's ability to pay its debts when they are due

C. showing the relationship of net income to changes in cash

D. revealing commitments that may restrict future courses of action

2) Nonoperating items on the income statement _____.

A. are revenues and expenses arising from adjusting entries
B. include interest income and expense
C. appear only on corporate income statements
D. appear on the income statement immediately after gross profit

3) The difference between a single-step and multiple-step income statement is that a single-step income statement _____.

A. groups all revenues together and all expenses together, whereas a multiple-step income statement separates certain revenues and expenses from each other and presents subtotals
B. calculates net income using one method, whereas a multiple-step income statement calculates net income using two or more methods
C. calculates gross profit and operating income, whereas a multiple-step income statement does not
D. shows only 1 year's net income, whereas a multiple-step income statement shows multiple years' net income

4) Which one of the following statements is true?

A. The statement of cash flows reports the cash receipts but not cash payments of an entity over a period of time.
B. Both the statement of cash flows and the income statement determine the net income for a company.
C. Transactions affecting the sale and the purchase or production of goods and services are reported in the financing activities section of the statement of cash flows.
D. Investing activities in the statement of cash flows include acquiring and selling long-term assets.

5) The _____ accounting convention uses the acquisition cost minus depreciation in valuing an asset on the balance sheet.

A. continuity
B. conservatism
C. cost-benefit
D. materiality

6) A new corporation issuing a common, no-par value stock for cash would include a journal entry a debit to _____.

A. paid-in capital and a credit to retained earnings.
B. cash and a credit to common stock.
C. retained earnings and a credit to cash.
D. cash and a credit to retained income.

7) Which type of organization would most likely have work-in-process inventory?

A. A retail store
B. A manufacturing company
C. A service organization
D. A real-estate investment trust

8) _____ is a measure of income or profit divided by the investment required to obtain that income or profit.

AA. Return on sales
B. Capital turnover
C. Return on investment
D. Residual income

9) The following information is available for the Peter Company:

Sales: $150,000

Invested capital: $156,250

ROI: 10%

The return on sales is _____.

A. 10.00%
B. 10.42% (156250*10%=15625) 15625/150000*100=10.42%
C. 62.50%
D. 9.60%

10) The following information is available for the Peter Company:

Sales: $500,000

Invested capital: $312,500

ROI: 10%

The return on sales is _____.

A. 10.00%
B. 6.250%
C. 1.000%
D. 62.50%

11) Company A's revenues are $300 on invested capital of $240. Expenses are currently 70% of sales. If Angelo Company can reduce its capital investment by 20% in Company A, return on investment will be _____.

A. 75% B. 93.75% C. 18.75% D. 46.88%

12) When the variable costing method is used, fixed factory overhead appears on the income statement as a _____.

A. component of cost of goods sold

B. fixed expense C. production-volume variance D. component of gross profit

13) In absorption costing, costs are separated into the major categories of _____.

A. manufacturing and nonmanufacturing B. manufacturing and fixed C. fixed and variable D. variable and nonmanufacturing

14) _____ is another term for variable costing.

A. Full costing B. Direct costing C. Traditional costing D. Absorption costing

15) Budgeted service department cost rates protects the user departments from _____.

A. service department efficiencies

B. price fluctuations C. service outages D. employee control

16) _____ is an example of the external financial-reporting purpose of the cost management systems.

A. The cost of a manufacturing process B. The product mix to optimize profitability C. The amount of inventory that should appear on the balance sheet

D. Budget reporting

17) The level of sales at which revenues equal expenses and net income is zero is called the _____.

A. margin of safety B. contribution margin C. break-even point D. marginal income point

18) Output measures of both resources and activities are _____.

A. cost drivers B. stages of production

C. fixed activities D. variable activities

19) The break-even point is where _____.

A. total sales revenue equals total cost plus desired profit. B. the contribution margin equals net income plus fixed costs.

C. total sales revenue equals total cost. D. the variable cost equals total cost.

20) _____ budgeting is when budgets are formulated with the active participation of all affected employees.

A. Financial B. Team C. Participative

D. Shared

21) _____ is the logical integration of management accounting tools to gather and report data and to evaluate performance.

A. An internal control system B. A quality control system

C. A financial-reporting system D. A management control system

22) _____ are components of a master budget.

A. A strategic plan and an operating budget B. An operating budget and a capital budget

C. A continuous budget and a static budget D. A cash budget and an activity budget

23) An important factor considered by sales forecasters is _____.

A. production employee requirements. B. expectations of the board of directors.

C. competitors' activities. D. the desired level of sales.

24) _____ models are mathematical models of the master budget that can react to any set of assumptions about sales, costs, and product mix.

A. Variance analysis B. Financial planning C. Accounting D. Futuring

25) Which of the following is an objective of budgeting?

A. Budgeting provides benchmarks against which performance can be measured. B. Budgeting provides a fixed fiscal plan that should not be changed during the year. C. Budgeting helps managers build favorable variances into the performance-evaluation process.

D. Budgeting is done exclusively by the chief fiscal officer for control purposes.

26) An organization's budget program should be used

A. to have power over employees. B. to assign blame to managers that do not meet budgetary goals. C. to help managers plan and control the organization's performance. D. to help the chief fiscal officer to allocate resources to the favored projects of the executives.

27) The activity-based costing may reveal _________, whereas traditional costing cannot.

A. high-volume products are overcosted B. low-volume products are overcosted C. both high- and low-volume products are overcosted D. both high- and low-volume products are undercosted

28) _____ is a method of approximating cost functions.

A. Cost-driver analysis B. Transaction analysis C. Product analysis D. Account analysis

29) In relation to a cost function, the term reliability refers to _____.

A. whether the costs and activities can be easily observed B. whether the cost function conforms to a given mathematical model

C. how well the cost function predicts future costs

D. how well the cost function explains past cost behavior

30) One of the simplest methods to measure a linear cost function from past data is the _____.

A. regression analysis method B. high–low method C. least squares regression method

D. visual-fit method

MGT 307 Final Exam

Business / Economics

8/13/12

Asked: 8/13/12 4:10 PM
Opening Offer: $27.00
Due Date: 8/13/13

1) __________ is a multidisciplinary field devoted to understanding individual and group behavior, interpersonal processes, and organizational dynamics.

A. Organizational behavior

B. Motivation

C. Performance management

D. Workgroup analysis

2) What is organizational culture?

A. The predominant cultural background represented by the organization's members

B. How an organization appears to external and internal stakeholders

C. The shared beliefs, actions, and values within an organization

D. The way an organization operates within the geographic region

3) Three important levels of cultural analysis in organizations are

A. implicit culture, shared values, and common experiences

B. shared objectives, shared values, and shared mission

C. observable culture, shared values, and common assumptions

D. explicit culture, implicit culture, and common assumptions

4) In the context of the three important levels of cultural analysis in organizations, the level referred to as __________ can play a critical part in linking people together and can provide a powerful motivational mechanism for members of the culture.

A. shared values

B. observable culture

C. rituals

D. common assumptions

5) Henry Mintzberg identified a set of roles that managers perform. These roles are grouped into which of the following three categories?

A. Interpersonal, strategic, and decisional

B. Strategic, informational, and political

C. Interpersonal, informational, and decisional

D. Supervisory, authoritarian, and decisional

6) A person who is a __________ assumes a unique responsibility for work that is accomplished largely through the efforts of other people.

A. team member

B. human resources director

C. change agent

D. manager or team leader

7) The difficulties with cross-cultural communication are perhaps most obvious with respect to

A. geographic differences

B. language differences

C. religious differences

D. lifestyle differences

8) __________ is often accompanied by an unwillingness to understand alternative points of view and to take the values they represent seriously.

A. Ethnocentrism

B. Proxemics

C. Kinesics

D. Parochialism

9) Groups and teams are not the same thing because of differences in goals, synergy, accountability and skills. A work team is characterized by

A. sharing information as a goal

B. random and varied skills

C. individual and mutual accountability

D. neutral synergy

10) Four contextual factors are most significantly related to team performance and whether or not they are successful. They are adequate resources, leadership and structure, performance evaluation and reward systems, and

A. abilities of members

B. size of teams

C. climate of trust

D. diversity of members

11) Groups generally pass through a predictable sequence in their evolution. The five-stage group-development model describes which stage as being characterized by a great deal of uncertainty about the group's purpose, structure, and leadership?

A. Storming

B. Forming

C. Norming

D. Adjourning

12) Which of the following distinguishes a team from a group?

A. Members are accountable to one another.

B. Members are assigned to one person: the leader.

C. Members do not have a clear stable culture and conflict is frequent.

D. Members may accomplish their goals.

13) Ken is being cooperative but unassertive with his employees during a conflict situation. He tries to smooth over their differences but it only produces a false sense of harmony among them. Ken is using which conflict management style?

A. Avoidance

B. Competition

C. Accommodation

D. Compromise

14) The conflict management style of __________ involves being both cooperative and assertive. This style is characterized by trying to fully satisfy everyone's concerns by working through differences and finding and solving problems so that everyone gains.

A. avoidance

B. accommodation

C. compromise

D. collaboration

15) Which of the following is the correct order of Maslow's theoretical hierarchal needs from the lowest (lower-order need) to the highest (higher-order need) level?

A. Safety, social, physiological, esteem, and self-actualization

B. Social, esteem, self-actualization, physiological, and safety

C. Physiological, safety, social, esteem, and self-actualization

D. Physiological, social, safety, self-actualization, and esteem

16) In the context of motivation, persistence refers to

A. the length of time a person sticks with a given action

B. the amount of effort a person puts forth

C. an individual's choice when presented with a number of possible alternatives

D. the different needs that an individual is trying to satisfy

17) In the context of motivation, intensity refers to

A. the length of time a person sticks with a given action

B. the amount of effort a person puts forth

C. the different needs that an individual is trying to satisfy

D. the consequences of an individual's behavior

18) Compared to other types of teams, __________ teams tend to have more difficulty learning to work with each other and solving problems in the early stages of team development.

A. problem-solving

B. heterogeneous

C. virtual

D. homogeneous

19) __________ implies that characteristics such as age or the date that someone joins a specific work team or organization should help us to predict turnover.

A. Allocation of roles

B. Social loafing

C. Groupshift

D. Organizational demography

20) __________ factors that could potentially cause stress include things such as economic or political uncertainty and technological change.

A. Environmental

B. Personal

C. Resource

D. Organizational

21) __________ stressors are stressors that keep you from achieving your goals, such as red tape, organizational politics, or confusion over responsibilities.

A. Challenge

B. Hindrance

C. Organizational

D. Personal

22) If a worker is placed on a difficult project and they experience eustress, one likely result would include

A. job burnout

B. hypertension

C. greater diligence

D. a successful project

23) __________ is often used in combination with horizontal leadership.

A. Power negotiation

B. Organizational goal setting

C. Shared leadership

D. Individual leadership

24) Often self-leadership activities are divided into these three broad categories:

A. behavior focused, natural reward, and constructive thought pattern strategies

B. cognitive, behavior, and emotional strategies

C. focus, ambiguous, and unfocused strategies

D. bottom-up, top-down, and middle strategies

25) Directives falling within the zone of indifference are

A. subjected to slight scrutiny

B. rejected

C. obeyed

D. subjected to severe scrutiny

26) Milgram designed experiments to determine the extent to which people

A. learn from personal failures

B. obey the commands of an authority figure

C. are willing to use coercive power to gain influence

D. are willing to learn new things as a means of gaining expert power

27) The essence of power is

A. personal desire

B. a distinguished reputation

C. control over the behavior of others

D. having a Machiavellian personality

28) The development of a cohesive, high-performing team can be aided by

A. individual performance evaluations and incentives

B. ensuring that new information is kept to a minimum

C. system modifications that reinforce team effort and commitment

D. allowing the team to develop their own values and purpose

29) One of the foremost trends in management involves using __________ to streamline operations and reduce staff in order to lower costs and raise productivity.

A. reengineering techniques

B. just-in-time inventory control

C. information technology

D. total quality management

30) The obvious organizational design response to uncertainty and volatility is to opt for a more __________ form.

A. mechanistic

B. organic

C. bureaucratic

D. centralized

ISCOM 305 Final Exam

Business / Economics

8/15/12

Asked: 8/15/12 2:51 AM
Opening Offer: $25.00
Due Date: 8/15/12

1. The role of Operations is to:
a. Improve Quality
b. Create Opportunity
c. Manage Inventory
d. Create Value
e. All of the above
2. The degree to which quality characteristics are designed into the product is commonly referred as:
a. Product optimization
b. Quality of design
c. Both A & B
d. None of the above
e. Management optimization theory
3. ____________ is a method of identifying the causes of poor quality.
a. Configuration management
b. Process analysis
c. Project management
d. Process improvement
e. Pareto analysis
4. When employees are directly involved in the quality management process, it is most commonly referred to as:
a. Translating required competitive dimensions into specific performance requirements for operations
b. Participative problem solving
c. Converting order winners into specific performance requirements
d. All of the above
e. Both A and B only
5. Control Charts are graphs that visually show:
a. Process improvement
b. Management control
c. If a sample is within statistical control limits
d. All of the above
e. None of the above
6. Process Capability Ratio is defined as:
a.
b. Performance quality
c. Performance duration
d. Existentialism
e. Conformance quality
7. The following activities are associated with supply chain:
a. Flow and transformation of goods and services
b. Associated information flows
c. A only
d. B only
e. Both A & B
8. The following attributes are associated with the Bullwhip effect:
a. High buffer inventories
b. Poor customer service
c. Missed production schedules
d. High costs
e. All of the above
9. e-Businesses replaces physical processes with imaginary ones:
a. True
b. False
10. RFID technology uses ____________ to transfer data:
a. Micro Waves
b. Television signals
c. Radio Waves
d. All of the above
e. None of the above
11. The following concept is associated with the УDeming WheelФ:
a. General MotorsТ new concept car
b. Motor cycles
c. PDCA cycle
d. Airlines
e. None of the above
12. A cause-and-effect diagram is also called:
a. fishbone
b. Ishikawa
c. A only
d. A & B
e. None of the above
13. The main focus of Quality Management according to Deming is to:
a. Customers
b. Management
c. Supervisors
d. Products
e. Both A & D
14. A document that provides a common understanding of a project is referred as:
a. Optimal replenishment document
b. Build to order document
c. Business statement
d. MRP document
e. Scope statement
15. Teamwork is a _________________ element in achieving project success
a. Mis-understood
b. Nice-to-have
c. Vague
d. Critical
e. None of the above
16. In continuous replenishment:
a. Inventories are not important
b. A company shares real-time demand and inventory data with its suppliers
c. Goods and services are provided as they are needed
d. B & C
e. None of the above
17. Many companies employ УoutsourcingФ as a principle element in their strategy:
a. To promote job growth
b. So they can focus more on their core competencies
c. To eliminate waste
d. All of the above
e. None of the above
18. Phantom Bills are used for transient subassemblies that never see a stockroom because they are immediately consumed in the next stage of manufacture:
a. True
b. False
19. ____________ is an organizationТs overall approach for physically producing goods and providing services:
a. Outsourcing
b. Process strategy
c. Process planning
d. Backward scheduling
e. None of the above
20. Process plans are a set of activities that detail manufacturing and service delivery specifications.
a. True
b. False

MGT 230 Final Exam

Business / Economics

8/15/12

Asked: 8/15/12 2:22 PM
Opening Offer: $25.00
Due Date: 8/15/13

1) Planning involves which of the following?

A. Analyzing current situations

B. Determining rewards for goals achievement

C. Motivating employees

D. Implementing necessary changes

2) _______ is specifying the goals to be achieved and deciding in advance the appropriate actions needed to achieve those goals.

A. Staffing

B. Leading

C. Organizing

D. Planning

3) Advances in genetic engineering and biotechnology are expected to produce some food products that will become available year-round even in northern climates. These changes will provide grocers with an opportunity to reduce their shipping costs while at the same time, offering fresher produce to their customers. These advances are an example of changes in the

A. technological environment

B. economic environment

C. political environment

D. ecological environment

4) _________ trends regarding how people think and behave have major implications for management of the labor force, corporate social actions, and strategic decisions about products and markets.

A. Psychological

B. Economic

C. Technological

D. Societal

5) Which of the following is a step in the decision-making process?

A. Generating an idea

B. Good business planning

C. Evaluating the decision

D. Delegating a task

6) Which is a step in the decision-making process?

A. Resolving and reducing conflict

B. Making the choice

C. Using the lack of structure

D. Delegating a task

7) The targets or ends the manager wants to reach are called

A. goals

B. missions

C. visions

D. strategies

8) In the _______________ stage of the planning process, managers should weigh the advantages, disadvantages, and potential effects of each alternative goal and plan.

A. goal and plan evaluation

B. goal and plan selection

C. implementation

D. alternate goals and plans

9) Tactical planning would include which of the following?

A. Profit goals

B. Design, test, and install the equipment needed to produce a new product line

C. Human resources requirements

D. Return on investment

10) The internal analysis component of the strategic management process assesses the organization's

A. performance levels

B. competitors

C. industry growth rate

D. product substitutions in the market

11) Eagle Manufacturing, Inc., is in the middle of its first day of the senior management retreat. The topic on the agenda is corporate social responsibility (CSR). Most of the group has seen this brought up before and then shot down because it generally costs Eagle's shareholders in the form of a lower stock price. But the new VP of Ethics, Gloria Wright, is about to explain why she believes CSR will actually benefit the shareholders and Eagle management alike. Her team begins the presentation with a discussion of CSR—its current definition and reconciliation of past views. Jeremiah then discusses the importance of being a good global corporate citizen by supporting the local school system. Ellen takes the floor to make the case for doing what is expected by global stakeholders even though there are no

laws requiring those actions. Finally Gloria wraps the discussion up with why Eagle should take legal and economic responsibility for the firm's performance. To Gloria's team's credit, senior management does appear to buy into the pyramid of global corporate social responsibility and performance that her team just presented.

Ellen's presentation most likely focused on the __________ responsibility of the firm.

A. economic

B. legal

C. ethical

D. social

12) Eagle Manufacturing, Inc., is in the middle of its first day of the senior management retreat. The topic on the agenda is corporate social responsibility (CSR). Most of the group has seen this brought up before and then shot down because it generally costs Eagle's shareholders in the form of a lower stock price. But the new VP of Ethics, Gloria Wright, is about to explain why she believes CSR will actually benefit the shareholders and Eagle management alike. Her team begins the presentation with a discussion of CSR—its current definition and reconciliation of past views. Jeremiah then discusses the importance of being a good global corporate citizen by supporting the local school system. Ellen takes the floor to make the case for doing what is expected by global stakeholders even though there are no

laws requiring those actions. Finally Gloria wraps the discussion up with why Eagle should take legal and economic responsibility for the firm's performance. To Gloria's team's credit, senior management does appear to buy into the pyramid of global corporate social responsibility and performance that her team just presented.

Gloria's team's presentation focused on the pyramid of global corporate social responsibility. To do what is desired by global stakeholders correlates with the _______ component of the pyramid.

A. philanthropic

B. ethical

C. legal

D. economic

13) In the study by Lawrence and Lorsch, companies in complex, dynamic environments developed _____ levels of differentiation; and

_____ levels of integration.

A. low; low

B. high; high

C. low; high

D. high; low

14) An aspect of the organization's internal environment created by job specialization and the division of labor is called

A. differentiation

B. integration

C. division of labor

D. specialization

15) An organization with departmentalization that groups units around products, customers, or geographic regions is called a

A. divisional organization

B. centralized organization

C. matrix organization

D. functional organization

16) Which of the following statements about matrix organizations is true?

A. A matrix organization is the same as a functional organization.

B. A matrix organization is the same as a product organization.

C. A matrix organization is a hybrid of the functional and divisional organizational forms.

D. A matrix organization is considered out-of-date compared to the organic organization.

17) An organization with departmentalization that groups units around products, customers, or geographic regions is called a

A. centralized organization

B. matrix organization

C. virtual organization

D. divisional organization

18) Sports International (SI) began business by making shoes for athletes. They soon expanded into making shoes for non-athletic purposes. They now manufacture and distribute clothing, sporting equipment, and protective sports gear worldwide. They are departmentalized by products sold to serious athletes, products sold to "weekend" athletes and products sold to sports teams. SI has

utilized which form of departmentalization?

A. Geographic

B. Customer

C. Functional

D. Matrix

19) The trait known as leadership motivation suggests that great leaders

A. can motivate others to work hard

B. can motivate others to become leaders

C. can motivate others to join

D. want to lead

20) A leadership perspective that attempts to identify what effective leaders do and the behaviors they exhibit is referred to as the

A. behavioral approach

B. trait approach

C. transformational leadership

D. strategic approach

21) __________ leadership invites colleagues at the same level to solve problems together.

A. Horizontal

B. Collegial

C. Lateral

D. Linear

22) Leaders who relate to others to serve their needs and enhance their personal growth while strengthening the organization are known as

A. lateral leaders

B. shared leaders

C. bridge leaders

D. servant-leaders

23) A shift in worker values toward personal time, quality of life, self-fulfillment, and family is occurring among

A. men

B. women

C. women and men

D. minorities

24) Future trends in the labor force include a

A. smaller labor force

B. more experienced labor force

C. more homogenous labor force

D. younger labor force

25) Behavior that gives purpose and meaning to organizations, while envisioning and creating a positive future, is known as

A. strategic leadership

B. supervisory leadership

C. organizational leadership

D. task leadership

26) The correspondence between actions and words that include characteristics such as honesty and credibility is known as

A. drive

B. self-confidence

C. knowledge of the business

D. integrity

27) Owners from two businesses have asked you which type of control system they should utilize. To help you make your decision, they have each provided a brief description of their organization. Alpha Omega, Inc., is a large corporation built in the 1950s. They produce chemical concentrates for industrial cleaning. Their organization uses a strict set of rules and regulations with their workforce. They have

the ability to track a large amount of data using statistical techniques. Mid-Atlantic Health is a regional medical center. They want to use a control system that will allow them to tie pricing of services and profits to specific services in the medical center. The control systems that should be used in the scenarios above were developed by

A. William Ouchi

B. Xerox

C. Frederick Taylor

D. Motorola

28) Your manager is speaking to a group of employees about a problem in your department. Employees are not complying with the rules regarding clocking in and clocking out each day. The rules in this situation are very important as employees will not receive their correct pay if the clocking procedures are not followed. There are three suggestions being considered to address this problem.

Employees will be monitored at the entrance during shift changes to make sure that each complies with the procedure.

Reports will be reviewed at the end of each pay period. The reports will contain data tracking the number of employees not complying with the procedures each shift. Employees violating the procedure will be counseled to correct the problem.

A new procedure will be developed describing an easier procedure for employees to follow. Training will be conducted so that each employee knows the policy and the procedure before it is enacted.

Option 1 describes which approach to bureaucratic control?

A. Feedback

B. Concurrent

C. Feedforward

D. Market

29) Suppose you are interviewing the CEO of a large company. The CEO is telling you about his or her job as a manager and how he or she spends time. Using the description below, which function of management is the CEO most likely describing in this example?

"My job, for some part of each day, is to empower our employees to think of things in new and different ways, not just to come to work and complete the tasks on a list."

A. Organizing

B. Leading

C. Controlling

D. Decision making

30) Suppose you are interviewing the CEO of a large company. The CEO is telling you about his or her job as a manager and how he or she spends time. Using the description below, which function of management is the CEO most likely describing in this example?

"Every six months or so, my senior management team and I meet to discuss the goals that will be achieved over the next year, three years, and beyond. We then make sure we are clear on who will take responsibility to see that the appropriate actions are undertaken to achieve our goals within the time frame we set."

A. Planning

B. Organizing

C. Leading

D. Decision making

ACC 423 Final Exam

Business / Economics

8/16/12

Asked: 8/16/12 4:00 PM
Opening Offer: $25.00
Due Date: 8/16/12

1) When convertible debt is retired by the issuer, any material difference between the cash acquisition price and
the carrying amount of the debt should be

A. reflected currently in income, but NOT as an extraordinary item.

B. treated as an adjustment of additional paid-in capital.

C. reflected currently in income as an extraordinary item.

D. treated as a prior period adjustment.

2) The conversion of preferred stock may be recorded by the

A. incremental method.

B. par value method.

C. book value method.

D. market value method.

3) The conversion of preferred stock into common stock requires that any excess of the par value of the common shares
issued over the carrying amount of the preferred being converted should be

A. reflected currently in income, but NOT as an extraordinary item.

B. treated as a direct reduction of retained earnings.

C. reflected currently in income as an extraordinary item.

D. treated as a prior period adjustment.

4) When a corporation issues its capital stock in payment for services, the least appropriate basis for recording the transaction is the
A. market value of the services received.

B. Any of these provides an appropriate basis for recording the transaction.

C. par value of the shares issued.

D. market value of the shares issued.

5) The accounting problem in a lump sum issuance is the allocation of proceeds between the classes of securities. An acceptable
method of allocation is the

A. pro forma method.

B. either the proportional method or the incremental method.

C. proportional method.

D. incremental method.

6) Which of the following represents the total number of shares that a corporation may issue under the terms of its charter?

A. authorized shares

B. outstanding shares

C. issued shares

D. unissued shares

7) Wilson Corp. purchased its own par value stock on January 1, 2007 for $20,000 and debited the treasury stock account for the purchase price.
The stock was subsequently sold for $12,000. The $8,000 difference between the cost and sales price should be recorded as a deduction from

A. additional paid-in capital to the extent that previous net "gains" from sales of the same class of stock are included therein; otherwise,
from retained earnings.
B. net income.

C. additional paid-in capital without regard as to whether or NOT there have been previous net "gains" from sales of the same class of
stock included therein.
D. retained earnings.

8) How should a "gain" from the sale of treasury stock be reflected when using the cost method of recording treasury stock transactions?

A. As ordinary earnings shown on the income statement.

B. As an extraordinary item shown on the income statement.

C. As paid-in capital from treasury stock transactions.

D. As an increase in the amount shown for common stock.

9) In January 2007, Castro Corporation, a newly formed company, issued 10,000 shares of its $10 par common stock for $15 per share. On July 1, 2007,
Castro Corporation reacquired 1,000 shares of its outstanding stock for $12 per share. The acquisition of these treasury shares

A. decreased total stockholders' equity.

B. decreased the number of issued shares.

C. increased total stockholders' equity.

D. did NOT change total stockholders' equity.

10) In computing earnings per share, the equivalent number of shares of convertible preferred stock are added as an adjustment to
the denominator (number of shares outstanding). If the preferred stock is cumulative, which amount should then be added as an adjustment
the numerator (net earnings)?

A. Annual preferred dividend

B. Annual preferred dividend divided by the income tax rate

C. Annual preferred dividend times (one minus the income tax rate)

D. Annual preferred dividend times the income tax rate

11) In the diluted earnings per share computation, the treasury stock method is used for options and warrants to reflect assumed reacquisition
of common stock at the average market price during the period. If the exercise price of the options or warrants exceeds the average market price, the
computation would

A. fairly present diluted earnings per share on a prospective basis.

B. be antidilutive.

C. fairly present the maximum potential dilution of diluted earnings per share on a prospective basis.

D. reflect the excess of the number of shares assumed issued over the number of shares assumed reacquired as the potential dilution of
earnings per share.

12) When computing diluted earnings per share, convertible bonds are
A. ignored.

B. assumed converted whether they are dilutive or antidilutive.

C. assumed converted only if they are antidilutive.

D. assumed converted only if they are dilutive.

13) Palmer Corp. owned 20,000 shares of Dixon Corp. purchased in 2003 for $240,000. On December 15, 2006, Palmer declared a property dividend
of all of its Dixon Corp. shares on the basis of one share of Dixon for every 10 shares of Palmer common stock held by its stockholders. The property
dividend was distributed on January 15, 2007. On the declaration date, the aggregate market price of the Dixon shares held by Palmer was $400,000.
The entry to record the declaration of the dividend would include a debit to Retained Earnings of

A. $0.

B. $160,000.

C. $240,000.

D. $400,000.

14) On December 31, 2006, the stockholders' equity section of Clark, Inc., was as follows: Common stock, par value $10; authorized 30,000 shares.

Issued and outstanding 9,000 shares $ 90,000
Additional paid-in capital 116,000
Retained earnings 174,000
Total stockholders' equity $380,000

On March 31, 2007, Clark declared a 10% stock dividend, and accordingly 900 additional shares were issued, when the fair market value of
the stock was $18 per share. For the three months ended March 31, 2007, Clark sustained a net loss of $32,000. The balance of Clark's retained
earnings as of March 31, 2007, should be

A. $125,800.

B. $133,000.

C. $134,800.

D. $142,000.

15) A corporation declared a dividend, a portion of which was liquidating. How would this distribution affect each of the following?

Additional Paid-in Capital | Retained Earnings

A. Decrease | No effect

B. Decrease | Decrease

C. No effect | Decrease

D. No effect | No effec

16) An unrealized holding gain on a company's available-for-sale securities should be reflected in the current financial statements as

A. an extraordinary item shown as a direct increase to retained earnings.

B. a current gain resulting from holding securities.

C. a note or parenthetical disclosure only.

D. other comprehensive income and included in the equity section of the balance sheet.

17) An unrealized holding loss on a company's available-for-sale securities should be reflected in the current financial statements as

A. an extraordinary item shown as a direct reduction from retained earnings.

B. a current loss resulting from holding securities.

C. a note or parenthetical disclosure only.

D. other comprehensive income and deducted in the equity section of the balance sheet.

18) A reclassification adjustment is reported in the
A. income statement as an Other Revenue or Expense.

B. stockholders' equity section of the balance sheet.

C. statement of comprehensive income as other comprehensive income.

D. statement of stockholders' equity.

19) Investments in debt securities should be recorded on the date of acquisition at

A. lower of cost or market.

B. market value.

C. market value plus brokerage fees and other costs incident to the purchase.

D. face value plus brokerage fees and other costs incident to the purchase.

20) Pippen Co. purchased ten-year, 10% bonds that pay interest semiannually. The bonds are sold to yield 8%. One step in
calculating the issue price of the bonds is to multiply the principal by the table value for

A. 10 periods and 10% from the present value of 1 table.

B. 10 periods and 8% from the present value of 1 table.

C. 20 periods and 5% from the present value of 1 table.

D. 20 periods and 4% from the present value of 1 table.

21) When an investor's accounting period ends on a date that does NOT coincide with an interest receipt date for bonds held as
an investment, the investor must

A. make an adjusting entry to debit Interest Receivable and to credit Interest Revenue for the amount of interest accrued since the
last interest receipt date.
B. notify the issuer and request that a special payment be made for the appropriate portion of the interest period.

C. make an adjusting entry to debit Interest Receivable and to credit Interest Revenue for the total amount of interest to be received
at the next interest receipt date.
D. do nothing special and ignore the fact that the accounting period does NOT coincide with the bond's interest period.

22) An investor has a long-term investment in stocks. Regular cash dividends received by the investor are recorded as

Fair Value Method | Equity Method

A. Income | Income

B. A reduction of the investment | A reduction of the investment

C. Income | A reduction of the investment

D. A reduction of the investment | Income

23) Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the

A. investor sells the investment.

B. investee declares a dividend.

C. investee pays a dividend.

D. earnings are reported by the investee in its financial statements.

24) Byner Corporation accounts for its investment in the common stock of Yount Company under the equity method.
Byner Corporation should ordinarily record a cash dividend received from Yount as

A. a reduction of the carrying value of the investment.

B. additional paid-in capital.

C. an addition to the carrying value of the investment.

D. dividend income.

25) A requirement for a security to be classified as held-to-maturity is

A. ability to hold the security to maturity.

B. positive intent.

C. the security must be a debt security.

D. All of these are required.

26) Debt securities that are accounted for at amortized cost, NOT fair value, are

A. held-to-maturity debt securities.

B. available-for-sale debt securities.

C. trading debt securities.

D. never-sell debt securities.

27) Debt securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or
losses and are included as other comprehensive income and as a separate component of stockholders' equity are

A. held-to-maturity debt securities.

B. available-for-sale debt securities.

C. trading debt securities.

D. never-sell debt securities.

28) The accounting for fair value hedges records the derivative at its

A. amortized cost.

B. fair value.

C. carrying value.

D. historical cost.

29) Gains or losses on cash flow hedges are

A. ignored completely.

B. reported directly in net income.

C. recorded in equity, as part of other comprehensive income.

D. reported directly in retained earnings.

30) All of the following statements regarding accounting for derivatives are correct EXCEPT that

A. they should be recognized in the financial statements as assets and liabilities.

B. gains and losses resulting from speculation should be deferred.

C. they should be reported at fair value.

D. gains and losses resulting from hedge transactions are reported in different ways, depending upon the type of hedge.

ACC 349 FINAL EXAM 1

Business / Economics

8/21/12

Asked: 8/21/12 3:40 PM
Opening Offer: $30.00
Due Date: 8/21/12

1) Luca Company overapplied manufacturing overhead during 2006. Which one of the following is part of the year end entry to dispose of the overapplied amount assuming the amount is material?

A. An increase to finished goods

B. An increase to cost of goods sold

C. A decrease to applied overhead

D. A decrease to work in process inventory

2) When a job is completed, what happens to the cost of the job?

A. It is removed from work in process and included in cost of goods sold.

B. It is removed from work in process and included in finished goods.

C. It is removed from finished goods and included in cost of goods sold.

D. It is removed from materials inventory and included in work in process.

3) Why is factory overhead applied to products and jobs by manufacturing companies?

A. Total actual overhead costs can never be accurately determined for production.

B. It provides a more accurate cost of the job or products being processed.

C. Because indirect costs are easy to trace to products and jobs.

D. It allows managers more timely determination of product costs during the manufacturing process.

4) Which of the following would be accounted for using a job order cost system?

A. The pasteurization of milk

B. The production of cans of spinach

C. The production of town homes

D. The production of textbooks

5) Which one of the following is an important feature of a job order cost system?

A. Each must be completed before a new product order is accepted.

B. Each job has characteristics similar to the next.

C. Each consists of features which distinguish it from the next.

D. Each job uses similar processes to produce.

6) In a job order cost accounting system, the Work in Process account is

A. closed at year end

B. a control account

C. a period cost

D. an expense

7) Which of the following is an element of manufacturing overhead?

A. Factory workers wages

B. Flour used in manufactured cake mixes

C. Components used in calculators during production

D. Plant manager's salary

8) What broad functions do the management of an organization perform?

A. Directing, manufacturing, and controlling

B. Planning, manufacturing, and controlling

C. Planning, directing, and controlling

D. Planning, directing, and selling

9) Which one of the following costs would be included in manufacturing overhead of a lawn mower manufacturer?

A. The cost of the wheels

B. The wages earned by motor assemblers

C. The cost of the fuel lines that run from the motor to the gas tank

D. Depreciation on the testing equipment

10) A well-designed activity-based costing system starts with

A. identifying the activity-cost pools

B. analyzing the activities performed to manufacture a product

C. computing the activity-based overhead rate

D. assigning manufacturing overhead costs for each activity cost pool to products

11) Which would be an appropriate cost driver for the ordering and receiving activity cost pool?

A. Machine setups

B. Inspections

C. Purchase orders

D. Machine hours

12) In traditional costing systems, overhead is generally applied based on

A. direct labor

B. units of production

C. machine hours

D. direct material dollars

13) What sometimes makes implementation of activity-based costing difficult in service industries is

A. the labeling of activities as value-added

B. attempting to reduce or eliminate nonvalue-added activities

C. identifying activities, activity cost plus, and cost drivers

D. that a larger proportion of overhead costs are company-wide costs

14) Which of the following factors would suggest a switch to activity-based costing?

A. Product lines similar in volume and manufacturing complexity.

B. Production managers use data provided by the existing system.

C. Overhead costs constitute a significant portion of total costs.

D. The manufacturing process has been stable.

15) All of the following statements are correct EXCEPT that

A. activity-based costing has been widely adopted in service industries

B. a larger proportion of overhead costs are company-wide costs in service industries

C. the objective of installing ABC in service firms is different than it is in a manufacturing firm

D. the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company

16) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:

Mini A

Maxi B

Direct labor hours

15,000

25,000

Machine setups

600

400

Machine hours

24,000

26,000

Inspections

800

700

Overhead applied to Mini A using traditional costing using direct labor hours is

A. $1,200,000

B. $1,670,000

C. $1,536,000

D. $1,920,000

17) Which of the following factors would suggest a switch to activity-based costing?

A. Product lines similar in volume and manufacturing complexity.

B. The manufacturing process has been stable.

C. Overhead costs constitute a significant portion of total costs.

D. Production managers use data provided by the existing system.

18) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:

Mini A Maxi B

Direct labor hours 15,000 25,000

Machine setups 600 400

Machine hours 24,000 26,000

Inspections 800 700

Overhead applied to Mini A using activity-based costing is

A. $1,200,000

B. $1,664,000

C. $1,536,000

D. $1,920,000

19) The cost to produce Part A was $10 per unit in 2005. During 2006, it has increased to $11 per unit. In 2006, Supplier Company has offered to supply Part A for $9 per unit. For the make-or-buy decision,

A. incremental revenues are $2 per unit

B. net relevant costs are $1 per unit

C. incremental costs are $1 per unit

D. differential costs are $2 per unit

20) Ace Company sells office chairs with a selling price of $25 and a contribution margin per unit of $15. It takes 3 machine hours to produce one chair. How much is the contribution margin per unit of limited resource?

A. $5

B. $45

C. $3.33

D. $10

21) Max Company uses 10,000 units of Part A in producing its products. A supplier offers to make Part A for $7. Max Company has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of buying Part A from the supplier is

A. $0

B. $70,000

C. $10,000

D. $80,000

22) Disney's variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase?

A. $18,000

B. $12,000

C. $20,000

D. $6,000

23) Which statement describes a fixed cost?

A. It varies in total at every level of activity.

B. Its total varies proportionally to the level of activity.

C. The amount per unit varies depending on the activity level.

D. It remains the same per unit regardless of activity level.

24) Which one of the following is required in order for an activity base to be useful in cost behavior analysis?

A. The activity level should be an approved GAAP activity base.

B. There should be a correlation between changes in the level of activity and changes in costs.

C. The activity should always be a fixed amount.

D. The activity should always be based on the number of units produced.

25) Which cost is NOT charged to the product under absorption costing?

A. Direct materials

B. Variable manufacturing overhead

C. Direct labor

D. Fixed administrative expenses

26) Orbach Company sells its product for $40 per unit. During 2005, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $10, direct labor $6, and variable overhead $2. Fixed costs are: $480,000 manufacturing overhead, and $60,000 selling and administrative expenses. The per unit manufacturing cost under variable costing is

A. $16

B. $26

C. $18

D. $27

27) Which cost is NOT charged to the product under variable costing?

A. Direct materials

B. Variable manufacturing overhead

C. Direct labor

D. Fixed manufacturing overhead

28) Which of the following is NOT considered an advantage of using standard costs?

A. Standard costs can reduce clerical costs.

B. Standard costs can be useful in setting prices for finished goods.

C. Standard costs can be used as a means of finding fault with performance.

D. Standard costs can make employees "cost-conscious."

29) A standard cost is

A. a cost which is paid for a group of similar products

B. the average cost in an industry

C. a predetermined cost

D. the historical cost of producing a product last year

30) If standard costs are incorporated into the accounting system,

A. it may simplify the costing of inventories and reduce clerical costs

B. it can eliminate the need for the budgeting process

C. the accounting system will produce information which is less relevant than the historical cost accounting system

D. approval of the stockholders is required

31) The total variance is $10,000. The total materials variance is $4,000. The total labor variance is twice the total overhead variance. What is the total overhead variance?

A. $1,000

B. $2,000

C. $3,000

D. $4,000

32) The standard rate of pay is $5 per direct labor hour. If the actual direct labor payroll was $19,600 for 4,000 direct labor hours worked, the direct labor price (rate) variance is

A. $400 unfavorable

B. $400 favorable

C. $500 unfavorable

D. $500 favorable

33) The standard number of hours that should have been worked for the output attained is 8,000 direct labor hours and the actual number of direct labor hours worked was 8,400. If the direct labor price variance was $8,400 unfavorable, and the standard rate of pay was $18 per direct labor hour, what was the actual rate of pay for direct labor?

A. $17 per direct labor hour

B. $15 per direct labor hour

C. $19 per direct labor hour

D. $18 per direct labor hour

34) The overhead controllable variance is calculated as the difference between actual overhead costs incurred and the budgeted

A. overhead costs for the standard hours allowed

B. overhead costs applied to the product

C. overhead costs at the normal level of activity

D. fixed overhead costs

35) Which of the following statements is FALSE?

A. The overhead volume variance indicates whether plant facilities were used efficiently during the period.

B. The costs that cause the overhead volume variance are usually controllable costs.

C. The overhead volume variance relates solely to fixed costs.

D. The overhead volume variance is favorable if standard hours allowed for output is greater than the standard hours at normal capacity.

36) The overhead volume variance relates only to

A. variable overhead costs

B. fixed overhead costs

C. both variable and fixed overhead costs

D. all manufacturing costs

37) Looker Hats is planning to sell 600 felt hats, and 700 will be produced during June. Each hat requires a half yard of felt and a quarter hour of direct labor. Felt costs $3.00 per yard and employees of the company are paid $20 per hour. How much is the total amount of budgeted direct labor for June?

A. $3,000

B. $48,000

C. $3,500

D. $2,400

38) Waco's Widgets plans to sell 22,000 widgets during May, 19,000 units in June, and 20,000 during July. Waco keeps 10% of the next month's sales as ending inventory. How many units should Waco produce during June?

A. 18,900

B. 21,000

C. 19,100

D. 19,000

39) Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200 mugs during April. Each mug requires 2 pounds of resin and a half hour of direct labor. Resin costs $1 per pound and employees of the company are paid $12.50 per hour. Manufacturing overhead is applied at a rate of 120% of direct labor costs. Gottberg has 2,000 pounds of resin in beginning inventory and wants to have 2,400 pounds in ending inventory. How much is the total amount of budgeted direct labor for April?

A. $12,500

B. $13,750

C. $25,000

D. $27,500

40) In cost-plus pricing, the target selling price is computed as

A. variable cost per unit + desired ROI per unit

B. fixed cost per unit + desired ROI per unit

C. total unit cost + desired ROI per unit

D. variable cost per unit + fixed manufacturing cost per unit + desired ROI per unit

41) In most cases, prices are set by the

A. customers

B. competitive market

C. largest competitor

D. selling company

42) In cost-plus pricing, the markup percentage is computed by dividing the desired ROI per unit by the

A. fixed cost per unit

B. variable cost per unit

C. total cost per unit

D. total manufacturing cost per unit

ACC 349 FINAL EXAM set 2

Business / Economics

8/21/12

Asked: 8/21/12 3:48 PM
Opening Offer: $30.00
Due Date: 8/21/12

1) At the end of the year, manufacturing overhead has been overapplied. What occurred to create this situation?

A.

The company incurred more total job costs than the amount budgeted for the job.

B.

The actual manufacturing overhead costs were less than the manufacturing overhead assigned to jobs.

C.

Estimated manufacturing overhead was less than actual manufacturing overhead costs.

D.

The company incurred more manufacturing overhead costs than the manufacturing overhead assigned to jobs.

2) Luca Company overapplied manufacturing overhead during 2006. Which one of the following is part of the year end entry to dispose of the overapplied amount assuming the amount is material?

A.

An increase to finished goods

B.

An increase to cost of goods sold

C.

A decrease to applied overhead

D.

A decrease to work in process inventory

3) Why is factory overhead applied to products and jobs by manufacturing companies?

A.

Total actual overhead costs can never be accurately determined for production.

B.

It provides a more accurate cost of the job or products being processed.

C.

Because indirect costs are easy to trace to products and jobs.

D.

It allows managers more timely determination of product costs during the manufacturing process.

4) In a job order cost accounting system, the Work in Process account is

A.

closed at year end

B.

a control account

C.

a period cost

D.

an expense

5) Which one of the following is an important feature of a job order cost system?

A.

Each must be completed before a new product order is accepted.

B.

Each job uses similar processes to produce.

C.

Each consists of features which distinguish it from the next.

D.

Each job has characteristics similar to the next.

6) Which of the following represents the two basic types of cost accounting systems?

A.

Job order and process cost systems

B.

Job order and batch systems

C.

Job order and job accumulation systems

D.

Process cost and batch systems

7) Which of the following represents the correct order in which inventories are reported on a manufacturer's balance sheet?

A.

Raw materials, work in process, finished goods

B.

Finished goods, work in process, raw materials

C.

Work in process, finished goods raw materials

D.

Work in process, raw materials, finished goods

8) Which one of the following is indirect labor considered?

A.

Product cost

B.

Period cost

C.

Nonmanufacturing cost

D.

Raw material cost

9) Which of the following is an element of manufacturing overhead?

A.

Factory workers wages

B.

Plant manager's salary

C.

Components used in calculators during production

D.

Flour used in manufactured cake mixes

10) Which of the following is NOT typical of traditional costing systems?

A.

Use of a single predetermined overhead rate

B.

Assumption of correlation between direct labor and incurrence of overhead cost

C.

Use of direct labor hours or direct labor cost to assign overhead

D.

Use of multiple cost drivers to allocate overhead

11) An activity that has a direct cause-effect relationship with the resources consumed is a(n)

A.

cost driver

B.

overhead rate

C.

cost pool

D.

product activity

12) A well-designed activity-based costing system starts with

A.

identifying the activity-cost pools

B.

computing the activity-based overhead rate

C.

assigning manufacturing overhead costs for each activity cost pool to products

D.

analyzing the activities performed to manufacture a product

13) What sometimes makes implementation of activity-based costing difficult in service industries is

A.

the labeling of activities as value-added

B.

identifying activities, activity cost plus, and cost drivers

C.

that a larger proportion of overhead costs are company-wide costs

D.

attempting to reduce or eliminate nonvalue-added activities

14) Which of the following is a nonvalue-added activity?

A.

Engineering design

B.

Machining

C.

Inspection

D.

Packaging

15) Each of the following is a limitation of activity-based costing EXCEPT

A.

It can be expensive to use.

B.

It is more complex than traditional costing.

C.

More cost pools are used.

D.

Some arbitrary allocations continue.

16) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:

Mini A

Maxi B

Direct labor hours

15,000

25,000

Machine setups

600

400

Machine hours

24,000

26,000

Inspections

800

700

Overhead applied to Mini A using activity-based costing is

A.

$1,200,000

B.

$1,536,000

C.

$1,664,000

D.

$1,920,000

17) Which of the following factors would suggest a switch to activity-based costing?

A.

Production managers use data provided by the existing system.

B.

The manufacturing process has been stable.

C.

Product lines similar in volume and manufacturing complexity.

D.

Overhead costs constitute a significant portion of total costs.

18) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:

Mini A

Maxi B

Direct labor hours

15,000

25,000

Machine setups

600

400

Machine hours

24,000

26,000

Inspections

800

700

Overhead applied to Maxi B using traditional costing using direct labor hours is

A.

$2,000,000

B.

$1,670,000

C.

$1,280,000

D.

$1,536,000

19) Seran Company has contacted Truckel Inc. with an offer to sell it 5,000 of the wickets for $18 each. If Truckel makes the wickets, variable costs are $11 per unit. Fixed costs are $12 per unit; however, $5 per unit is avoidable. Should Truckel make or buy the wickets?

A.

Make; savings = $10,000

B.

Make; savings = $20,000

C.

Buy; savings = $25,000

D.

Buy; savings = $10,000

20) Max Company uses 10,000 units of Part A in producing its products. A supplier offers to make Part A for $7. Max Company has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of buying Part A from the supplier is

A.

$80,000

B.

$70,000

C.

$0

D.

$10,000

21) Rosen, Inc. has 10,000 obsolete calculators, which are carried in inventory at a cost of $20,000. If the calculators are scrapped, they can be sold for $1.10 each (for parts). If they are repackaged, at a cost of $15,000, they could be sold to toy stores for $2.50 per unit. What alternative should be chosen, and why?

A.

Repackage; receive profit of $10,000.

B.

Scrap; incremental loss is $9,000.

C.

Scrap; profit is $1,000 greater.

D.

Repackage; revenue is $5,000 greater than cost.

22) Disney's variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase?

A.

$6,000

B.

$12,000

C.

$18,000

D.

$28,000

23) H55 Company sells two products, beer and wine. Beer has a 10 percent profit margin and wine has a 12 percent profit margin. Beer has a 27 percent contribution margin and wine has a 25 percent contribution margin. If other factors are equal, which product should H55 push to customers?

A.

It should sell an equal quantity of both.

B.

Selling either results in the same additional income for the company

C.

Beer

D.

Wine

24) Hartley, Inc. has one product with a selling price per unit of $200, the unit variable cost is $75, and the total monthly fixed costs are $300,000. How much is Hartley's contribution margin ratio?

A.

266.6%

B.

37.5%

C.

150%.

D.

62.5%.

25) Which cost is charged to the product under variable costing?

A.

Fixed administrative expenses

B.

Fixed manufacturing overhead

C.

Variable administrative expenses

D.

Variable manufacturing overhead

26) Orbach Company sells its product for $40 per unit. During 2005, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $10, direct labor $6, and variable overhead $2. Fixed costs are: $480,000 manufacturing overhead, and $60,000 selling and administrative expenses. The per unit manufacturing cost under absorption costing is

A.

$27

B.

$18

C.

$26

D.

$16

27) Which cost is NOT charged to the product under variable costing?

A.

Fixed manufacturing overhead

B.

Direct labor

C.

Variable manufacturing overhead

D.

Direct materials

28) If standard costs are incorporated into the accounting system,

A.

approval of the stockholders is required

B.

it can eliminate the need for the budgeting process

C.

the accounting system will produce information which is less relevant than the historical cost accounting system

D.

it may simplify the costing of inventories and reduce clerical costs

29) The difference between a budget and a standard is that

A.

standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system

B.

a budget expresses management's plans, while a standard reflects what actually happened

C.

a budget expresses a total amount while a standard expresses a unit amount

D.

a budget expresses what costs were, while a standard expresses what costs should be

30) A standard cost is

A.

the historical cost of producing a product last year

B.

a cost which is paid for a group of similar products

C.

a predetermined cost

D.

the average cost in an industry

31) The standard rate of pay is $5 per direct labor hour. If the actual direct labor payroll was $19,600 for 4,000 direct labor hours worked, the direct labor price (rate) variance is

A.

$500 favorable

B.

$400 unfavorable

C.

$500 unfavorable

D.

$400 favorable

32) A company developed the following per-unit standards for its product: 2 pounds of direct materials at $6 per pound. Last month, 2,000 pounds of direct materials were purchased for $11,400. The direct materials price variance for last month was

A.

$600 unfavorable

B.

$11,400 favorable

C.

$300 favorable

D.

$600 favorable

33) The total variance is $10,000. The total materials variance is $4,000. The total labor variance is twice the total overhead variance. What is the total overhead variance?

A.

$4,000

B.

$1,000

C.

$3,000

D.

$2,000

34) Which of the following statements is FALSE?

A.

The overhead volume variance is favorable if standard hours allowed for output is greater than the standard hours at normal capacity.

B.

The overhead volume variance indicates whether plant facilities were used efficiently during the period.

C.

The overhead volume variance relates solely to fixed costs.

D.

The costs that cause the overhead volume variance are usually controllable costs.

35) The overhead volume variance relates only to

A.

all manufacturing costs

B.

variable overhead costs

C.

both variable and fixed overhead costs

D.

fixed overhead costs

36) If the standard hours allowed are less than the standard hours at normal capacity, the volume variance

A.

will be greater than the controllable variance

B.

will be unfavorable

C.

will be favorable

D.

cannot be calculated

37) During December, the capital budget indicates a $280,000 purchase of equipment. The ending November cash balance is budgeted to be $40,000. Cash receipts are $840,000, and cash disbursements are $610,000 during December. The company wants to maintain a minimum cash balance of $20,000. What is the minimum cash loan that must be planned to be borrowed from the bank during December?

A.

$0

B.

$50,000

C.

$10,000

D.

$30,000

38) Waco's Widgets plans to sell 22,000 widgets during May, 19,000 units in June, and 20,000 during July. Waco keeps 10% of the next month's sales as ending inventory. How many units should Waco produce during June?

A.

19,000

B.

19,100

C.

21,000

D.

18,900

39) At January 1, 2004, Barry, Inc. has beginning inventory of 4,000 widgets. Barry estimates it will sell 35,000 units during the first quarter of 2004 with a 10% increase in sales each quarter. Barry's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each widget costs $1 and is sold for $1.50. How much is budgeted sales revenue for the third quarter of 2004?

A.

$42,350

B.

$63,525

C.

$63,000

D.

$57,525

40) Prices are set by the competitive market when

A.

a product is not easily distinguished from competing products

B.

a company can effectively differentiate its product from others

C.

there are no other producers capable of manufacturing a similar item

D.

the product is specially made for a customer

41) In cost-plus pricing, the markup percentage is computed by dividing the desired ROI per unit by the

A.

variable cost per unit

B.

total manufacturing cost per unit

C.

total cost per unit

D.

fixed cost per unit

42) The cost-plus pricing approach's major advantage is

A.

it can be used to determine a product's target cost

B.

that sales volume has no effect on per unit costs

C.

it is simple to compute

D.

it considers customer demand

ACC 349 FINAL EXAM set 3

Business / Economics

8/21/12

Asked: 8/21/12 3:51 PM
Opening Offer: $30.00
Due Date: 8/21/12

1) What is the best way to handle manufacturing overhead costs in order to get the most timely job cost information?

A. The company should add actual manufacturing overhead costs to jobs as soon as the overhead costs are incurred. B. The company should determine an allocation rate as soon as the actual costs are known, and then apply manufacturing overhead to jobs. C. The company should apply overhead using an estimated rate throughout the year. D. The company should account for only the direct production costs.

2) At the end of the year, manufacturing overhead has been overapplied. What occurred to create this situation?

The company incurred more total job costs than the amount budgeted for the job.

The actual manufacturing overhead costs were less than the manufacturing overhead assigned to jobs.

Estimated manufacturing overhead was less than actual manufacturing overhead costs.

The company incurred more manufacturing overhead costs than the manufacturing overhead assigned to jobs.

3) Luca Company overapplied manufacturing overhead during 2006. Which one of the following is part of the year end entry to dispose of the overapplied amount assuming the amount is material?

A.

An increase to finished goods

B.

An increase to cost of goods sold

C.

A decrease to applied overhead

D.

A decrease to work in process inventory

4) Which of the following would be accounted for using a job order cost system?

a. The pasteurization of milk
b. The production of town homes
c. The production of textbooks
d. The production of cans of spinach

5) Which one of the following is NEVER part of recording the issuance of raw materials in a job order cost system?

A. Debit Work in Process Inventory B. Credit Raw Materials Inventory C. Debit Finished Goods Inventory D. Debit Manufacturing Overhead

6) What is unique about the flow of costs in a job order cost system?

A. Each job is costed separately in a Work in Process subsidiary ledger. B. There are no costs remaining in Work in Process at year end. C. It involves accumulating material, labor, and manufacturing overhead costs as they are incurred in order to determine the job cost. D. Job costs cannot be measured until all overhead costs are determined.

7) Which one of the following costs would be included in manufacturing overhead of a lawn mower manufacturer?

A. The cost of the wheels B. The wages earned by motor assemblers C. The cost of the fuel lines that run from the motor to the gas tank D. Depreciation on the testing equipment

8) What broad functions do the management of an organization perform?

A. Directing, manufacturing, and controlling

B. Planning, manufacturing, and controlling

C. Planning, directing, and controlling

D. Planning, directing, and selling

D. Depreciation on the testing equipment

9) Which of the following represents the correct order in which inventories are reported on a manufacturer's balance sheet?

A. Directing, manufacturing, and controlling B. Planning, manufacturing, and controlling C. Planning, directing, and controlling D. Planning, directing, and selling

10) In traditional costing systems, overhead is generally applied based on

A. direct material dollars B. units of production C. machine hours D. direct labor

11) An activity that has a direct cause-effect relationship with the resources consumed is a(n)

A. cost pool B. product activity C. overhead rate D. cost driver

12) A well-designed activity-based costing system starts with

A. identifying the activity-cost pools
B. computing the activity-based overhead rate
C. assigning manufacturing overhead costs for each activity cost pool to products
D. analyzing the activities performed to manufacture a product

13) Which of the following factors would suggest a switch to activity-based costing?

A. The manufacturing process has been stable. B. Production managers use data provided by the existing system. C. Overhead costs constitute a significant portion of total costs. D. Product lines similar in volume and manufacturing complexity.

14) All of the following statements are correct EXCEPT that

A) Xylem conduction occurs within dead cells.
B) Xylem has a lower water potential than the soil does.
C) Xylem conducts material upward.
D) Xylem transports mainly sugars and amino acids.
E) No energy input from the plant is required for xylem transport.

15) What sometimes makes implementation of activity-based costing difficult in service industries is

A.

the labeling of activities as value-added

B.

identifying activities, activity cost plus, and cost drivers

C.

that a larger proportion of overhead costs are company-wide costs

D.

attempting to reduce or eliminate nonvalue-added activities

16) One of Astro Company's activity cost pools is machine setups, with estimated overhead of $150,000. Astro produces sparklers (400 setups) and lighters (600 setups). How much of the machine setup cost pool should be assigned to sparklers?

A. $150,000
B. $60,000
C. $90,000
D. $75,000

17) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:

Mini AMaxi B

Direct labor hours15,00025,000

Machine setups600400

Machine hours24,00026,000

Inspections800700

Overhead applied to Mini A using activity-based costing is

A.

$1,200,000

B.

$1,536,000

C.

$1,664,000

D.

$1,920,000

18) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:

Mini A Maxi B

Direct labor hours15,000 25,000

Machine setups 600 400

Machine hours 24,000 26,000

Inspections 800 700

Overhead applied to Maxi B using activity-based costing is

A.

$2,000,000

B.

$1,670,000

C.

$1,280,000

D.

$1,536,000

19) Seran Company has contacted Truckel Inc. with an offer to sell it 5,000 of the wickets for $18 each. If Truckel makes the wickets, variable costs are $11 per unit. Fixed costs are $12 per unit; however, $5 per unit is avoidable. Should Truckel make or buy the wickets?

A.

Make; savings = $10,000

B.

Make; savings = $20,000

C.

Buy; savings = $25,000

D.

Buy; savings = $10,000

20) Rosen, Inc. has 10,000 obsolete calculators, which are carried in inventory at a cost of $20,000. If the calculators are scrapped, they can be sold for $1.10 each (for parts). If they are repackaged, at a cost of $15,000, they could be sold to toy stores for $2.50 per unit. What alternative should be chosen, and why?

A.

Repackage; receive profit of $10,000.

B.

Scrap; incremental loss is $9,000.

C.

Scrap; profit is $1,000 greater.

D.

Repackage; revenue is $5,000 greater than cost.

21) The cost to produce Part A was $10 per unit in 2005. During 2006, it has increased to $11 per unit. In 2006, Supplier Company has offered to supply Part A for $9 per unit. For the make-or-buy decision,

A. incremental costs are $1 per unit
B. net relevant costs are $1 per unit
C. incremental revenues are $2 per unit
D. differential costs are $2 per unit

22) Hartley, Inc. has one product with a selling price per unit of $200, the unit variable cost is $75, and the total monthly fixed costs are $300,000. How much is Hartley's contribution margin ratio?

A. 37.5%
B. 150%.
C. 62.5%.
D. 266.6%

23) Which statement describes a fixed cost?

A. It varies in total at every level of activity.

B. The unit cost varies directly to the activity level.

C. Its unit cost varies inversely to the level of activity.

D. It remains the same per unit regardless of activity level.

24) Disney's variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase?

A.

$6,000

B.

$12,000

C.

$18,000

D.

$28,000

25) Variable costing

26) Which cost is NOT charged to the product under variable costing?

A.

Fixed manufacturing overhead

B.

Direct labor

C.

Variable manufacturing overhead

D.

Direct materials

27) Orbach Company sells its product for $40 per unit. During 2005, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $10, direct labor $6, and variable overhead $2. Fixed costs are: $480,000 manufacturing overhead, and $60,000 selling and administrative expenses. The per unit manufacturing cost under absorption costing is

A. $18
B. $26
C. $16
D. $27

28) Which of the following is NOT considered an advantage of using standard costs?

a.Standard costs can reduce clerical costs.

b.Standard costs can be useful in setting prices for finished goods

.c.Standard costs can be used as a means of finding fault with performance

.d.Standard costs can make employees "cost-conscious."

29) The difference between a budget and a standard is that

a. a budget expresses what costs were, while a standard expresses what costs should be.

b. a budget expresses management's plans, while a standard reflects what actually happened.

c. a budget expresses a total amount, while a standard expresses a unit amount.

d. standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system.

30) If a company is concerned with the potential negative effects of establishing standards, they should

a.set loose standards that are easy to fulfill.

b.offer wage incentives to those meeting standards.

c.not employ any standards.

d.set tight standards in order to motivate people

31) The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 11,200 gallons of direct materials that actually cost $42,400 were used to produce 6,000 units of product. The direct materials quantity variance for last month was

A. $3,200 favorable B. $2,400 favorable C. $5,600 unfavorable D. $3,200 unfavorable

32) The standard number of hours that should have been worked for the output attained is 8,000 direct labor hours and the actual number of direct labor hours worked was 8,400. If the direct labor price variance was $8,400 unfavorable, and the standard rate of pay was $18 per direct labor hour, what was the actual rate of pay for direct labor?

$19 per direct labor hour
B. $18 per direct labor hour
C. $17 per direct labor hour
D. $15 per direct labor hour

33) The total variance is $10,000. The total materials variance is $4,000. The total labor variance is twice the total overhead variance. What is the total overhead variance?

A.

$4,000

B.

$1,000

C.

$3,000

D.

$2,000

34) Manufacturing overhead costs are applied to work in process on the basis of

A. actual hours worked

B. standard hours allowed

C. ratio of actual variable to fixed costs

D. actual overhead costs incurred

35) The overhead volume variance relates only to

A.

all manufacturing costs

B.

variable overhead costs

C.

both variable and fixed overhead costs

D.

fixed overhead costs

36) If the standard hours allowed are less than the standard hours at normal capacity,

a) the overhead volume variance will be unfavorable
b) variable overhead costs will be underapplied
c) the overhead controllable variance will be favorable
d) variable overhead costs will be overapplied

37) Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200 mugs during April. Each mug requires 2 pounds of resin and a half hour of direct labor. Resin costs $1 per pound and employees of the company are paid $12.50 per hour. Manufacturing overhead is applied at a rate of 120% of direct labor costs. Gottberg has 2,000 pounds of resin in beginning inventory and wants to have 2,400 pounds in ending inventory. How much is the total amount of budgeted direct labor for April?

A. $25,000
B. $27,500
C. $12,500
D. $13,750

38) Lewis Hats is planning to sell 600 straw hats. Each hat requires a half pound of straw and a quarter hour of direct labor. Straw costs $0.20 per pound and employees of the company are paid $22 per hour. Lewis has 80 pounds of straw and 40 hats in beginning inventory and wants to have 50 pounds of straw and 60 hats in ending inventory. How many units should Lewis Hats produce in April?

A. 620
B. 600
C. 630
D. 580

39) At January 1, 2004, Barry, Inc. has beginning inventory of 4,000 widgets. Barry estimates it will sell 35,000 units during the first quarter of 2004 with a 10% increase in sales each quarter. Barry's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each widget costs $1 and is sold for $1.50. How much is budgeted sales revenue for the third quarter of 2004?

A. $57,525

B. $63,000

C. $63,525

D. $42,350

40) In most cases, prices are set by the

a) customers
b) competitive market
c) largest competitor
d) selling company

41) A company must price its product to cover its costs and earn a reasonable profit in

a. all cases.
b. its early years.
c. the long run.
d. the short run.

42) The cost-plus pricing approach's major advantage is

a. it considers customer demand.

b. that sales volume has no effect on per unit costs.

c. it is simple to compute.

d. none of these.

ACC 290 Final Exam

Business / Economics

9/1/12

Asked: 9/1/12 5:28 PM
Opening Offer: $27.00
Due Date: 9/1/12

1) Which financial statement is used to determine cash generated from operations?

A. Income statement

B. Statement of operations

C. Statement of cash flows

D. Retained earnings statement

2) In terms of sequence, in what order must the four basic financial statements be prepared?

A. Balance sheet, income statement, statement of cash flows, and capital statement

B. Income statement, capital statement, statement of cash flows, and balance sheet

C. Balance sheet, capital statement, statement of cash flows, and income statement

D. Income statement, capital statement, balance sheet, and statement of cash flows

3) In classifying transactions, which of the following is true in regard to assets?

A. Normal balances and increases are debits.

B. Normal balances and decreases are credits.

C. Normal balances can either be debits or credits for assets.

D. Normal balances are debits and increases can be debits or credits.

4) An increase in an expense account must be

A. debited

B. credited

C. either debited or credited, depending on the circumstances

D. capitalized

5) ABC Corporation issues 100 shares of $1 par common stock at $5 per share, which of the following is the correct journal entry?

A. Cash $100 Common Stock $100

B. Cash $500 Common Stock $500

C. Cash $500 Paid-in Capital, Excess of Par $400 Common Stock $100

D. Cash $100 Paid-in Capital, Excess of Par $400 Common Stock $500

6) In the first month of operations, the total of the debit entries to the cash account amounted to $1,400 and the total of the credit entries to the cash account amounted to $600. The cash account has a

A. $600 credit balance

B. $1,400 debit balance

C. $800 debit balance

D. $800 credit balance

7) Which ledger contains control accounts?

A. Accounts receivable subsidiary ledger

B. General ledger

C. Accounts payable subsidiary ledger

D. General revenue and expense ledger

8) Smith is a customer of ABC Corporation. Smith typically purchases merchandise from ABC on account. Which ledger would ABC use to keep track of the details of Smith's account?

A. Accounts receivable subsidiary ledger

B. Accounts receivable control ledger

C. General ledger

D. Accounts payable subsidiary ledger

9) Under the cash basis of accounting,

A. revenue is recognized when services are performed

B. expenses are matched with the revenue that is produced

C. cash must be received before revenue is recognized

D. a promise to pay is sufficient to recognize revenue

10) Under the accrual basis of accounting,

A. cash must be received before revenue is recognized

B. net income is calculated by matching cash outflows against cash inflows

C. events that change a company's financial statements are recognized in the period they occur rather than in the period in which the cash is paid or received

D. the ledger accounts must be adjusted to reflect a cash basis of accounting before financial statements are prepared under generally accepted accounting principles

11) The Vintage Laundry Company purchased $6,500 worth of laundry supplies on June 2 and recorded the purchase as an asset. On June 30, an inventory of the laundry supplies indicated only $2,000 on hand. The adjusting entry that should be made by the company on June 30 is

A. debit Laundry Expense, $2,000; credit Laundry Expense $2,000

B. debit Laundry Expense, $4,500; credit Laundry Supplies Expense, $4,500

C. debit Laundry Supplies, $2,000; credit Laundry Supplies Expense, $2,000

D. debit Laundry Supplies Expense, $4,500; credit Laundry Supplies, $4,500

12) Greese Company purchased office supplies costing $4,000 and debited Office Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $1,100 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be

A. debit Office Supplies Expense, $1,100; credit Office Supplies, $1,100

B. debit Office Supplies, $2,900; credit Office Supplies Expense, $2,900

C. debit Office Supplies Expense, $2,900; credit Office Supplies, $2,900

D. debit Office Supplies, $1,100; credit Office Supplies Expense, $1,100

13) Based on the account balance below, what is the total of the debit and credit columns of the adjusted trial balance?

Service revenue $3,300 Equipment $6,400

Cash 1,525 Prepaid insurance 1,225

Unearned revenue 5,320 Depreciation expense 640

Salary 1,050 Accum. depreciation 1,280

Common stock 390 Retained earnings 550

A. $9,150

B. $10,840

C. $9,560

D. $10,430

14) An adjusted trial balance

A. is prepared after the financial statements are completed

B. proves the equality of the total debit balances and total credit balances of ledger accounts after all adjustments have been made

C. is a required financial statement under generally accepted accounting principles

D. cannot be used to prepare financial statements

15) Given the following adjusted trial balance, net income for the year is:

Debit Credit

Cash $781

Accounts receivable 1,049

Inventory 1,562

Prepaid rent 43

Property, plant & equipment 150

Accumulated depreciation 26

Accounts payable 41

Unearned revenue 61

Common stock 103

Retained earnings 3,305

Service revenue 134

Interest revenue 28

Salary expense 80

Travel expense 33

Total $3,698 $3,698

A. $248

B. $135

C. $162

D. $49

16) Given the following adjusted trial balance, what will be the totals for the debit and credit columns of the post-closing trial balance?

Debit Credit

Cash $1,562

Accounts receivable 2,098

Inventory 3,124

Prepaid rent 86

Property, plant, & equipment 300

Accumulated depreciation $52

Accounts payable 82

Unearned revenue 172

Common stock 206

Retained earnings 6,610

Service revenue 218

Interest revenue 56

Salary expense 160

Travel expense 66

Totals $7,396 $7,396

A. $7,396

B. $7,118

C. $7,334

D. $7,170

17) Given the following adjusted trial balance:

Debit Credit

Cash $781

Accounts receivable 1,049

Inventory 1,562

Prepaid rent 43

Property, plant & equipment 150

Accumulated depreciation $26

Accounts payable 41

Unearned revenue 61

Common stock 103

Retained earnings 3,305

Service revenue 134

Interest revenue 28

Salary expense 80

Travel expense 33

Total $3,698 $3,698

After closing entries have been posted, the balance in retained earnings will be

A. $3,256

B. $3,170

C. $3,440

D. $3,354

18) Net income is recorded on the work sheet under the

A. debit column of the adjusted trial balance and the credit column of retained earnings

B. debit column of the income statement and the credit column of the balance sheet

C. credit column of the adjusted trial balance and the debit column of retained earnings

D. credit column of the income statement and the debit column of the balance sheet

19) At the beginning of the year, Uptown Athletic had an inventory of $400,000.

During the year, the company purchased goods costing $1,500,000. If Uptown

Athletic reported ending inventory of $600,000 and sales of $2,000,000, their cost of goods sold and gross profit rate would be

A. $900,000 and 65%

B. $1,300,000 and 35%

C. $900,000 and 35%

D. $1,300,000 and 65%

20) During the year, Sarah's Pet Shop's merchandise inventory decreased by $30,000. If the company's cost of goods sold for the y ear was $450,000, purchases would have been

A. $480,000

B. $420,000

C. $390,000

D. Insufficient data to determine

21) At the beginning of the year, Wildcat Athletic had an inventory of $200,000.

During the year, the company purchased goods costing $700,000. If Wildcat

Athletic reported ending inventory of $300,000 and sales of $1,000,000, their cost of goods sold and gross profit rate would be

A. $400,000 and 60%

B. $600,000 and 40%

C. $400,000 and 40%

D. $600,000 and 60%

22) The entry to record of sale of $900 with terms of 2/10, n/30 will include a

A. debit to Sales Discount for $18

B. debit to Sales Revenue for $882

C. credit to Accounts Receivable for $900

D. credit to Sales Revenue for $900

23) Dobler Company uses a periodic inventory system. Details for the inventory account for the

Units Per unit price Total

Balance, 1/1/2012 200 $5.00 $1,000

Purchase, 1/15/2012 100 5.3 530

Purchase, 1/28/2012 100 5.5 550

An end of the month (1/31/2012), inventory showed that 140 units were on hand. If the company uses LIFO, what is the value of the ending inventory?

A. $737

B. $700

C. $762

D. $1,380

24) The difference between ending inventory using LIFO and ending inventory using FIFO is referred to as

A. FIFO reserve

B. inventory reserve

C. LIFO reserve

D. periodic reserve

25) A consistent application of an inventory costing method enhances

A. conservatism

B. accuracy

C. comparability

D. efficiency

26) The accountant at Patton Company has determined that income before income taxes amounted to $11,000 using the FIFO costing assumption. If the income tax rate is 30% and the amount of income taxes paid would be $300 greater if the LIFO assumption were used, what would be the amount of income before taxes under the LIFO assumption?

A. $11,300

B. $12,000

C. $10,000

D. $10,700

27) A very small company would have the most difficulty in implementing which of the following internal control activities?

A. Separation of duties

B. Limited access to assets

C. Periodic independent verification

D. Sound personnel procedures

28) A system of internal control

A. is infallible

B. can be rendered ineffective by employee collusion

C. invariably will have costs exceeding benefits

D. is premised on the concept of absolute assurance

29) The custodian of a company asset should

A. have access to the accounting record for that asset

B. be someone outside the company

C. not have access to the accounting record for that asset

D. be an accountant

30) The Sarbanes Oxley Act (2002) applies to

A. U.S. companies but not international companies

B. international companies but not U.S. companies

C. U.S. and Canadian companies but not other international companies

D. U.S. and international companies

Acc 432 Final Exam

Business / Economics

9/5/12

Asked: 9/5/12 2:46 PM
Opening Offer: $22.00
Due Date: 9/5/12

1) Proceeds from an issue of debt securities having stock warrants should NOT be allocated between debt and equity features when
A. the allocation would result in a discount on the debt security.
B. the warrants issued with the debt securities are nondetachable.
C. exercise of the warrants within the next few fiscal periods seems remote.
D. the market value of the warrants is NOT readily available.

2) The conversion of preferred stock may be recorded by the
A. market value method.
B. par value method.
C. book value method.
D. incremental method.

3) The conversion of preferred stock into common stock requires that any excess of the par value of the common shares issued over the carrying amount of the preferred being converted should be
A. treated as a prior period adjustment.
B. treated as a direct reduction of retained earnings.
C. reflected currently in income as an extraordinary item.
D. reflected currently in income, but NOT as an extraordinary item.

4) A primary source of stockholders' equity is
A. contributions by stockholders.
B. both income retained by the corporation and contributions by stockholders.
C. appropriated retained earnings.
D. income retained by the corporation.

5) Stockholders' equity is generally classified into two major categories:
A. retained earnings and unappropriated capital.
B. earned capital and contributed capital.
C. appropriated capital and retained earnings.
D. contributed capital and appropriated capital.

6) When a corporation issues its capital stock in payment for services, the least appropriate basis for recording the transaction is the
A. market value of the shares issued.
B. Any of these provides an appropriate basis for recording the transaction.
C. par value of the shares issued.
D. market value of the services received.

7) Treasury shares are
A. shares held as an investment by the treasurer of the corporation.
B. issued but NOT outstanding shares.
C. shares held as an investment of the corporation.
D. issued and outstanding shares.

8) "Gains" on sales of treasury stock (using the cost method) should be credited to
A. paid-in capital from treasury stock.
B. other income.
C. capital stock.
D. retained earnings.

9) How should a "gain" from the sale of treasury stock be reflected when using the cost method of recording treasury stock transactions?
A. As ordinary earnings shown on the income statement.
B. As an extraordinary item shown on the income statement.
C. As paid-in capital from treasury stock transactions.
D. As an increase in the amount shown for common stock.

10) In computing earnings per share, the equivalent number of shares of convertible preferred stock are added as an adjustment to the denominator (number of shares outstanding). If the preferred stock is cumulative, which amount should then be added as an adjustment to the numerator (net earnings)?
A. Annual preferred dividend
B. Annual preferred dividend divided by the income tax rate
C. Annual preferred dividend times (one minus the income tax rate)
D. Annual preferred dividend times the income tax rate

11) When computing diluted earnings per share, convertible bonds are
A. ignored.
B. assumed converted only if they are dilutive.
C. assumed converted whether they are dilutive or antidilutive.
D. assumed converted only if they are antidilutive.

12) What effect will the acquisition of treasury stock have on stockholders' equity and earnings per share, respectively?
A. Decrease and no effect
B. Increase and decrease
C. Increase and no effect
D. Decrease and increase

13) On May 1, 2007, Kent Corp. declared and issued a 10% common stock dividend. Prior to this dividend, Kent had 100,000 shares of $1 par value common stock issued and outstanding. The fair value of Kent 's common stock was $20 per share on May 1, 2007. As a result of this stock dividend, Kent's total stockholders' equity
A. did NOT change.
B. increased by $200,000.
C. decreased by $10,000.
D. decreased by $200,000.

14) How would the declaration and subsequent issuance of a 10% stock dividend by the issuer affect each of the following when the market value of the shares exceeds the par value of the stock?

Additional Common Stock | Paid-in Capital
A. Increase | Increase
B. No effect | No effect
C. Increase | No effect
D. No effect | Increase

15) At its date of incorporation, Wilson, Inc. issued 100,000 shares of its $10 par common stock at $11 per share. During the current year, Wilson acquired 20,000 shares of its common stock at a price of $16 per share and accounted for them by the cost method. Subsequently, these shares were reissued at a price of $12 per share. There have been no other issuances or acquisitions of its own common stock. What effect does the reissuance of the stock have on the following accounts?
Retained Earnings | Additional Paid-in Capital
A. No effect | No effect
B. Decrease | Decrease
C. Decrease | No effect
D. No effect | Decrease

16) Which of the following is correct about the effective-interest method of amortization?
A. The effective-interest method produces a constant rate of return on the book value of the investment from period to period.
B. The effective interest method applied to investments in debt securities is different from that applied to bonds payable.
C. Amortization of a premium decreases from period to period.
D. Amortization of a discount decreases from period to period.

17) An unrealized holding loss on a company's available-for-sale securities should be reflected in the current financial statements as
A. other comprehensive income and deducted in the equity section of the balance sheet.
B. an extraordinary item shown as a direct reduction from retained earnings.
C. a note or parenthetical disclosure only.
D. a current loss resulting from holding securities.

18) An unrealized holding gain on a company's available-for-sale securities should be reflected in the current financial statements as
A. other comprehensive income and included in the equity section of the balance sheet.
B. an extraordinary item shown as a direct increase to retained earnings.
C. a note or parenthetical disclosure only.
D. a current gain resulting from holding securities.

19) Investments in debt securities should be recorded on the date of acquisition at
A. face value plus brokerage fees and other costs incident to the purchase.
B. lower of cost or market.
C. market value plus brokerage fees and other costs incident to the purchase.
D. market value.

20) Securities which could be classified as held-to-maturity are
A. warrants.
B. redeemable preferred stock.
C. municipal bonds.
D. treasury stock.

21) Which of the following is NOT a debt security?
A. Commercial paper
B. Convertible bonds
C. Loans receivable
D. All of these are debt securities.

22) An investor has a long-term investment in stocks. Regular cash dividends received by the investor are recorded as
Fair Value Method | Equity Method
A. A reduction of the investment | A reduction of the investment
B. Income | Income
C. Income | A reduction of the investment
D. A reduction of the investment | Income

23) When a company holds between 20% and 50% of the outstanding stock of an investee, which of the following statements applies?
A. The investor should use the equity method to account for its investment unless circum-stances indicate that it is unable to exercise "significant influence" over the investee.
B. The investor should always use the equity method to account for its investment.
C. The investor must use the fair value method unless it can clearly demonstrate the ability to exercise "significant influence" over the investee.
D. The investor should always use the fair value method to account for its investment.

24) Bista Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt of those dividends affect the investment account of the investor under each of the following accounting methods?
Fair Value Method | Equity Method
A. Increase | Decrease
B. No Effect | Decrease
C. No Effect | No Effect
D. Decrease | No Effect

25) Debt securities that are accounted for at amortized cost, NOT fair value, are
A. trading debt securities.
B. held-to-maturity debt securities.
C. available-for-sale debt securities.
D. never-sell debt securities.

26) Equity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses as other comprehensive income and as a separate component of stockholders' equity are
A. trading securities where a company has holdings of less than 20%.
B. available-for-sale securities where a company has holdings of less than 20%.
C. securities where a company has holdings of between 20% and 50%.
D. securities where a company has holdings of more than 50%.

27) Use of the effective-interest method in amortizing bond premiums and discounts results in
A. a smaller amount of interest income over the life of the bond issue than would result from use of the straight-line method.
B. a greater amount of interest income over the life of the bond issue than would result from use of the straight-line method.
C. a varying amount being recorded as interest income from period to period.
D. a variable rate of return on the book value of the investment.

28) All of the following are characteristics of a derivative financial instrument EXCEPT the instrument
A. All of these are characteristics.
B. has one or more underlyings and an identified payment provision.
C. requires a large investment at the inception of the contract.
D. requires or permits net settlement.

29) The accounting for fair value hedges records the derivative at its
A. historical cost.
B. amortized cost.
C. carrying value.
D. fair value.

30) All of the following statements regarding accounting for derivatives are correct EXCEPT that
A. gains and losses resulting from hedge transactions are reported in different ways, depending upon the type of hedge.
B. they should be recognized in the financial statements as assets and liabilities.
C. they should be reported at fair value.
D. gains and losses resulting from speculation should be deferred.

ACC 432 Final Exam NEW

Business / Economics

9/6/12

Asked: 9/6/12 2:56 PM
Opening Offer: $22.00
Due Date: 9/6/12

1) Proceeds from an issue of debt securities having stock warrants should NOT be allocated between debt and equity features when

A.

the allocation would result in a discount on the debt security.

B.

the warrants issued with the debt securities are nondetachable.

C.

exercise of the warrants within the next few fiscal periods seems remote.

D.

the market value of the warrants is NOT readily available.

2) The conversion of preferred stock may be recorded by the

A.

market value method.

B.

par value method.

C.

book value method.

D.

incremental method.

3) The conversion of preferred stock into common stock requires that any excess of the par value of the common shares issued over the carrying amount of the preferred being converted should be

A.

treated as a prior period adjustment.

B.

treated as a direct reduction of retained earnings.

C.

reflected currently in income as an extraordinary item.

D.

reflected currently in income, but NOT as an extraordinary item.

4) A primary source of stockholders' equity is

A.

contributions by stockholders.

B.

both income retained by the corporation and contributions by stockholders.

C.

appropriated retained earnings.

D.

income retained by the corporation.

5) Stockholders' equity is generally classified into two major categories:

A.

retained earnings and unappropriated capital.

B.

earned capital and contributed capital.

C.

appropriated capital and retained earnings.

D.

contributed capital and appropriated capital.

6) When a corporation issues its capital stock in payment for services, the least appropriate basis for recording the transaction is the

A.

market value of the shares issued.

B.

Any of these provides an appropriate basis for recording the transaction.

C.

par value of the shares issued.

D.

market value of the services received.

7) Treasury shares are

A.

shares held as an investment by the treasurer of the corporation.

B.

issued but NOT outstanding shares.

C.

shares held as an investment of the corporation.

D.

issued and outstanding shares.

8) "Gains" on sales of treasury stock (using the cost method) should be credited to

A.

paid-in capital from treasury stock.

B.

other income.

C.

capital stock.

D.

retained earnings.

9) How should a "gain" from the sale of treasury stock be reflected when using the cost method of recording treasury stock transactions?

A.

As ordinary earnings shown on the income statement.

B.

As an extraordinary item shown on the income statement.

C.

As paid-in capital from treasury stock transactions.

D.

As an increase in the amount shown for common stock.

10) In computing earnings per share, the equivalent number of shares of convertible preferred stock are added as an adjustment to the denominator (number of shares outstanding). If the preferred stock is cumulative, which amount should then be added as an adjustment to the numerator (net earnings)?

A.

Annual preferred dividend

B.

Annual preferred dividend divided by the income tax rate

C.

Annual preferred dividend times (one minus the income tax rate)

D.

Annual preferred dividend times the income tax rate

11) When computing diluted earnings per share, convertible bonds are

A.

ignored.

B.

assumed converted only if they are dilutive.

C.

assumed converted whether they are dilutive or antidilutive.

D.

assumed converted only if they are antidilutive.

12) What effect will the acquisition of treasury stock have on stockholders' equity and earnings per share, respectively?

A.

Decrease and no effect

B.

Increase and decrease

C.

Increase and no effect

D.

Decrease and increase

13) On May 1, 2007, Kent Corp. declared and issued a 10% common stock dividend. Prior to this dividend, Kent had 100,000 shares of $1 par value common stock issued and outstanding. The fair value of Kent 's common stock was $20 per share on May 1, 2007. As a result of this stock dividend, Kent's total stockholders' equity

A.

did NOT change.

B.

increased by $200,000.

C.

decreased by $10,000.

D.

decreased by $200,000.

14)

How would the declaration and subsequent issuance of a 10% stock dividend by the issuer affect each of the following when the market value of the shares exceeds the par value of the stock?

Additional Common Stock | Paid-in Capital

A.

Increase | Increase

B.

No effect | No effect

C.

Increase | No effect

D.

No effect | Increase

15)

At its date of incorporation, Wilson, Inc. issued 100,000 shares of its $10 par common stock at $11 per share. During the current year, Wilson acquired 20,000 shares of its common stock at a price of $16 per share and accounted for them by the cost method. Subsequently, these shares were reissued at a price of $12 per share. There have been no other issuances or acquisitions of its own common stock. What effect does the reissuance of the stock have on the following accounts?

Retained Earnings | Additional Paid-in Capital

A.

No effect | No effect

B.

Decrease | Decrease

C.

Decrease | No effect

D.

No effect | Decrease

16) Which of the following is correct about the effective-interest method of amortization?

A.

The effective-interest method produces a constant rate of return on the book value of the investment from period to period.

B.

The effective interest method applied to investments in debt securities is different from that applied to bonds payable.

C.

Amortization of a premium decreases from period to period.

D.

Amortization of a discount decreases from period to period.

17) An unrealized holding loss on a company's available-for-sale securities should be reflected in the current financial statements as

A.

other comprehensive income and deducted in the equity section of the balance sheet.

B.

an extraordinary item shown as a direct reduction from retained earnings.

C.

a note or parenthetical disclosure only.

D.

a current loss resulting from holding securities.

18) An unrealized holding gain on a company's available-for-sale securities should be reflected in the current financial statements as

A.

other comprehensive income and included in the equity section of the balance sheet.

B.

an extraordinary item shown as a direct increase to retained earnings.

C.

a note or parenthetical disclosure only.

D.

a current gain resulting from holding securities.

19) Investments in debt securities should be recorded on the date of acquisition at

A.

face value plus brokerage fees and other costs incident to the purchase.

B.

lower of cost or market.

C.

market value plus brokerage fees and other costs incident to the purchase.

D.

market value.

20) Securities which could be classified as held-to-maturity are

A.

warrants.

B.

redeemable preferred stock.

C.

municipal bonds.

D.

treasury stock.

21) Which of the following is NOT a debt security?

A.

Commercial paper

B.

Convertible bonds

C.

Loans receivable

D.

All of these are debt securities.

22)

An investor has a long-term investment in stocks. Regular cash dividends received by the investor are recorded as

Fair Value Method | Equity Method

A.

A reduction of the investment | A reduction of the investment

B.

Income | Income

C.

Income | A reduction of the investment

D.

A reduction of the investment | Income

23) When a company holds between 20% and 50% of the outstanding stock of an investee, which of the following statements applies?

A.

The investor should use the equity method to account for its investment unless circum-stances indicate that it is unable to exercise "significant influence" over the investee.

B.

The investor should always use the equity method to account for its investment.

C.

The investor must use the fair value method unless it can clearly demonstrate the ability to exercise "significant influence" over the investee.

D.

The investor should always use the fair value method to account for its investment.

24)

Bista Corporation declares and distributes a cash dividend that is a result of current earnings. How will the receipt of those dividends affect the investment account of the investor under each of the following accounting methods?

Fair Value Method | Equity Method

A.

Increase | Decrease

B.

No Effect | Decrease

C.

No Effect | No Effect

D.

Decrease | No Effect

25) Debt securities that are accounted for at amortized cost, NOT fair value, are

A.

trading debt securities.

B.

held-to-maturity debt securities.

C.

available-for-sale debt securities.

D.

never-sell debt securities.

26) Equity securities acquired by a corporation which are accounted for by recognizing unrealized holding gains or losses as other comprehensive income and as a separate component of stockholders' equity are

A. trading securities where a company has holdings of less than 20%.

B. available-for-sale securities where a company has holdings of less than 20%.

C. securities where a company has holdings of between 20% and 50%.

D. securities where a company has holdings of more than 50%.

27) Use of the effective-interest method in amortizing bond premiums and discounts results in

A. a smaller amount of interest income over the life of the bond issue than would result from use of the straight-line method.

B. a greater amount of interest income over the life of the bond issue than would result from use of the straight-line method.

C. a varying amount being recorded as interest income from period to period.

D. a variable rate of return on the book value of the investment.

28) All of the following are characteristics of a derivative financial instrument EXCEPT the instrument

A. All of these are characteristics.

B. has one or more underlyings and an identified payment provision.

C. requires a large investment at the inception of the contract.

D. requires or permits net settlement.

29) The accounting for fair value hedges records the derivative at its

A. historical cost.

B. amortized cost.

C. carrying value.

D. fair value.

30) All of the following statements regarding accounting for derivatives are correct EXCEPT that

A. gains and losses resulting from hedge transactions are reported in different ways, depending upon the type of hedge.

B. they should be recognized in the financial statements as assets and liabilities.

C. they should be reported at fair value.

D. gains and losses resulting from speculation should be deferred.

ACC 422 Final Exam

Business / Economics

9/14/12

Asked: 9/14/12 3:19 AM
Opening Offer: $45.00
Due Date: 9/14/12

1) Which of the following is NOT considered cash for financial reporting purposes?

A. Money orders, certified checks, and personal checks

B. Coin, currency, and available funds

C. Petty cash funds and change funds

D. Postdated checks and I.O.U.'s

2) What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet?

As offsets to capital.

By means of footnotes only.

As assets but separately from other receivables.

As trade notes and accounts receivable if they otherwise qualify as current assets.

3) Which of the following is considered cash?

a.Certificates of deposit (CDs)

b.Money market checking accounts

c.Money market savings certificates

d.Postdated checks

4) If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as

A. an item of "other expense" in the income statement.

B. a deduction from accounts receivable in determining the net realizable value of accounts receivable.

C. a deduction from sales in the income statement.

D. sales discounts forfeited in the cost of goods sold section of the income statement.

5) Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does NOT make the balance sheet misleading because

A. the amount of the discount is NOT material.

B. the allowance for uncollectible accounts includes a discount element.

C. most short-term receivables are NOT interest-bearing.

D. most receivables can be sold to a bank or factor.

6) Which of the following methods of determining annual bad debt expense best achieves the matching concept?

a. Percentage of sales

b. Percentage of ending accounts receivable

c. Percentage of average accounts receivable

d. Direct write-off

7) The accountant for the Orion Sales Company is preparing the income statement for 2007 and the balance sheet at December 31, 2007. Orion uses the periodic inventory system. The January 1, 2007 merchandise inventory balance will appear

A. only as an asset on the balance sheet

B. only in teh cost of goods sold section of the income statement

C. as a deductino int eh cost of goods sold section in the income statement as a current asset on the balance sheet.

D. as an addition in teh cost of goods sold section of the income statement and as a current asset on the balance sheet.

8) Eller Co. received merchandise on consignment. As of January 31, Eller included the goods in inventory, but did NOT record the transaction. The effect of this on its financial statements for January 31 would be

A. net income and current assets were overstated and current liabilities were understated.

B. net income, current assets, and retained earnings were overstated.

C. net income, current assets, and retained earnings were understated.

D. net income was correct and current assets were understated.

9. If the beginning inventory for 2006 is overstated, the effects of this error on cost of goods sold for 2006, net income for 2006, and assets at December 31, 2007, respectively, are

A. overstatement, understatement, no effect.

B. overstatement, understatement, overstatement.

C. understatement, overstatement, no effect.

D. understatement, overstatement, overstatement.

10) Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of goods sold computed when inventory is valued using the FIFO method exceeds cost of goods sold when inventory is valued using the LIFO method?

A. Prices increased.

B. Prices decreased.

C. Price trend cannot be determined from information given.

D. Prices remained unchanged.

11) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?

A. First-in, first-out

B. Base stock

C. Average cost

D. Last-in, first-out

12) All of the following costs should be charged against revenue in the period in which costs are incurred EXCEPT for

A. costs which will NOT benefit any future period.

B. costs of normal shrinkage and scrap incurred for the manufacture of a product in ending inventory.

C. manufacturing overhead costs for a product manufactured and sold in the same accounting period.

D. costs from idle manufacturing capacity resulting from an unexpected plant shutdown.

13) In no case can "market" in the lower-of-cost-or-market rule be more than

A. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal.

B. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal, an allowance for an approximately normal profit margin, and an adequate reserve for possible future losses.

C. estimated selling price in the ordinary course of business.

D. estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal and an allowance for an approximately normal profit margin.

14) When the direct method is used to record inventory at market

A. a loss is recorded directly in the inventory account by crediting inventory and debiting loss on inventory decline.

B. the market value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold

C. only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements.

D. there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale.

15) An item of inventory purchased this period for $15.00 has been incorrectly written down to its current replacement cost of $10.00. It sells during the following period for $30.00, its normal selling price, with disposal costs of $3.00 and normal profit of $12.00. Which of the following statements is NOT true?

A. The current year's income is understated.

B. Income of the following year will be understated.

C. The cost of sales of the following year will be understated.

D. The closing inventory of the current year is understated.

16) The retail inventory method is based on the assumption that the

A. ratio of gross margin to sales is approximately the same each period.

B. ratio of cost to retail changes at a constant rate.

C. final inventory and the total of goods available for sale contain the same proportion of high-cost and low-cost ratio goods.

D. proportions of markups and markdowns to selling price are the same.

17) A major advantage of the retail inventory method is that it

A. hides costs from competitors and customers.

B. provides a method for inventory control and facilitates determination of the periodic inventory for certain types of companies.

C. provides reliable results in cases where the distribution of items in the inventory is different from that of items sold during the period.

D. gives a more accurate statement of inventory costs than other methods.

18) In 2006, Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $700,000. Before the December 31, 2006 balance sheet date, the market price for these materials dropped to $510,000. The journal entry to record this situation at December 31, 2006 will result in a credit that should be reported

A. as a current liability.

B. as an appropriation of retained earnings.

C. as a valuation account to Inventory on the balance sheet.

D. on the income statement.

19) The cost of land typically includes the purchase price and all of the following costs EXCEPT

A. grading, filling, draining, and clearing costs.

B. street lights, sewers, and drainage systems costs.

C. private driveways and parking lots.

D. assumption of any liens or mortgages on the property.

20) Cotton Hotel Corporation recently purchased Holiday Hotel and the land on which it is located with the plan to tear down the Holiday Hotel and build a new luxury hotel on the site. The cost of the Holiday Hotel should be

A. depreciated over the period from acquisition to the date the hotel is scheduled to be torn down.

B. written off as an extraordinary loss in the year the hotel is torn down.

C. capitalized as part of the cost of the land.

D. capitalized as part of the cost of the new hotel.

21) If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on

A. the length of time for which the building was held prior to its demolition.

B. the contemplated future use of the parking lot.

C. the significance of the cost allocated to the building in relation to the combined cost of the lot and building.

D. the intention of management for the property when the building was acquired.

22) The period of time during which interest must be capitalized ends when

A. no further interest cost is being incurred.

B. the asset is abandoned, sold, or fully depreciated.

C. the asset is substantially complete and ready for its intended use.

D. the activities that are necessary to get the asset ready for its intended use have begun.

23) Which of the following assets do NOT qualify for capitalization of interest costs incurred during construction of the assets?

A. Assets financed through the issuance of long-term debt.

B. Assets intended for sale or lease that are produced as discrete projects.

C. Assets NOT currently undergoing the activities necessary to prepare them for their intended use.

D. Assets under construction for an enterprise's own use.

24) When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to

a cost of capital charge for stockholders' equity.

B. that portion of total interest cost which would NOT have been incurred if expenditures for asset construction had NOT been made.

C. the total interest cost actually incurred.

D. that portion of average accumulated expenditures on which no interest cost was incurred.

25) The King-Kong Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is NOT expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will

A. effectively increase the amount to be recorded as the cost of the new asset.

B. effectively reduce the amount to be recorded as the cost of the new asset.

C. be credited directly to the owner's capital account.

D. be reported in the Other Revenues and Gains section of the income statement.

26) When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the

A. stated value of the stock.

B. par value of the stock.

C. market value of the stock.

D. book value of the stock.

27) The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset and the exchange has commercial substance is usually recorded at

A. the fair value of the asset received if it is equally reliable as the fair value of the asset given up.

B. the fair value of the asset given up, and a gain but NOT a loss may be recognized.

C. either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company.

D. the fair value of the asset given up, and a gain or loss is recognized.

28) Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

A. Systematic and rational allocation

B. Associating cause and effect

C. Partial recognition

D. Immediate recognition

29) If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will

A. be constant.

B. vary with unit sales.

C. vary with sales revenue.

D. vary with production.

30) Which of the following most accurately reflects the concept of depreciation as used in accounting?

A. The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset.

B. The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred.

C. An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets.

D. A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved.

31) Prentice Company purchased a depreciable asset for $200,000. The estimated salvage value is $20,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?

A. $20,000

B. $180,000

C. $200,000

D. $18,000

32) Harrison Company purchased a depreciable asset for $100,000. The estimated salvage value is $10,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?

A. $9,000

B. $10,000

C. $90,000

D. $100,000

33) Starr Company purchased a depreciable asset for $150,000. The estimated salvage value is $10,000, and the estimated useful life is 8 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset?

A. $17,500

B. $26,250

C. $28,125

D. $37,500

34) Costs incurred internally to create intangibles are

A. expensed as incurred.

B. capitalized.

C. expensed only if they have a limited life.

D. capitalized if they have an indefinite life.

35) Factors considered in determining an intangible asset's useful life include all of the following EXCEPT

A. any legal or contractual provisions that may limit the useful life.

B. any provisions for renewal or extension of the asset's legal life

C. the amortization method used.

D. the expected use of the asset.

36) The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be

A. charged off in the current period.

B. amortized over the remaining estimated life of the original patent covering the product whose market would have been impaired by competition from the newly patented product.

C. amortized over the legal life of the purchased patent.

D. added to factory overhead and allocated to production of the purchaser's product.

37) Malrom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2006 for $10,000,000. It was expected to have a 10 year life and no residual value. Malrom uses straight-line amortization for patents. On December 31, 2007, the expected future cash flows expected from the patent were expected to be $800,000 per year for the next eight years. The present value of these cash flows, discounted at Malrom's market interest rate, is $4,800,000. At what amount should the patent be carried on the December 31, 2007 balance sheet?

A. $10,000,000

B. $8,000,000

C. $6,400,000

D. $4,800,000

38) Mining Company acquired a patent on an oil extraction technique on January 1, 2006 for $5,000,000. It was expected to have a 10 year life and no residual value. Mining uses straight-line amortization for patents. On December 31, 2007, the expected future cash flows expected from the patent were expected to be $600,000 per year for the next eight years. The present value of these cash flows, discounted at Mining's market interest rate, is $2,800,000. At what amount should the patent be carried on the December 31, 2007 balance sheet?

A. $4,800,000

B. $4,000,000

$5,000,000 – [($5,000,000 ÷ 10) × 2] = $4,000,000

C. $2,800,000

D. $5,000,000

39) General Products Company bought Special Products Division in 2006 and appropriately booked $250,000 of goodwill related to the purchase. On December 31, 2007, the fair value of Special Products Division is $2,000,000 and it is carried on General Product's books for a total of $1,700,000, including the goodwill. An analysis of Special Products Division's assets indicates that goodwill of $200,000 exists on December 31, 2007. What goodwill impairment should be recognized by General Products in 2007?

A. $200,000.

B. $50,000.

C. $300,000.

D. $0.

40) The intangible asset goodwill may be

A. capitalized only when purchased.

B. capitalized only when created internally.

C. capitalized either when purchased or created internally.

D. written off directly to retained earnings.

41) The reason goodwill is sometimes referred to as a master valuation account is because

A. it represents the purchase price of a business that is about to be sold.

B. it is the difference between the fair market value of the net tangible and identifiable intangible assets as compared with the purchase price of the acquired business.

C. it is the only account in the financial statements that is based on value, all other accounts are recorded at an amount other than their value.

D. the value of a business is computed without consideration of goodwill and then goodwill is added to arrive at a master valuation.

42) Goodwill

A. generated internally should NOT be capitalized unless it is measured by an individual independent of the enterprise involved.

B. is easily computed by assigning a value to the individual attributes that comprise its existence.

C. exists in any company that has earnings that differ from those of a competitor.

D. represents a unique asset in that its value can be identified only with the business as a whole.

43) If a short-term obligation is excluded from current liabilities because of refinancing, the footnote to the financial statements describing this event should include all of the following information EXCEPT

A. a general description of the financing arrangement.

B. the terms of the new obligation incurred or to be incurred.

C. the number of financing institutions that refused to refinance the debt, if any.

D. the terms of any equity security issued or to be issued.

44) Stock dividends distributable should be classified on the

A. income statement as an expense.

B. balance sheet as an asset.

C. balance sheet as an item of stockholders' equity.

D. balance sheet as a liability.

45) Which of the following items is a current liability?

A. Bonds (for which there is an adequate sinking fund properly classified as a long-term investment) due in three months.

B. Bonds due in three years.

C. Bonds to be refunded when due in eight months, there being no doubt about the marketability of the refunding issue.

D. Bonds (for which there is an adequate appropriation of retained earnings) due in eleven months.

46) A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 4,000,000 packages of light bulbs are sold, and 140,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?

A. $400,000; $400,000

B. $400,000; $260,000

C. $140,000; $260,000

D. $260,000; $260,000

47) A company offers a cash rebate of $1 on each $4 package of batteries sold during 2007. Historically, 10% of customers mail in the rebate form. During 2007, 6,000,000 packages of batteries are sold, and 210,000 $1 rebates are mailed to customers. What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?

A. $600,000; $600,000

B. $600,000; $390,000

C. $210,000; $390,000

D. $390,000; $390,000

48) A company buys an oil rig for $1,000,000 on January 1, 2007. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $200,000 (present value at 10% is $77,110). 10% is an appropriate interest rate for this company. What expense should be recorded for 2007 as a result of these events?

A. Depreciation expense of $100,000 and interest expense of $20,000

B. Depreciation expense of $100,000 and interest expense of $7,711

C. Depreciation expense of $120,000

D. Depreciation expense of $107,710 and interest expense of $7,711

49) A contingency can be accrued when

A. it is certain that funds are available to settle the disputed amount.

B. an asset may have been impaired.

C. it is probable that an asset has been impaired or a liability incurred even though the amount of the loss cannot be reasonably estimated.

D. the amount of the loss can be reasonably estimated and it is probable that an asset has been impaired or a liability incurred.

50) Mark Ward is a farmer who owns land which borders on the right-of-way of the Northern Railroad. On August 10, 2007, due to the admitted negligence of the Railroad, hay on the farm was set on fire and burned. Ward had had a dispute with the Railroad for several years concerning the ownership of a small parcel of land. The representative of the Railroad has offered to assign any rights which the Railroad may have in the land to Ward in exchange for a release of his right to reimbursement for the loss he has sustained from the fire. Ward appears inclined to accept the Railroad's offer. The Railroad's 2007 financial statements should include the following related to the incident:

A. recognition of a loss and creation of a liability for the value of the land.

B. disclosure in note form only.

C. recognition of a loss only.

D. creation of a liability only.

51) Which of the following contingencies need NOT be disclosed in the financial statements or the notes thereto?

A. Probable losses NOT reasonably estimable

B. All of these must be disclosed.

C. Environmental liabilities that cannot be reasonably estimated

D. Guarantees of indebtedness of others

52) The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the

A. registered bond.

B. bond indenture.

C. bond debenture.

D. bond coupon.

53) If bonds are issued initially at a premium and the effective-interest method of amortization is used, interest expense in the earlier years will be

A. greater than if the straight-line method were used.

B. less than if the straight-line method were used.

C. greater than the amount of the interest payments.

D. the same as if the straight-line method were used.

54) Bonds that pay no interest unless the issuing company is profitable are called

A. collateral trust bonds.

B. debenture bonds.

C. revenue bonds.

D. income bonds.

55) Minimum lease payments may include a

A. penalty for failure to renew.

B. any of these.

C. bargain purchase option.

D. guaranteed residual value.

56) An essential element of a lease conveyance is that the

A. lessor conveys less than his or her total interest in the property.

B. lessee provides a sinking fund equal to one year's lease payments.

C. term of the lease is substantially equal to the economic life of the leased property.

D. property that is the subject of the lease agreement must be held for sale by the lessor prior to the drafting of the lease agreement.

57) While only certain leases are currently accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that

A. all leases are generally for the economic life of the property and the residual value of the property at the end of the lease is minimal.

B. at the end of the lease the property usually can be purchased by the lessee.

C. a lease reflects the purchase or sale of a quantifiable right to the use of property.

D. during the life of the lease the lessee can effectively treat the property as if it were

owned by the lessee.

58) In the earlier years of a lease, from the lessee's perspective, the use of the

A. capital method will enable the lessee to report higher income, compared to the operating method.

B. operating method will cause debt to increase, compared to the capital method.

C. operating method will cause income to decrease, compared to the capital method.

D. capital method will cause debt to increase, compared to the operating method.

59) In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned income

A. should be amortized over the period of the lease using the interest method.

B. does NOT arise.

C. should be amortized over the period of the lease using the straight-line method.

D. should be recognized at the lease's expiration.

60) In order to properly record a direct-financing lease, the lessor needs to know how to calculate the lease receivable. The lease receivable in a direct-financing lease is best defined as

A. the amount of funds the lessor has tied up in the asset which is the subject of the direct-financing lease.

B. the present value of minimum lease payments.

C. the difference between the lease payments receivable and the fair market value of the leased property.

D. the total book value of the asset less any accumulated depreciation recorded by the lessor prior to the lease agreement.

ECO 372 Final Exam

Business / Economics

9/25/12

Asked: 9/25/12 9:41 AM
Opening Offer: $25.00
Due Date: 9/25/13

1) The largest source of household income in the U.S. is obtained from

A. stock dividends

B. wages and salaries

C. interest earnings

D. rental income

2) The market where business sell goods and services to households and the government is called the

A. goods market

B. factor market

C. capital market

D. money market

3) Real gross domestic product is best defined as

A. the market value of intermediate goods and services produced in an economy, including exports

B. all goods and services produced in an economy, stated in the prices of a given year and multiplied by quantity

C. the market value of all final goods and services produced in an economy, stated in the prices of a given year

D. the market value of goods and services produced in an economy, stated in current-year prices

4) Underemployment includes people

A. who work "off-the-books" to avoid tax liabilities

B. who are working part time, or not using all their skills at a full-time job

C. who are tired of looking for a job, so they quit looking, but still want one

D. whose skills are not in demand anymore

5) The Bureau of Economic Analysis is responsible for which of the following?

A. Setting interest rates

B. Managing the money supply

C. Calculating U.S. gross domestic product]

D. Paying unemployment benefits

6) The Federal Reserve provides which of the following data?

A. Federal funds rate

B. Stock price of GE

C. Bond yields of corporations

D. Debt to GDP of Ireland

7) Consider if the government instituted a 10 percent income tax surcharge. In terms of the AS/AD model, this change should have

A. shifted the AD curve to the left

B. shifted the AD curve to the right

C. made the AD curve flatter

D. made the AD curve steeper

8) If the depreciation of a country's currency increases its aggregate expenditures by 20, the AD curve will

A. shift right by more than 20

B. shift right by less than 20

C. shift right by exactly 20

D. not shift at all

9) Aggregate demand management policies are designed most directly to

A. minimize unemployment

B. minimize inflation

C. control the aggregate level of spending in the economy

D. prevent budget deficits or surpluses

10) Suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following policies is most appropriate according to the AS/AD model?

A. An increase in government spending

B. An increase in taxes

C. A reduction in government spending

D. No change in taxes or government spending

11) According to Keynes, market economies

A. never experience significant declines in aggregate demand

B. quickly recover after they experience a significant decline in aggregate demand

C. may recover slowly after they experience a significant decline in aggregate demand

D. are constantly experiencing significant declines in aggregate demand

12) The laissez-faire policy prescription to eliminate unemployment was to

A. eliminate labor unions and government policies that hold real wages too high

B. strengthen unions and government regulations protecting unions and workers

C. increase real wages so that people are encouraged to work

D. have government guarantee jobs for everyone

13) In the AS/AD model, an expansionary monetary policy has the greatest effect on the price level when it

A. increases both nominal and real income

B. increases real income but not nominal income

C. increases nominal income but not real income

D. doesn't increase real or nominal income

14) The Federal funds rate

A. is always slightly higher than the discount rate

B. can never be close to zero

C. may sometimes have to be targeted at zero

D. is an intermediate target

15) What tool of monetary policy will the Federal Reserve use to increase the federal funds rate from 1% to 1.25%?

A. Open-market operations

B. The discount rate

C. A change in reserve requirements

D. Margin requirements

16) If the Federal Reserve increases the required reserves, financial institutions will likely lend out

A. more than before, increasing the money supply

B. less than before, decreasing the money supply

C. more than before, decreasing the money supply

D. less than before, increasing the money supply

17) Suppose the money multiplier in the U.S. is 3. Suppose further that if the Federal Reserve changes the discount rate by 1 percentage point, banks change their reserves by 300. To increase the money supply by 2700 the Federal Reserve should

A. reduce the discount rate by 3 percentage points

B. reduce the discount rate by 10 percentage points

C. raise the discount rate by 3 percentage points

D. raise the discount rate by 10 percentage points

18) If the Federal Reserve reduced its reserve requirement from 6.5 percent to 5 percent. This policy would most likely

A. increase both the money multiplier and the money supply

B. increase the money multiplier but decrease the money supply

C. decrease the money multiplier but increase the money supply

D. decrease both the money multiplier and the money supply

19) A country can have a trade deficit as long as it can

A. purchase foreign assets

B. make loans to other countries

C. borrow from or sell assets to foreigners

D. produce more than it consumes.

20) A weaker dollar

A. raises inflation and contracts the economy.

B. reduces inflation and contracts the economy

C. raises inflation and expands the economy

D. reduces inflation and expands the economy

21) In the short run, a trade deficit allows more consumption, but in the long run, a trade deficit is a problem because

A. the country eventually will consume more and produce less

B. the country eventually will sell all its financial assets to foreigners

C. the domestic currency will appreciate

D. the country eventually has to produce more than it consumes in order to pay foreigners their profits

22) Considering an economy with a current trade deficit and considering only the direct effect on income, an expansionary monetary policy tends to

A. decrease the exchange rate and increase the trade deficit

B. increase the exchange rate and increase the trade deficit

C. decrease the exchange rate and decrease the trade deficit

D. increase the exchange rate and decrease the trade deficit

23) The balance of trade measures the

A. difference between the value of imports and exports

B. share of U.S. imports coming from various regions of the world

C. share of U.S. exports going to various regions of the world

D. exchange rate needed to make imports equal exports

24) When a country runs a trade deficit, it does so by:

A. borrowing from foreign countries or selling assets to them.

B. borrowing from foreign countries or buying assets from them.

C. lending to foreign countries or selling assets to them.

D. lending to foreign countries or buying assets from them.

25) Expansionary fiscal policy tends to

A. raise U.S. income, increase U.S. imports, and increase the trade deficit

B. raise U.S. income, increase U.S. imports, and lower the trade deficit

C. lower U.S. income, reduce U.S. imports, and increase the trade deficit

D. lower U.S. income, reduce U.S. imports, and lower the trade deficit

26) In considering the net effect of expansionary fiscal policy on the trade deficit, the

A. income effect offsets the price effect

B. price effect offsets the income effect

C. income and price effects work in the same direction, so the trade deficit is decreased

D. income and price effects work in the same direction, so the trade deficit is increased

27) If U.S. interest rates fall relative to Japanese interest rates and Japanese inflation falls relative to U.S. inflation, then the

A. dollar will lose value in terms of yen

B. dollar will gain value in terms of yen

C. dollar's value will not change in terms of yen

D. change in the dollar's value cannot be determined

28) Expansionary monetary policy tends to

A. lower the U.S. interest rate and increase the U.S. exchange rate

B. lower the U.S. interest rate and decrease the U.S. exchange rate

C. increase the U.S. interest rate and decrease the U.S. exchange rate

D. increase the U.S. interest rate and increase the U.S. exchange rate

29) The U.S. has limits on Chinese textile imports. Such limits are an example of

A. a tariff

B. a quota

C. a regulatory trade restriction

D. an embargo

30) Duties imposed by the U.S. government on imported Chinese frozen and canned shrimp are an example of

A. tariffs

B. quotas

C. voluntary restrictions

D. regulatory trade restrictions

RES 351 Final Exam

Business / Economics

9/25/12

Asked: 9/25/12 2:28 PM
Opening Offer: $30.00
Due Date: 9/25/13

1) Northwest Airlines applied mathematical models to determine which customers in its database were

currently responsible for most of its profitability and which customers were not currently profitable but had similar characteristics to the most profitable customers. Northwest Airlines utilized _____ to identify these customers.

A. computer programming

B. data warehousing

C. customer relationships management

D. data mining

2) Minute Maid sees research as the fundamental first step in any business decision, and it created proprietary methods for conducting research. At what level of the hierarchy of business decision makers does Minute Maid operate?

A. Top tier

B. Middle tier

C. Base tier

D. Foundation tier

3) Which of the following questions is considered first when discussing a management dilemma?

A. How can management eliminate negative symptoms?

B. What does the manager need to know to choose the best alternative from the available sources of action?

C. What is the recommended course of action?

D. What symptoms cause management concern?

4) The goal of ethics in research is to _____.

A. ensure that no one is harmed

B. protect researchers from legal liability

C. identify what behavior is appropriate

D. ensure research sponsors fulfill their legal obligations

5) _____ occurs when the participants are told only part of the truth or when the truth is fully compromised.

A. Coercion

B. Deception

C. Informed consent

D. Debriefing

6) The process of stating the basic dilemma and then developing other questions by progressively breaking down the original question into more specific ones is called the _____.

A. research question

B. management-research question hierarchy

C. management dilemma

D. management question

7) The fundamental weakness in the research process is _____.

A. incorrectly defining the research question

B. identifying a flawed sampling frame

C. misdefining the target population

D. failing to identify all relevant secondary information

8) Which type of management question asks what do we want to achieve?

A. Choice of purpose

B. Evaluation of solutions

C. Troubleshooting

D. Control

9) In the Southeast, the potato chip market share held by the Lays brand is 46%. This is an example of _____.

A. a research question

B. a descriptive hypothesis

C. a relational hypothesis

D. an explanatory hypothesis

10) An increase in hours of television viewing leads to increases in the sales of snack foods. This is an example of a _____.

A. research question

B. descriptive hypothesis

C. correlational hypothesis

D. causal hypothesis

11) To be categorized as a customer, an individual must have a history of shopping at the establishment at least twice before the start of the study with expenditures of more than $10. This is an example of _____.

A. a hypothetical construct

B. a conceptual scheme

C. an operational definition

D. a dictionary definition

12) James is entering data on client gender. Because the values entered reflect male or female, this variable is _____.

A. discrete

B. dichotomous

C. continuous

D. ratio-scaled

13) Which variable in an experiment is the variable expected to be affected by the manipulation?

A. Dependent variable

B. Extraneous variable

C. Moderating variable

D. Independent variable

14) Qualitative research seeks to _____ theory while quantitative research _____ it.

A. examine; interprets

B. build; tests

C. test; understands

D. apply; builds

15) Which of the following is true of quantitative research?

A. It uses a nonprobability sampling method

B. Results are generalizable

C. Data analysis is ongoing during the project

D. Sample sizes are generally small

16) The use of a control group in experimentation _____.

A. provides for the manipulation of the independent variable

B. serves as a comparison to assess the manipulation

C. minimizes the cost of experimentation

D. allows for discovery of the average effect of the independent variable in different situations

17) What is the first step in conducting an experiment?

A. Specify the level(s) of the treatment

B. Choose the experimental design

C. Control the experimental environment

D. Select relevant variables

18) Data originating from studies that are conducted by others and created for a purpose different from the purpose of the study for which the data are being reviewed are called _____ data

A. primary

B. secondary

C. quantitative

D. statistical

19) The goal of a formal study is to _____.

A. discover future research tasks

B. expand understanding of a topic

C. test hypotheses

D. provide insight

20) A _____ scale is a scale that scores an object or property without making a direct comparison to another object or property.

A. ranking

B. rating

C. categorization

D. sorting

21) What type of data is produced by simple category scales?

A. Nominal

B. Ordinal

C. Interval

D. Ratio

22) _____ is the extent to which a measurement tool actually measures what we wish to measure.

A. Reliability

B. Validity

C. Practicality

D. Significance

23) The list of elements in a population from which the sample is drawn is known as the _____.

A. sampling frame

B. population extent

C. database

D. sampling base

24) The process of ensuring the accuracy of data and their conversion from raw form into classified forms appropriate for analysis is called _____.

A. coding

B. data entry

C. data preparation

D. data measurement

25) _____ involves assigning numbers or other symbols to answers so that the responses can be grouped into a limited number of categories

A. Editing

B. Data entry

C. Coding

D. Measurement

26) The standard error of the estimate is a type of measure of _____.

A. central tendency

B. accuracy

C. significance

D. standard deviation

27) _____ are summary descriptors of variables of interest in the population

A. Sample statistics

B. Population parameters

C. Systematic estimates

D. Standard errors

28) The measure of deviation from the mean such that cases stretch toward one tail or the other is called _____.

A. kurtosis

B. platykurtic

C. skewness

D. ku

29) Which of the research questions/hypotheses below is best answered using cross-tabulations?

A. What percentage of men and women prefer Brand A over Brand B?

B. What percentage of residents shop at the local grocery store?

C. Is brand loyalty related to brand image?

D. What happens to sales when prices drop?

30) If a difference is not caused only by random sampling fluctuations, it is said to have _____.

A. resistance

B. statistical significance

C. substantive significance

D. reasonable doubt

ECO 365 Final Exam

Business / Economics

10/4/12

Asked: 10/4/12 7:43 AM
Opening Offer: $20.00
Due Date: 10/4/13

1) An economist who is studying the relationship between the money supply, interest rates, and the rate of inflation is engaged in

 

A. microeconomic research

 

B. macroeconomic research

 

C. theoretical research, because there is no data on these variables

 

D. empirical research, because there is no economic theory related to these variables

 

2) A basic difference between microeconomics and macroeconomics is that microeconomics

 

A. focuses on the choices of individual consumers, while macroeconomics considers the behavior of large businesses

 

B. focuses on financial reporting by individuals, while macroeconomics focuses on financial reporting by large firms

 

C. examines the choices made by individual participants in an economy, while macroeconomics considers the economy's overall performance

 

D. focuses on national markets, while macroeconomics concentrates on international markets

 

3) The distinction between supply and the quantity supplied is best made by saying that

 

A. the quantity supplied is represented graphically by a curve and supply as a point on that curve associated with a particular price

                         

B. supply is represented graphically by a curve and the quantity supplied as a point on that curve associated with a particular price

 

C. the quantity supplied is in direct relation with prices, whereas supply is in inverse relation

 

D. the quantity supplied is in inverse relation with prices, whereas supply is in direct relation

 

4) After several years of slow economic growth, world demand for petroleum began to rise rapidly in the 1990s. Much of the increase in demand was met by additional supplies from sources outside the Organization of Petroleum Exporting Countries (OPEC). OPEC, during this time, was unable to restrain output among members in its effort to lift oil prices. What best describes these events?

 

A. The rise in demand shifted the demand for oil to the right. OPEC actions shifted the demand for oil back to the left.

 

B. The rise in demand shifted the demand for oil to the right. As price rose, the supply of oil also rose.

 

C. The rise in demand shifted the demand for oil to the right. As price rose, the quantity of oil supplied rose.

 

D. The rise in demand reflects a movement down along the demand curve as supply shifted to the right when suppliers produced more oil.

 

5) Price elasticity of demand is the:

 

A. change in the quantity of a good demanded divided by the change in the price of that good

 

B. change in the price of a good divided by the change in the quantity of that good demanded

 

C. percentage change in price of that good divided by the percentage change in the quantity of that good demanded

 

D. percentage change in quantity demanded of a good divided by the percentage change in the price of that good

 

6) If average movie ticket prices rise by about 5 percent and attendance falls by about 2 percent, other things being equal, the elasticity of demand for movie tickets is about:

 

A. 0.0

 

B. 0.4

 

C. 0.6

 

D. 2.5

 

7) When labor is the variable input, the average product equals the

 

A. marginal product divided by the number of workers

 

B. marginal product multiplied by the number of workers

 

C. number of workers divided by the quantity of output

 

D. quantity of output divided by the number of workers

 

8) The increase in output obtained by hiring an additional worker is known as

 

A. the average product

 

B. the marginal product

 

C. the total product

 

D. value added

 

9) Which of the following is the best example of a long-run decision?

 

A. An automobile manufacturing company is considering whether or not to invest in robotic equipment to develop a more cost-effective production technique.

 

B. An automobile manufacturing company is considering whether or not to expand its existing workforce, while keeping the same factory and equipment.

 

C. A business consulting firm is considering whether or not to hire interns to assist with research and data processing.

 

D. A business consulting firm is considering whether or not to add new computers while maintaining the same number of employees.

 

10) Other things being equal, when average productivity falls,

 

A. average fixed cost must rise

 

B. marginal cost must rise

 

C. average total cost must rise

 

D. average variable cost must rise

 

11) According to economist Colin Camerer of the California Institute of Technology, many New York taxi drivers decide when to finish work by setting an income goal for themselves. If this is true, then on busy days when the effective hourly wage is higher, taxi drivers will

 

A. work the same number of hours as they will on slower days

 

B. work fewer hours than they will on slower days

 

C. work more hours than they will on slower days

 

D. not work any hours

 

12) A firm's demand for labor is derived from the

 

A. opportunity costs associated with labor and leisure

 

B. desires and needs of the entrepreneur

 

C. cost of labor inputs

 

D. demand for its output

 

13) Owen runs a delivery business and currently employs three drivers. He owns three vans that employees use to make deliveries, but he is considering hiring a fourth driver. If he hires a fourth driver, he can schedule breaks and lunch hours so all three vans are in constant use, allowing him to increase deliveries per day from 60 to 75. This will cost an additional $75 per day to hire the fourth driver. The marginal cost per delivery of increasing output beyond 60 deliveries per day

 

A. is $0 because Owen does not have to purchase another van

 

B. is $5

 

C. is $75

 

D. cannot be calculated without knowing Owen's total fixed costs

 

14) Expected economic profit per unit is equal to

 

A. expected price

 

B. expected average total cost

 

C. the difference between expected average price and expected average total cost

 

D. the difference between expected total revenue and expected total cost

 

15) If a firm in a perfectly competitive market experiences a technological breakthrough,

 

A. other firms would find out about it eventually

 

B. other firms would find out about it immediately

 

C. other firms would not find out about it

 

D. some firms would find out about it, but others would not

 

16) A significant difference between monopoly and perfect competition is that

 

A. free entry and exit is possible in a monopolized industry, but impossible in a competitive industry

 

B. competitive firms control market supply, but monopolies do not

 

C. the monopolist's demand curve is the industry demand curve, while the competitive firm's demand curve is perfectly elastic

 

D. profits are driven to zero in a monopolized industry, but may be positive in a competitive industry.

 

17) A monopoly firm is different from a competitive firm in that

 

A. there are many substitutes for a monopolist's product while there are no substitutes for a competitive firm's product

 

B. a monopolist's demand curve is perfectly inelastic while a competitive firm's demand curve is perfectly elastic

 

C. a monopolist can influence market price while a competitive firm cannot

 

D. a competitive firm has a U-shaped average cost curve while a monopolist does not

 

18) The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a

 

A. horizontal demand curve and price equals marginal cost in equilibrium

 

B. horizontal demand curve and price exceeds marginal cost in equilibrium

 

C. downward-sloping demand curve and price equals marginal cost in equilibrium

 

D. downward-sloping demand curve and price exceeds marginal cost in equilibrium

 

19) As long as marginal cost is below marginal revenue, a perfectly competitive firm should

 

A. increase production

 

B. hold production constant

 

C. decrease production

 

D. reconsider past production decisions

 

20) Because a monopolistic competitor has some monopoly power, advertising to increase that monopoly power makes sense as long as the marginal

 

A. benefit of advertising is positive

 

B. cost of advertising is positive

 

C. benefit of advertising exceeds the marginal cost of advertising

 

D. cost of advertising exceeds the marginal benefit of advertising

 

21) In the Flint Hills area of Kansas, proposals to build wind turbines to generate electricity have pitted environmentalist against environmentalist. Members of the Kansas Sierra Club support the turbines as a way to reduce fossil fuel usage, while local chapters of the Nature Conservancy say they will befoul the landscape. The Sierra Club argues that wind turbines

 

A. are a source of negative externalities

 

B. reduce negative externalities elsewhere in the economy

 

C. create a free-rider problem

 

D. are a way of solving a free-rider problem

 

22) When negative externalities are present, market failure often occurs because

 

A the marginal external cost resulting from the activity is not reflected in the market price

 

B. the marginal external cost resulting from the activity is reflected in the market price

 

C. the existence of imports from foreign countries takes jobs and income away from U.S. citizen

 

D. consumers will consume the good at a level where their individual marginal benefits exceed the marginal costs borne by the firm producing the good

 

23) A merger between a textile mill and a clothing manufacturing company would be considered a

 

A. horizontal merger

 

B. vertical merger

 

C. conglomerate merger

 

D. diagonal merger

 

24) A merger between a baby food company and a life insurance company would be considered a

 

A. horizontal merger

 

B. vertical merger

 

C. conglomerate merger

 

D. diagonal merger

 

25) From the point of view of consumer and producer surplus, what problem may be created when a country subsidizes the cost of energy to consumers to help alleviate the burden of higher energy costs?

 

A. It hurts the poor and benefits the rich.

 

B. It leads to less fuel being used than the amount that maximizes consumer surplus.

 

C. It encourages the consumption of too much fuel at the expense of other goods.

 

D. It has no effect; consumers gain a surplus, but taxpayers lose the same amount because they must finance the subsidy.

 

26) Suppose people freely choose to spend 40 percent of their income on health care, but the government decides to tax 40 percent of a person's income to provide the same level of coverage as before. What can be said about deadweight loss in each case?

 

A. Taxing income results in deadweight loss, while purchasing health care on one's own does not result in deadweight loss.

 

B. Taxing income results in less deadweight loss, because government knows better what health care coverage is good for society.

 

C. There is no difference because the goods are purchased in the market in either case.

 

D. There is no difference because the total spending remains the same and the health care purchased remains the same.

 

27) The U.S. textile industry is relatively small because the US imports most of its clothing. A clear result of the importation of clothing is

 

A. there is less variety available than there would be without imports

 

B. the quality of clothing is lower than it would be without imports

 

C. the price of clothing is higher than it would be without imports

 

D. the price of clothing is lower than it would be without imports

 

28) Countries can expect to gain from international trade as long as they

 

A. keep production diversified

 

B. specialize according to their comparative advantage

 

C. produce only those goods for which they have a relatively high opportunity cost

 

D. use trade restrictions to reduce competition for domestic producers

 

29) Which of the following is an example of the law of one price?

 

A. Exchange rates tend to have equivalent values. For example, one Italian lire equals one U.S. dollar.

 

B. Because people have essentially the same basic needs wherever they live, they tend to buy the same bundle of goods.

 

C. Because wages are so much lower in China, eventually all U.S. jobs will be outsourced to China, leaving the US to import all goods at one price.

 

D. Because their countries have similar institutions, the price paid for a computer in Germany and the United States are about the same when converted into the same currency.

 

30) The fact that U.S. managers' salaries are substantially greater than those of comparable managers in Japan may be related to

 

A. an increase in the demand for CEOs

 

B. an increase in the supply of CEOs

 

C. the comparatively greater competitive markets in Japan

 

D. the greater number of public goods provided in the United States

 

ACC 421 Final Exam

Business / Economics

10/4/12

Asked: 10/4/12 10:06 AM
Opening Offer: $25.00
Due Date: 10/4/13

1) An accrued expense can best be described as an amount

A.

paid and currently matched with earnings.

B.

not paid and not currently matched with earnings.

C.

not paid and currently matched with earnings.

D.

paid and not currently matched with earnings.

2) When an item of revenue is collected and recorded in advance, it is normally called a(n) ___________ revenue.

A.

unearned

B.

prepaid

C.

accrued

D.

cash

3) When an item of expense is paid and recorded in advance, it is normally called a(n)

A.

estimated expense.

B.

accrued expense.

C.

prepaid expense.

D.

cash expense.

4) A common set of accounting standards and procedures are called

A.

objectives of financial reporting.

B.

generally accepted accounting principles.

C.

financial accounting standards.

D.

statements of financial accounting concepts.

5) One objective of financial reporting is to provide

A.

information that is useful in assessing cash flow prospects.

B.

information about the liquidation values of the resources held by the enterprise.

C.

information about the investors in the business entity.

D.

information that will attract new investors.

6) The information provided by financial reporting pertains to

A.

individual business enterprises, industries, and an economy as a whole, rather than to members of society as consumers.

B.

business industries, rather than to individual enterprises or an economy as a whole or to members of society as consumers.

C.

individual business enterprises, rather than to industries or an economy as a whole or to members of society as consumers.

D.

an economy as a whole and to members of society as consumers, rather than to individual enterprises or industries.

7) The Financial Accounting Foundation

A.

provides information to interested parties on financial reporting issues.

B.

oversees the operations of the AICPA.

C.

oversees the operations of the FASB.

D.

works with the Financial Accounting Standards Advisory Council to provide informa-tion to interested parties on financial reporting issues.

8) The major distinction between the Financial Accounting Standards Board (FASB) and its predecessor, the Accounting Principles Board (APB), is

A.

all members of the FASB possess extensive experience in financial reporting.

B.

all members of the FASB are fully remunerated, serve full time, and are independent of any companies or institutions.

C.

the FASB issues exposure drafts of proposed standards.

D.

a majority of the members of the FASB are CPAs drawn from public practice.

9) The body that has the power to prescribe the accounting practices and standards to be employed by companies that fall under its jurisdiction is the

A.

FASB.

B.

SEC.

C.

APB.

D.

AICPA.

10) Limitations of the income statement include all of the following except

A.

items that cannot be measured reliably are not reported.

B.

income measurement involves judgment.

C.

income numbers are affected by the accounting methods employed.

D.

only actual amounts are reported in determining net income.

11) The income statement reveals

A.

resources and equities of a firm at a point in time.

B.

net earnings (net income) of a firm at a point in time.

C.

net earnings (net income) of a firm for a period of time.

D.

resources and equities of a firm for a period of time.

12) Which of the following would represent the least likely use of an income statement prepared for a business enterprise?

A.

Use by customers to determine a company's ability to provide needed goods and services.

B.

Use by government agencies to formulate tax and economic policy.

C.

Use by investors interested in the financial position of the entity.

D.

Use by labor unions to examine earnings closely as a basis for salary discussions.

13) The process of formally recording or incorporating an item in the financial statements of an entity is

A.

allocation.

B.

realization.

C.

recognition.

D.

articulation.

14) Which of the following is not a reason why revenue is recognized at time of sale?

A.

Realization has occurred.

B.

Title legally passes from seller to buyer.

C.

All of these are reasons to recognize revenue at time of sale.

D.

The sale is the critical event.

15) Which of the following is not an accurate representation concerning revenue recognition?

A.

Revenue from selling products is recognized at the date of sale, usually interpreted to mean the date of delivery to customers.

B.

Revenue from permitting others to use enterprise assets is recognized as time passes or as the assets are used.

C.

Revenue from disposing of assets other than products is recognized at the date of sale.

D.

Revenue from services rendered is recognized when cash is received or when services have been performed.

16) One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is

A.

an extensive use of estimates.

B.

the extensive use of separate classifications.

C.

failure to reflect current value information.

D.

failure to include items of financial value that cannot be recorded objectively.

17) The basis for classifying assets as current or noncurrent is conversion to cash within

A.

the accounting cycle or one year, whichever is longer.

B.

the operating cycle or one year, whichever is longer.

C.

the accounting cycle or one year, whichever is shorter.

D.

the operating cycle or one year, whichever is shorter.

18) The correct order to present current assets is

A.

Cash, inventories, accounts receivable, prepaid items.

B.

Cash, accounts receivable, inventories, prepaid items.

C.

Cash, accounts receivable, prepaid items, inventories.

D.

Cash, inventories, prepaid items, accounts receivable.

19) If a business entity entered into certain related party transactions, it would be required to disclose all of the following information except the

A.

dollar amount of the transactions for each of the periods for which an income state-ment is presented.

B.

nature of any future transactions planned between the parties and the terms involved.

C.

nature of the relationship between the parties to the transactions.

D.

amounts due from or to related parties as of the date of each balance sheet presented.

20) Events that occur after the December 31, 2008 balance sheet date (but before the balance sheet is issued) and provide additional evidence about conditions that existed at the balance sheet date and affect the realizability of accounts receivable should be

A.

used to record an adjustment to Bad Debt Expense for the year ending December 31, 2008.

B.

disclosed only in the Notes to the Financial Statements.

C.

discussed only in the MD&A (Management's Discussion and Analysis) section of the annual report.

D.

used to record an adjustment directly to the Retained Earnings account

21) The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?

A.

Enough information should be disclosed in the financial statements so a person wishing to invest in the stock of the company can make a profitable decision.

B.

Information about each account balance appearing in the financial statements is to be included in the notes to the financial statements.

C.

All information related to an entity's business and operating objectives is required to be disclosed in the financial statements.

D.

Disclosure of any financial facts significant enough to influence the judgment of an informed reader.

22) The MD&A section of an enterprise's annual report is to cover the following three items:

A.

liquidity, capital resources, and results of operations.

B.

income statement, balance sheet, and statement of cash flows.

C.

income statement, balance sheet, and statement of owners' equity.

D.

changes in the stock price, mergers, and acquisitions.

23) If the financial statements examined by an auditor lead the auditor to issue an opinion that contains an exception that is not of sufficient magnitude to invalidate the statement as a whole, the opinion is said to be

A.

unqualified.

B.

adverse.

C.

qualified.

D.

exceptional.

24) Which of the following best characterizes the difference between a financial forecast and a financial projection?

A.

Forecasts include a complete set of financial statements, while projections include only summary financial data.

B.

A forecast attempts to provide information on what is expected to happen, whereas a projection may provide information on what is not necessarily expected to happen.

C.

A forecast is normally for a full year or more and a projection presents data for less than a year.

D.

A forecast includes data which can be verified about future expectations, while the data in a projection is not susceptible to verification.

25) Theoretically, in computing the receivables turnover, the numerator should include

A.

net sales.

B.

sales.

C.

net credit sales.

D.

credit sales.

26) Which of the following ratios measures long-term solvency?

A.

Acid-test ratio

B.

Debt to total assets

C.

Receivables turnover

D.

Current ratio

27) The rate of return on common stock equity is calculated by dividing

A.

net income by average common stockholders' equity.

B.

net income by ending common stockholders' equity.

C.

net income less preferred dividends by average common stockholders' equity.

D.

net income less preferred dividends by ending common stockholders' equity.

28) The primary purpose of the statement of cash flows is to provide information

A.

about the operating, investing, and financing activities of an entity during a period.

B.

about the cash receipts and cash payments of an entity during a period.

C.

that is useful in assessing cash flow prospects.

D.

about the entity's ability to meet its obligations, its ability to pay dividends, and its needs for external financing.

29) The first step in the preparation of the statement of cash flows requires the use of information included in which comparative financial statements?

A.

Statements of cash flows

B.

Income statements

C.

Balance sheets

D.

Statements of retained earnings

30) To arrive at net cash provided by operating activities, it is necessary to report revenues and expenses on a cash basis. This is done by

A.

eliminating the effects of income statement transactions that did not result in a corresponding increase or decrease in cash.

B.

estimating the percentage of income statement transactions that were originally reported on a cash basis and projecting this amount to the entire array of income statement transactions.

C.

eliminating all transactions that have no current or future effect on cash, such as depreciation, from the net income computation.

D.

re-recording all income statement transactions that directly affect cash in a separate cash flow journal.

31) The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n)

A.

investing activity.

B.

deduction from net income.

C.

financing activity.

D.

addition to net income.

32) In determining net cash flow from operating activities, a decrease in accounts payable during a period

A.

requires an increase adjustment to cost of goods sold under the direct method.

B.

requires an addition adjustment to net income under the indirect method.

C.

requires a decrease adjustment to cost of goods sold under the direct method.

D.

means that income on an accrual basis is less than income on a cash basis.

33) In reporting extraordinary transactions on a statement of cash flows (indirect method), the

A.

net of tax amount of an extraordinary gain should be deducted from net income.

B.

net of tax amount of an extraordinary gain should be added to net income.

C.

gross amount of an extraordinary gain should be added to net income.

D.

gross amount of an extraordinary gain should be deducted from net income.

34) Which of the following transactions would require the use of the present value of an annuity due concept in order to calculate the present value of the asset obtained or liability owed at the date of incurrence?

A.

A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 7%.

B.

A capital lease is entered into with the initial lease payment due one month subse-quent to the signing of the lease agreement.

C.

A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 9%.

D.

A capital lease is entered into with the initial lease payment due upon the signing of the lease agreement.

35) Which of the following tables would show the smallest value for an interest rate of 5% for six periods?

A.

Future value of an ordinary annuity of 1

B.

Present value of 1

C.

Present value of an ordinary annuity of 1

D.

Future value of 1

36) Which table would show the largest factor for an interest rate of 8% for five periods?

A.

Future value of an annuity due of 1

B.

Present value of an ordinary annuity of 1

C.

Present value of an annuity due of 1

D.

Future value of an ordinary annuity of 1

 

HRM 531 Final Exam

Business / Economics

10/4/12

Asked: 10/4/12 1:40 PM
Opening Offer: $25.00
Due Date: 10/4/13

1) Distrust, disrespect, and animosity pertain to which component of indirect costs associated with mismanaged organizational stress?

 

A. Quality of work relations

 

B. Participation and membership

 

C. Performance on the job

 

D. Communication breakdowns

 

2) Inventory shrinkages and accidents pertain to which component of direct costs associated with mismanaged organizational stress?

 

A. Employee conflict

 

B. Performance on the job

 

C. Loss of vitality

 

D. Communication breakdowns

 

3) Thousands of equal-pay lawsuits have been filed, predominantly by ___________ since the Equal Pay Act of 1963 was passed

 

A. women

 

B. African Americans

 

C. the elderly

 

D. Americans with disabilities

 

4) What term refers to those actions appropriate to overcome the effects of past or present policies, practices, or other barriers to equal employment opportunity?

 

A. Reparation

 

B. Emancipation

 

C. Desegregation

 

D. Affirmative action

 

5) In the employment context, _______________ can be viewed broadly as giving an unfair advantage or disadvantage to the members of a particular group in comparison with the members of other groups

 

A. ethnocentrism

 

B. discrimination

 

C. seniority system

 

D. race norming

 

6) Thousands of equal-pay suits have been filed, predominantly by ___________ since the Equal Pay Act of 1963 was passed

 

A. women

 

B. African Americans

 

C. the elderly

 

D. Americans with disabilities

 

7) Which of the following observations is correct?

 

A. Diversity is problem focused, and affirmative action is opportunity focused

 

B. Diversity is government initiated, and affirmative action is voluntary

 

C. Diversity is proactive, and affirmative action is reactive

 

D. Diversity is quantitative, and affirmative action is qualitative

 

8) Which of the following would you associate with managing diversity?

 

A. Government initiated

 

B. Assumes integration

 

C. Internally focused

 

D. Quantitative

 

9) "To be the world's best quick-service restaurant" is an example of what?

 

A. Organizational charter

 

B. Standard operating procedure

 

C. Code of ethics

 

D. Vision statement

 

10) _________ is a job analysis method that lists tasks or behaviors and involves workers rating each task or behavior in terms of whether or not it is performed. If the task is performed, workers also rate the frequency, importance, level of difficulty, and relationship to overall performance

 

A. Job performance

 

B. Structured questionnaires

 

C. Interviews

 

D. Critical incidents

 

11) Recruitment begins by specifying _____, which are the typical results of job analysis and workforce planning activities

 

A. human resource requirements

 

B. strategic imperatives

 

C. succession plans

 

D. affirmative action candidates

 

12) The step following recruitment is _____, which is basically a rapid, rough selection process

 

A. an orientation

 

B. an initial screening

 

C. a suspension

 

D. a workforce plan

 

13) During the _____ stage, it is most important to select the managers who can develop stable management systems to preserve the gains achieved during the embryonic stage

 

A. mature

 

B. high-growth

 

C. aging

 

D. embryonic

 

14) Increasing an individual's employability outside the company simultaneously increases his or her job security and desire to stay with the current employer. What is this known as?

 

A. Training paradox

 

B. Pygmalion effect

 

C. Distributed practice

 

D. Massed practice

 

15) Which is a characteristic of the most effective training practices?

 

A. Training starts at the bottom of the organization

 

B. Training is part of the corporate culture

 

C. Training is evaluated by checking participant reactions

 

D. Little time is spent assessing training needs

 

16) Which analysis is helpful in determining the special needs of a particular group, such as older workers, women, or managers at different levels?

 

A. Individual

 

B. Operations

 

C. Demographic

 

D. Organization

 

17) Providing adequate resources to get a job done right and on time, and paying careful attention to selecting employees, are parts of

 

A. employee welfare

 

B. grievance management

 

C. performance appraisal

 

D. performance facilitation

 

18) This can be thought of as a compass that indicates a person's actual direction as well as a person's desired direction.

 

A. Management by objectives

 

B. Forced distribution

 

C. Central tendency

 

D. Performance management

 

19) What would you call a meeting that is typically done once a year to identify and discuss job-relevant strengths and weaknesses of individuals or work teams?

 

A. performance appraisal

 

B. performance facilitation

 

C. performance encouragement

 

D. performance standard

 

20) When managing careers, what should organizations do?

 

A. Plan for shorter employment relationships

 

B. Focus primarily on employee needs and aspirations

 

C. Allow employees to structure work assignments

 

D. Focus on and recognize career stages that employees go through

 

21) A sequence of positions occupied by a person during the course of a lifetime is characteristic of what type of career?

 

A. Subjective

 

B. Objective

 

C. Specific

 

D. General

 

22) In the new world of career management, the primary goal is to provide which of the following for employees?

 

A. Rising aspirations

 

B. Executive ranking

 

C. Psychological success

 

D. Time off when they need it

 

23) At a broad level, _____ includes anything an employee values and desires that an employer is able and willing to offer in exchange for employee contributions

 

A. a competency-based pay system

 

B. an employee stock ownership plan

 

C. an organizational reward system

 

D. a merit-pay method

 

24) This benefit, tied mostly to profitability and promising better job security, but not guaranteeing it, is at the center of the evolving bonus system

 

A. Contribution-based pay

 

B. Competency-based pay

 

C. Skill-based pay

 

D. Flexible pay

 

25) Financial rewards include direct payments plus indirect payments in the form of what?

 

A. Individual equity

 

B. Corporate compensation

 

C. Spot awards

 

D. Employee benefits

 

26) Which law offers full coverage for retirees, dependent survivors, and disabled persons insured by 40 quarters of payroll taxes on their past earnings or earnings of heads of households?

 

A. Federal Unemployment Tax Act

 

B. Social Security Act

 

C. Workers' compensation

 

D. Employee Retirement Income Security Act

 

27) Plans are known as _____ when the employees share in the cost of the premiums

 

A. share-based

 

B. contributory

 

C. distributive

 

D. peer participating

 

28) Which type of justice refers to the quality of interpersonal treatment that employees receive in their everyday work?

 

A. Interactional

 

B. Informational

 

C. Distributive

 

D. Blind

 

29) Procedural justice affects citizenship behaviors by influencing employees' perceptions of _____, the extent to which the organization values employees' general contributions and cares for their well being.

 

A. due process

 

B. management accessibility

 

C. indirect compensation

 

D. organizational support

 

30) When companies discover they can communicate better with their customers through employees who are similar to their customers, those companies then realize they have increased their _____ diversity.

 

A. primary

 

B. secondary

 

C. internal

 

D. external

FIN 534 – Homework Chapter 1

Business / Economics

10/17/12

Asked: 10/17/12 6:06 AM
Opening Offer: $7.00
Due Date: 10/17/12

1. Which of the following statements is CORRECT?

 

a. One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability.

 

b. It is generally easier to transfer one's ownership interest in a partnership than in a corporation.

 

c. One of the advantages of the corporate form of organization is that it avoids double taxation.

 

d. One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights, i.e., "one person, one vote."

 

e. Corporations of all types are subject to the corporate income tax.

 

2. Which of the following would be most likely to lead to higher interest rates on all debt securities in the economy?

 

a. Households start saving a larger percentage of their income.

 

b. The economy moves from a boom to a recession.

 

c. The level of inflation begins to decline.

 

d. Corporations step up their expansion plans and thus increase their demand for capital.

 

e. The Federal Reserve uses monetary policy in an attempt to stimulate the economy.

 

3. Which of the following statements is CORRECT?

 

a. If General Electric were to issue new stock this year it would be considered a secondary market transaction since the company already has stock outstanding.

 

b. Capital market transactions only include preferred stock and common stock transactions.

 

c. The distinguishing feature between spot markets versus futures markets transactions is the maturity of the investments. That is, spot market transactions involve securities that have maturities of less than one year, whereas futures markets transactions involve securities with maturities greater than one year.

 

d. Both Nasdaq "dealers" and NYSE "specialists" hold inventories of stocks.

 

e. An electronic communications network (ECN) is a physical location exchange.

 

4. Which of the following statements is CORRECT?

 

a. A good goal for a firm's management is maximization of expected EPS.

 

b. Most business in the U.S. is conducted by corporations, and corporations' popularity results primarily from their favorable tax treatment.

 

c. Because most stock ownership is concentrated in the hands of a relatively small segment of society, firms' actions to maximize their stock prices have little benefit to society.

 

d. Corporations and partnerships have an advantage over proprietorships because a sole proprietor is exposed to unlimited liability, but the liability of all investors in the other types of businesses is more limited.

 

e. The potential exists for agency conflicts between stockholders and managers.

 

5. Which of the following statements is NOT CORRECT?

 

a. When a corporation's shares are owned by a few individuals and are not traded on public markets, we say that the firm is "closely, or privately, held."

 

b. "Going public" establishes a firm's true intrinsic value, and it also insures that a highly liquid market will always exist for the firm's shares.

 

c. When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public," and the market for such stock is called the new issue market.

 

d. Publicly owned companies have shares owned by investors who are not associated with management, and public companies must register with and report to a regulatory agency such as the SEC.

 

e. It is possible for a firm to go public and yet not raise any additional new capital at the time.

FIN 534 – Chapter 4(a step by step s..

Business / Economics

10/18/12

Asked: 10/18/12 6:08 AM
Opening Offer: $7.00
Due Date: 10/18/12

1.  $50,000 loan is to be amortized over 7 years, with annual end-of-year payments. Which of these statements is CORRECT?

a. The annual payments would be larger if the interest rate were lower.

 

 

 

b. If the loan were amortized over 10 years rather than 7 years, and if the interest rate were the same in either case, the first payment would include more dollars of interest under the 7-year amortization plan.

 

 

 

c. The proportion of each payment that represents interest as opposed to repayment of principal would be lower if the interest rate were lower.

 

 

 

d. The last payment would have a higher proportion of interest than the first payment.

 

 

 

e. The proportion of interest versus principal repayment would be the same for each of the 7 payments.

 

 

 

2. Which of the following statements is CORRECT?

 

 

 

a. If you have a series of cash flows, each of which is positive, you can solve for I, where the solution value of I causes the PV of the cash flows to equal the cash flow at Time 0.

 

 

 

b. If you have a series of cash flows, and CF0 is negative but each of the following CFs is positive, you can solve for I, but only if the sum of the undiscounted cash flows exceeds the cost.

 

 

 

c. To solve for I, one must identify the value of I that causes the PV of the positive CFs to equal the absolute value of the PV of the negative CFs. This is, essentially, a trial-and-error procedure that is easy with a computer or financial calculator but quite difficult otherwise.

 

 

 

d. If you solve for I and get a negative number, then you must have made a mistake.

 

 

 

e. If CF0 is positive and all the other CFs are negative, then you cannot solve for I.

 

 

 

3. Riverside Bank offers to lend you $50,000 at a nominal rate of 6.5%, compounded monthly. The loan (principal plus interest) must be repaid at the end of the year. Midwest Bank also offers to lend you the $50,000, but it will charge an annual rate of 7.0%, with no interest due until the end of the year. How much higher or lower is the effective annual rate charged by Midwest versus the rate charged by Riverside?

 

 

 

a. 0.52%

 

 

 

b. 0.44%

 

 

 

c. 0.36%

 

 

 

d. 0.30%

 

 

 

e. 0.24%

 

 

 

4. Steve and Ed are cousins who were both born on the same day, and both turned 25 today. Their grandfather began putting $2,500 per year into a trust fund for Steve on his 20th birthday, and he just made a 6th payment into the fund. The grandfather (or his estate's trustee) will make 40 more $2,500 payments until a 46th and final payment is made on Steve's 65th birthday. The grandfather set things up this way because he wants Steve to work, not be a "trust fund baby," but he also wants to ensure that Steve is provided for in his old age.

 

 

 

Until now, the grandfather has been disappointed with Ed, hence has not given him anything. However, they recently reconciled, and the grandfather decided to make an equivalent provision for Ed. He will make the first payment to a trust for Ed today, and he has instructed his trustee to make 40 additional equal annual payments until Ed turns 65, when the 41st and final payment will be made. If both trusts earn an annual return of 8%, how much must the grandfather put into Ed's trust today and each subsequent year to enable him to have the same retirement nest egg as Steve after the last payment is made on their 65th birthday?

 

 

 

a. $3,726

 

 

 

b. $3,912

 

 

 

c. $4,107

 

 

 

d. $4,313

 

 

 

e. $4,528

 

 

 

5. John and Daphne are saving for their daughter Ellen's college education. Ellen just turned 10 at (t = 0), and she will be entering college 8 years from now (at t = 8). College tuition and expenses at State U. are currently $14,500 a year, but they are expected to increase at a rate of 3.5% a year. Ellen should graduate in 4 years--if she takes longer or wants to go to graduate school, she will be on her own. Tuition and other costs will be due at the beginning of each school year (at t = 8, 9, 10, and 11).

 

 

 

So far, John and Daphne have accumulated $15,000 in their college savings account (at t = 0). Their long-run financial plan is to add an additional $5,000 in each of the next 4 years (at t = 1, 2, 3, and 4). Then they plan to make 3 equal annual contributions in each of the following years, t = 5, 6, and 7. They expect their investment account to earn 9%. How large must the annual payments at t = 5, 6, and 7 be to cover Ellen's anticipated college costs?

 

 

 

a. $1,965.21

 

 

 

b. $2,068.64

 

 

 

c. $2,177.51

 

 

 

d. $2,292.12

 

 

 

e. $2,412.76

FIN 534 – Homework Chapter 9

Business / Economics

10/20/12

Asked: 10/20/12 3:22 PM
Opening Offer: $7.00
Due Date: 10/20/12

1. Bankston Corporation forecasts that if all of its existing financial policies are followed, its proposed capital budget would be so large that it would have to issue new common stock. Since new stock has a higher cost than retained earnings, Bankston would like to avoid issuing new stock. Which of the following actions would REDUCE its need to issue new common stock?

 

 

 

a. Increase the dividend payout ratio for the upcoming year.

 

 

 

b. Increase the percentage of debt in the target capital structure.

 

 

 

c. Increase the proposed capital budget.

 

 

 

d. Reduce the amount of short-term bank debt in order to increase the current ratio.

 

 

 

e. Reduce the percentage of debt in the target capital structure.

 

 

 

2. LaPango Inc. estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept?

 

 

 

a. Project B, which is of below-average risk and has a return of 8.5%.

 

 

 

b. Project C, which is of above-average risk and has a return of 11%.

 

 

 

c. Project A, which is of average risk and has a return of 9%.

 

 

 

d. None of the projects should be accepted.

 

 

 

e. All of the projects should be accepted.

 

 

 

3. Which of the following statements is CORRECT?

 

 

 

a. When calculating the cost of preferred stock, a company needs to adjust for taxes, because preferred stock dividends are deductible by the paying corporation.

 

 

 

b. All else equal, an increase in a company's stock price will increase its marginal cost of retained earnings, rs.

 

 

 

c. All else equal, an increase in a company's stock price will increase its marginal cost of new common equity, re.

 

 

 

d. Since the money is readily available, the after-tax cost of retained earnings is usually much lower than the after-tax cost of debt.

 

 

 

e. If a company's tax rate increases but the YTM on its noncallable bonds remains the same, the after-tax cost of its debt will fall.

 

 

 

4. Which of the following statements is CORRECT?

 

 

 

a. Since debt capital can cause a company to go bankrupt but equity capital cannot, debt is riskier than equity, and thus the after-tax cost of debt is always greater than the cost of equity.

 

 

 

b. The tax-adjusted cost of debt is always greater than the interest rate on debt, provided the company does in fact pay taxes.

 

 

 

c. If a company assigns the same cost of capital to all of its projects regardless of each project's risk, then the company is likely to reject some safe projects that it actually should accept and to accept some risky projects that it should reject.

 

 

 

d. Because no flotation costs are required to obtain capital as retained earnings, the cost of retained earnings is generally lower than the after-tax cost of debt.

 

 

 

e. Higher flotation costs tend to reduce the cost of equity capital.

 

 

 

5. Cranberry Corp. has two divisions of equal size: a computer manufacturing division and a data processing division. Its CFO believes that stand-alone data processor companies typically have a WACC of 8%, while stand-alone computer manufacturers typically have a 12% WACC. He also believes that the data processing and manufacturing divisions have the same risk as their typical peers. Consequently, he estimates that the composite, or corporate, WACC is 10%. A consultant has suggested using an 8% hurdle rate for the data processing division and a 12% hurdle rate for the manufacturing division. However, the CFO disagrees, and he has assigned a 10% WACC to all projects in both divisions. Which of the following statements is CORRECT?

 

 

 

a. While the decision to use just one WACC will result in its accepting more projects in the manufacturing division and fewer projects in its data processing division than if it followed the consultant's recommendation, this should not affect the firm's intrinsic value.

 

 

 

b. The decision not to adjust for risk means, in effect, that it is favoring the data processing division. Therefore, that division is likely to become a larger part of the consolidated company over time.

 

 

 

c. The decision not to adjust for risk means that the company will accept too many projects in the manufacturing division and too few in the data processing division. This will lead to a reduction in the firm's intrinsic value over time.

 

 

 

d. The decision not to risk-adjust means that the company will accept too many projects in the data processing business and too few projects in the manufacturing business. This will lead to a reduction in its intrinsic value over time.

 

 

 

e. The decision not to risk adjust means that the company will accept too many projects in the manufacturing business and too few projects in the data processing business. This may affect the firm's capital structure but it will not affect its intrinsic value

FIN534 COMPLETE COURSE (CHAPTERS)

Business / Economics

10/31/12

Asked: 10/31/12 2:12 AM
Opening Offer: $80.00
Due Date: 10/31/13

- FIN 534 – Homework Chapter 1-17- FIN 534 – Homework Chapter 1-17

(a step by step solutiona step by step solution)

ACC 561 Final Exam Solutions in Steps

Business / Economics

11/7/12

Asked: 11/7/12 1:48 PM
Opening Offer: $25.00
Due Date: 11/6/13

.1) The statement of cash flows is used for _____. 

 

2) Nonoperating items on the income statement _____. 

 

3) The difference between a single-step and multiple-step income statement is that a single-step income statement _____. 

 

4) Which one of the following statements is true? 

 

5) The _____ accounting convention uses the acquisition cost minus depreciation in valuing an asset on the balance sheet. 

 

6) A new corporation issuing a common, no-par value stock for cash would include a journal entry a debit to _____. 

 

7) Which type of organization would most likely have work-in-process inventory? 

 

8) _____ is a measure of income or profit divided by the investment required to obtain that income or profit. 

 

9) The following information is available for the Peter Company: 

Sales: $150,000 

Invested capital: $156,250 

ROI: 10% 

The return on sales is _____. 

 

10) The following information is available for the Peter Company: 

Sales: $500,000 

Invested capital: $312,500 

ROI: 10% 

The return on sales is _____. 

 

11) Company A’s revenues are $300 on invested capital of $240. Expenses are currently 70% of sales. If Angelo Company can reduce its capital investment by 20% in Company A, return on investment will be _____. 

 

 

12) When the variable costing method is used, fixed factory overhead appears on the income statement as a _____. 

 

13) In absorption costing, costs are separated into the major categories of _____. 

 

14) _____ is another term for variable costing. 

 

15) Budgeted service department cost rates protects the user departments from _____. 

 

16) _____ is an example of the external financial-reporting purpose of the cost management systems. 

 

17) The level of sales at which revenues equal expenses and net income is zero is called the _____. 

 

18) Output measures of both resources and activities are _____. 

 

19) The break-even point is where _____. 

 

20) _____ budgeting is when budgets are formulated with the active participation of all affected employees. 

 

21) _____ is the logical integration of management accounting tools to gather and report data and to evaluate performance. 

 

22) _____ are components of a master budget. 

 

23) An important factor considered by sales forecasters is _____. 

 

24) _____ models are mathematical models of the master budget that can react to any set of assumptions about sales, costs, and product mix. 

 

25) Which of the following is an objective of budgeting? 

 

26) An organization's budget program should be used 

 

27) The activity-based costing may reveal _________, whereas traditional costing cannot. 

 

28) _____ is a method of approximating cost functions. 

 

29) In relation to a cost function, the term reliability refers to _____. 

 

30) One of the simplest methods to measure a linear cost function from past data is the _____.

MAT 540 Quantitative Methods

Mathematics

11/8/12

Asked: 11/8/12 2:32 PM
Opening Offer: $75.00
Due Date: 11/7/13

MAT 540 Quiz 1

MAT 540 Quiz 2

MAT 540 Quiz 3

MAT 540 Quiz 4

MAT 540 Quiz 5

MAT 540 Final Exam

MAT 540 Midterm Exam

 

MGT 311 Final Exam

Business / Economics

11/14/12

Asked: 11/14/12 4:04 PM
Opening Offer: $30.00
Due Date: 11/13/12

1) In her work in the publishing industry, Vera seeks out new authors whom she considers promising. In the past 2 years she has found a number of new writers whose work she thought was exceptional, and immersed herself in the task of helping them shape their manuscripts for submission to her managers for publishing. Although she was extremely proud of the results, none of the authors she worked with were chosen for publication. Vera believes that the decision not to publish these authors was based on personal rivalries within management, rather than the quality of her writers' work. She is extremely frustrated, dreads coming into work each morning, and is seriously thinking of resigning. How can Vera's job attitude best be described?

A. Low job satisfaction and low job involvement

 

B. High job satisfaction and low job involvement

 

C. Low job satisfaction and high job involvement

 

D. High job satisfaction and high job involvement

 

2) Julia works as a receptionist at a real-estate company. Her boss just came in the door and yelled at her, telling her that the front office was a mess and that she needed to get up and clean it immediately. After her boss left the room, Julia grabbed three magazines and violently slammed them into the trash can. Which of the following best describes Julia's action?

A. An affect

 

B. A thought

 

C. A mood

 

D. An emotion

 

3) Erin works on a software help desk. After being yelled at by a customer about the state of her company's software, she becomes angry, and has to take a short break to calm down. What makes her anger an emotion, rather than a mood?

A. It is a simple, unambiguous feeling.

 

B. It interferes with her capacity to work effectively.

 

C. It has contextual stimulus.

 

D. It can be controlled given some time.

 

4) Any incompatibility between two or more attitudes or between behavior and attitudes results in what?

A. Organizational dissonance

 

B. Cognitive dissonance

 

C. Attitudinal clarification

 

D. Values clarification

 

5) What is the degree to which a person identifies with his or her job, actively participates in it, and considers his or her performance as being important to self-worth?

A. Job satisfaction

 

B. Job involvement

 

C. Job stability

 

D. Organizational commitment

 

6) What term is used for those emotions that an organization requires workers to show and considers appropriate for a given job?

A. Felt emotions

 

B. Required emotions

 

C. Conditional emotions

 

D. Displayed emotions

 

7) Janet needs to assign a very important advertising account to one of her writers. First she reviewed each writers work load, then she studied the sales data of the products for the last three campaigns of each writer, then she reviewed each writer's annual review to familiarize herself with their goals. Finally, she gave the account to Paula, a very creative, efficient writer who has had high sales results with her last three clients' products. What is Janet's management style is based on?

A. Organizational behavior studies

B. Substantive evidence approach

C. Preconceived notions

D. Systematic study

 

8) Basing managerial methods on the best available scientific evidence is called what?

A. Systematic study

 

B. Organizational behavior

 

C. Evidence-based management

 

D. Conceptual management

 

9) The manager at a construction site observes that he is spending a great deal of time interviewing prospective employees. This is due to the large amount of absenteeism and turnover among his skilled workers. While questioning exiting employees, he discovers that many of them quit because they feel the work place is too dangerous. In particular, several foremen have stated that the need to get the job done quickly is more important than a few rules, and have gone as far as to mock the courage of workers who question this attitude. What is the best way for the manager to control the deviant behavior of the foremen?

A. Ordering the foremen to conform with the required safety standards

 

B. Finding out why the foremen place a greater importance on finishing the job than on safety

 

C. Firing the foremen and promoting new foremen from the current pool of workers

 

D. Taking over the work of the foreman himself

 

10) Phil loves sales. He has been a stellar sales person since he was 12. Recently he was awarded a full paid trip for two to Puerto Rico for breaking a company sales record. Phil is so motivated to work, he has set a new goal to break his old record in the coming year. Taking into account self-determination theory, why did the company recognition and award, an extrinsic reward, motivate Phil?

A. The reward was seen as a coercive method of increasing sales and motivated Phil to prove himself intrinsically.

 

B. The reward was imposed to work toward a standard that Phil could not believe in, and his intrinsic motivation suffered.

 

C. The reward increased Phil's sense of competence by providing feedback that improved his intrinsic motivation.

 

D. The reward increased Phil's sense of competence by providing feedback that diminished his intrinsic motivation.

 

11) Tony loves programming. He was on the ground level of the computer revolution. This year his boss has set personal goals for each of the programmers, one of which includes a presentation from each programmer about a project. Tony is very annoyed because he has a tremendous amount of work to do and he will have to spend the weekend, his personal time, preparing the presentation. Taking into account self-determination theory, why did his manager's goals and the presentation reduce Tony's motivation?

 

A. The internally imposed goal feels coercive, causing Tony's intrinsic motivation to suffer.

 

B. The self-imposed goal increases his sense of competence, causing the intrinsic motivation to suffer.

 

C. The externally imposed goal is an external reward, causing Tony's intrinsic motivation to increase.

 

D. The externally imposed goal feels coercive, causing Tony's intrinsic motivation to suffer.

 

12) Glendon has a degree in business and worked for 2 years at an international firm in Spain. When the firm suffered cutbacks and Glendon returned home, he took a job at a nonprofit agency mentoring at-risk Spanish-speaking children. Glendon earns a third of what he earned in the business world, but has decided that his new goal is to acquire a larger case load and continue to use his Spanish to help people. Which theory explains why Glendon is happy with a much smaller external reward for his work?

 

A. Self-imposition of goals

 

B. nAch

 

C. Self-concordance

 

D. Extrinsic motivation

 

13) Today Marci's boss entered her cubicle and told her that her work has been fantastic, and that because of her last project the client is going to give the company all of their business. Marci's boss continued to talk about what a great job she's doing. When her boss left, Marci felt very confident and satisfied with herself and her job. Marci's boss uses communication in which of the following functions?

 

A. Motivation

 

B. Control

 

C. Emotional expression

 

D. Information

 

14) What can managers do to make sure that important information is not withheld from them through silence?

 

A. Listen to and support diverse opinions.

 

B. Deal with information overload.

 

C. Interpret what they see and call it reality.

 

D. Tell employees what they want to hear.

 

15) When Neal Patterson, CEO of Cerner Corporation, sent his seething e-mail to 400 managers, he erred by selecting the wrong

 

A. channel for his message

 

B. message

 

C. distribution

 

D. emotional charge

 

16) Araceli is a team member in a large corporation. She never speaks in the team meetings because she has seen members talk behind each others' backs outside of the meetings. Members are constantly monitoring the other member's work, looking for a mistake to point out in a meeting. According to the information provided, which contextual factor is most likely hindering the success of Araceli's team?

 

A. Adequate resources

 

B. Climate of trust

 

C. Team structure

 

D. Performance evaluations

 

17) Ayesha is leading a group to develop a prototype for a new product. She has chosen three people to work with her. Ben and Tom are good friends and socialize on the weekend. They are both very creative. Julian is older than Ben and Tom, but they have worked together before and been quite productive. Julian is organized. Ayesha has never worked with any of the men, but knows the product well. She brings the highest level of expertise. Which of the following statements best describes Ayesha's group?

 

A. High norms, low cohesiveness, high productivity

 

B. Low norms, low cohesiveness, low productivity

 

C. High norms, high cohesiveness, high productivity

 

D. Low norms, high cohesiveness, low productivity

 

18) Irma does not like a few of the standard operating procedures adapted for the new project. However, she discussed the items with the team and told them that she realized she was in the minority and that she would adapt the new procedures to maintain smooth operations within the team. What is this type of intention called?

 

A. Sacrificing

 

B. Accommodating

 

C. Collaborating

 

D. Compromising

 

19) Angelina feels that her cubicle neighbor talks too loudly on the phone, but in other ways she is a great neighbor. Angelina gets annoyed every time her neighbor's phone rings, but she has decided it is simply not worth the trouble to talk to her neighbor. What is Angelina's conflict intention called?

 

A. Avoiding

 

B. Accommodating

 

C. Compromising.

 

D. Collaborating

 

20) For process conflict to be productive, it must be

 

A. Kept high

 

B. Kept low

 

C. Kept at low to moderate levels

 

D. Kept at moderate levels

 

21) The right inherent in a managerial position to give orders and expect orders to be obeyed is termed

 

A. chain of command

 

B. authority

 

C. power

 

D. unity of command

 

22) ________ are consistent with recent efforts by companies to reduce costs, cut overhead, speed up decision making, increase flexibility, get closer to customers, and empower employees.

 

A. Wider spans of control

 

B. Narrower spans of control

 

C. Matrix structures

 

D. Simple structures

 

23) What is the process through which employees are adapted to an organization's culture?

 

A. Personalization

 

B. Mentoring

 

C. Socialization

 

D. Institutionalization

 

24) If there is a basic conflict between the individual's expectations and the reality of working in an organization, the employee is most likely to be disillusioned and quit during which stage of socialization?

 

A. Prearrival

 

B. Ritual

 

C. Metamorphosis

 

D. Encounter

 

25) When your superior offers you a raise if you will perform additional work beyond the requirements of your job, he or she is exercising ________ power.

 

A. Legitimate

 

B. Coercive

 

C. Reward

 

D. Personal

 

26) Political behaviors usually

 

A. lie outside of an individual's specified job performance

 

B. are counter productive to individual goals

 

C. are seen only in large organizations

 

D. are frowned upon by organizational leaders

 

27) Regardless of the composition of a group, managers can leverage diversity to achieve superior performance by which of the following approaches?

 

A. Emphasize the higher-level similarities among members.

 

B. Ensure that everyone knows the importance of diversity in groups.

 

C. Explain the legal and ethical implications involved of not having a diverse group.

 

D. Focus on the benefits of having a diverse group.

 

28) Effective workforce programs that encourage diversity have three distinct components. First, they inform managers about the legal framework for equal employment opportunities and encourage fair treatment. Second, they teach managers how a diverse workforce will be better able to serve a diverse market of customers and clients. Third, they

 

A. ensure top-level management represents the diversity of its workforce and client base

 

B. ensure that certain groups have not been underutilized

 

C. generally involve one-shot training sessions that don't take up an undue amount of time

 

D. foster personal development practices that bring out the skills and abilities of all workers

 

29) If individuals resisting change are included in making change decisions in an attempt to gain their support, what is this approach called?

 

A. Cooptation

 

B. Exploitation

 

C. Manipulation

 

D. Coercion

 

30) Which tactic to overcome resistance to change is a relatively easy way to gain the support of adversaries, but may backfire if the targets become aware of the tactic?

 

A. Conciliation

 

B. Manipulation

 

C. Coercion

 

D. Cooperationactic?

FIN 534 quiz 2 week 3

Business / Economics

11/19/12

Asked: 11/19/12 11:00 PM
Opening Offer: $18.99
Due Date: 11/18/13

 Question 1

Which of the following statements is CORRECT?

 

a. Since companies can deduct dividends paid but not interest paid, our tax system favors the use of equity financing over debt financing, and this causes companies’ debt ratios to be lower than they would be if interest and dividends were both deductible.

b. Interest paid to an individual is counted as income for tax purposes and taxed at the individual’s regular tax rate, which in 2008 could go up to 35%, but dividends received were taxed at a maximum rate of 15%.

c. The maximum federal tax rate on corporate income in 2008 was 50%.

d. Corporations obtain capital for use in their operations by borrowing and by raising equity capital, either by selling new common stock or by retaining earnings.  The cost of debt capital is the interest paid on the debt, and the cost of the equity is the dividends paid on the stock.  Both of these costs are deductible from income when calculating income for tax purposes.

d. The maximum federal tax rate on personal income in 2008 was 50%.

 

 

Question 2

Which of the following statements is CORRECT?

 

The four most important financial statements provided in the annual report are the balance sheet, income statement, cash budget, and the statement of retained earnings.
The balance sheet gives us a picture of the firm’s financial position at a point in time.
The income statement gives us a picture of the firm’s financial position at a point in time.
The statement of cash flows tells us how much cash the firm has in the form of currency and demand deposits.
The statement of cash needs tells us how much cash the firm will require during some future period, generally a month or a year.

 

Question 3

For managerial purposes, i.e., making decisions regarding the firm's operations, the standard financial statements as prepared by accountants under Generally Accepted Accounting Principles (GAAP) are often modified and used to create alternative data and metrics that provide a somewhat different picture of a firm's operations. Related to these modifications, which of the following statements is CORRECT?

 

The standard statements make adjustments to reflect the effects of inflation on asset values, and these adjustments are normally carried into any adjustment that managers make to the standard statements.

The standard statements focus on accounting income for the entire corporation, not cash flows, and the two can be quite different during any given accounting period.  However, for valuation purposes we need to discount cash flows, not accounting income.  Moreover, since many firms have a number of separate divisions, and since division managers should be compensated on their divisions’ performance, not that of the entire firm, information that focuses on the divisions is needed.  These factors have led to the development of information that is focused on cash flows and the operations of individual units.

The standard statements provide useful information on the firm’s individual operating units, but management needs more information on the firm’s overall operations than the standard statements provide.

The standard statements focus on cash flows, but managers are less concerned with cash flows than with accounting income as defined by GAAP.

The best feature of standard statements is that, if they are prepared under GAAP, the data are always consistent from firm to firm.  Thus, under GAAP, there is no room for accountants to “adjust” the results to make earnings look better.

 

 

Question 4

On its 2010 balance sheet, Barngrover Books showed $510 million of retained earnings, and exactly that same amount was shown the following year.  Assuming that no earnings restatements were issued, which of the following statements is CORRECT?

 

a. If the company lost money in 2010, they must have paid dividends.

b. The company must have had zero net income in 2010.

c. The company must have paid out half of its earnings as dividends.

d. The company must have paid no dividends in 2010.

e. Dividends could have been paid in 2010, but they would have had to equal the earnings for the year.

 

 

Question 5

Other things held constant, which of the following actions would increase the amount of cash on a company’s balance sheet?                                  

 

The company repurchases common stock.

The company pays a dividend.

The company issues new common stock.

The company gives customers more time to pay their bills.

The company purchases a new piece of equipment.

 

 

Question 6

The CFO of Shalit Industries plans to have the company issue $300 million of new common stock and use the proceeds to pay off some of its outstanding bonds.  Assume that the company, which does not pay any dividends, takes this action, and that total assets, operating income (EBIT), and its tax rate all remain constant. Which of the following would occur?                                     

The company’s taxable income would fall.

The company’s interest expense would remain constant.

The company would have less common equity than before.

The company’s net income would increase.

The company would have to pay less taxes.                                      

 

 

Question 7

Which of the following factors could explain why Dellva Energy had a negative net cash flow last year, even though the cash on its balance sheet increased?                                               

 a. The company sold a new issue of bonds.

b. The company made a large investment in new plant and equipment.

c. The company paid a large dividend.

d. The company had high amortization expenses.

e. The company repurchased 20% of its common stock.             

Question 8

Which of the following statements is CORRECT?                                              

 

Since depreciation is a source of funds, the more depreciation a company has, the larger its retained earnings will be, other things held constant.

A firm can show a large amount of retained earnings on its balance sheet yet need to borrow cash to make required payments.

Common equity includes common stock and retained earnings, less accumulated depreciation.

The retained earnings account as shown on the balance sheet shows the amount of cash that is available for paying dividends.

If a firm reports a loss on its income statement, then the retained earnings account as shown on the balance sheet will be negative.                                            

 

 

Question 9

Below is the common equity section (in millions) of Teweles Technology’s last two year-end balance sheets:

                                                               2009                      2008     

Common stock                                $2,000                  $1,000  

Retained earnings                          2,000                    2,340

Total common equity                    $4,000                  $3,340  

 

 Teweles has never paid a dividend to its common stockholders.  Which of the following statements is CORRECT?

 

a. The company’s net income in 2009 was higher than in 2008.

b. Teweles issued common stock in 2009.

c. The market price of Teweles' stock doubled in 2009.

d. Teweles had positive net income in both 2008 and 2009, but the company’s net income in 2009 was lower than it was in 2008.

e. The company has more equity than debt on its balance sheet.

 

 

 Question 10     

Assume that Congress recently passed a provision that will enable Bev's Beverages Inc. (BBI) to double its depreciation expense for the upcoming year but will have no effect on its sales revenue or tax rate. Prior to the new provision, BBI’s net income after taxes was forecasted to be $4 million. Which of the following best describes the impact of the new provision on BBI’s financial statements versus the statements without the provision?  Assume that the company uses the same depreciation method for tax and stockholder reporting purposes.

 

The provision will reduce the company’s net cash flow.

The provision will increase the company’s tax payments.

Net fixed assets on the balance sheet will increase.

The provision will increase the company’s net income.

Net fixed assets on the balance sheet will decrease.                      

 

 

Question 11        

A start-up firm is making an initial investment in new plant and equipment. Assume that currently its equipment must be depreciated on a straight-line basis over 10 years, but Congress is considering legislation that would require the firm to depreciate the equipment over 7 years. If the legislation becomes law, which of the following would occur in the year following the change?                                  

 

a. The firm’s operating income (EBIT) would increase.

b. The firm’s taxable income would increase.

c. The firm’s net cash flow would increase.

d. The firm’s tax payments would increase.

e. The firm’s reported net income would increase.

 

 

Question 12

Which of the following statements is CORRECT?  

 

The income of certain small corporations that qualify under the Tax Code is completely exempt from corporate income taxes.  Thus, the federal government receives no tax revenue from these businesses.

All businesses, regardless of their legal form of organization, are taxed under the Business Tax Provisions of the Internal Revenue Code.

Small businesses that qualify under the Tax Code can elect not to pay corporate taxes, but then their owners must report their pro rata shares of the firm’s income as personal income and pay taxes on that income.

Congress recently changed the tax laws to make dividend income received by individuals exempt from income taxes. Prior to the enactment of that law, corporate income was subject to double taxation, where the firm was first taxed on the income and stockholders were taxed again on the income when it was paid to them as dividends.

All corporations other than non-profit corporations are subject to corporate income taxes, which are 15% for the lowest amounts of income and 35% for the highest amounts of income.

 

 

Question 13

Which of the following statements is CORRECT?

 

a. One way to increase EVA is to achieve the same level of operating income but with more investor-supplied capital.

b. If a firm reports positive net income, its EVA must also be positive.

c. One drawback of EVA as a performance measure is that it mistakenly assumes that equity capital is free.

d. One way to increase EVA is to generate the same level of operating income but with less investor-supplied capital.

e. Actions that increase reported net income will always increase net cash flow.

 

 

Question 14

Which of the following statements is CORRECT?

 

The more depreciation a firm reports, the higher its tax bill, other things held constant.

People sometimes talk about the firm’s net cash flow, which is shown as the lowest entry on the income statement, hence it is often called "the bottom line.”

Depreciation reduces a firm’s cash balance, so an increase in depreciation would normally lead to a reduction in the firm’s net cash flow.

Net cash flow (NCF) is often defined as follows:

Net Cash Flow = Net Income + Depreciation and Amortization Charges.

Depreciation and amortization are not cash charges, so neither of them has an effect on a firm’s reported profits.

 

 

Question 15

Which of the following items is NOT included in current assets?

 

Accounts receivable.

Inventory.

Bonds.

Cash.

Short-term, highly liquid, marketable securities.

 

 

Question 16

A firm’s new president wants to strengthen the company’s financial position.  Which of the following actions would make it financially stronger?

 

a. Increase accounts receivable while holding sales constant.

b. Increase EBIT while holding sales constant.

c. Increase accounts payable while holding sales constant.

d. Increase notes payable while holding sales constant.

e. Increase inventories while holding sales constant.

 

 

Question 17

Which of the following statements is CORRECT?

 

a. Borrowing by using short-term notes payable and then using the proceeds to retire long-term debt is an example of “window dressing.” Offering discounts to customers who pay with cash rather than buy on credit and then using the funds that come in quicker to purchase additional inventories is another example of “window dressing.”

b. Borrowing on a long-term basis and using the proceeds to retire short-term debt would improve the current ratio and thus could be considered to be an example of “window dressing.”

c. Offering discounts to customers who pay with cash rather than buy on credit and then using the funds that come in quicker to purchase additional inventories is an example of “window dressing.”

d. Using some of the firm’s cash to reduce long-term debt is an example of “window dressing.”

e. “Window dressing” is any action that improves a firm’s fundamental, long-run position and thus increases its intrinsic value.

 to be an example of “window dressing.”

 

Question 18

Which of the following statements is CORRECT?

 

a. If a firm has the highest price/earnings ratio of any firm in its industry, then, other things held constant, this suggests that the board of directors should fire the president.

b. If a firm has the highest market/book ratio of any firm in its industry, then, other things held constant, this suggests that the board of directors should fire the president.

c. Other things held constant, the higher a firm’s expected future growth rate, the lower its P/E ratio is likely to be.

d. The higher the market/book ratio, then, other things held constant, the higher one would expect to find the Market Value Added (MVA).

e. If a firm has a history of high Economic Value Added (EVA) numbers each year, and if investors expect this situation to continue, then its market/book ratio and MVA are both likely to be below average.

 

 

Question 19

Which of the following statements is CORRECT?

 

a. If a security analyst saw that a firm’s days’ sales outstanding (DSO) was higher than the industry average and was also increasing and trending still higher, this would be interpreted as a sign of strength.

b. If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its days’ sales outstanding (DSO) will increase.

c. There is no relationship between the days’ sales outstanding (DSO) and the average collection period (ACP).  These ratios measure entirely different things.

d. A reduction in accounts receivable would have no effect on the current ratio, but it would lead to an increase in the quick ratio.

e. If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its days’ sales outstanding will decline.

 

 

Question 20

Taggart Technologies is considering issuing new common stock and using the proceeds to reduce its outstanding debt.  The stock issue would have no effect on total assets, the interest rate Taggart pays, EBIT, or the tax rate.  Which of the following is likely to occur if the company goes ahead with the stock issue?

 

 a. The ROA will decline.

b. Taxable income will decrease.

c. The tax bill will increase.

d. Net income will decrease.

e. The times interest earned ratio will decrease.                              

 

 

Question 21

Casey Communications recently issued new common stock and used the proceeds to pay off some of its short-term notes payable.  This action had no effect on the company’s total assets or operating income.  Which of the following effects would occur as a result of this action?

 

a. The company’s current ratio increased.

b. The company’s times interest earned ratio decreased.

c. The company’s basic earning power ratio increased.

d. The company’s equity multiplier increased.

e. The company’s debt ratio increased.

 

 

 

 

 

 

Question 22

Which of the following statements is CORRECT?

 

a. If Firms X and Y have the same P/E ratios, then their market-to-book ratios must also be the same.

b. If Firms X and Y have the same net income, number of shares outstanding, and price per share, then their P/E ratios must also be the same.

c. If Firms X and Y have the same earnings per share and market-to-book ratio, they must have the same price earnings ratio.

d. If Firm X’s P/E ratio exceeds that of Firm Y, then Y is likely to be less risky and also to be expected to grow at a faster rate.

e. If Firms X and Y have the same net income, number of shares outstanding, and price per share, then their market-to-book ratios must also be the same.

 

 

Question 23

Companies HD and LD have the same sales, tax rate, interest rate on their debt, total assets, and basic earning power.  Both companies have positive net incomes.  Company HD has a higher debt ratio and, therefore, a higher interest expense.  Which of the following statements is CORRECT?

 

a. Company HD pays less in taxes.

b. Company HD has a lower equity multiplier.

c. Company HD has a higher ROA.

d. Company HD has a higher times interest earned (TIE) ratio.

e. Company HD has more net income.

 

 

Question 24

You observe that a firm’s ROE is above the industry average, but its profit margin and debt ratio are both below the industry average.  Which of the following statements is CORRECT?

 

a. Its total assets turnover must be above the industry average.

b. Its return on assets must equal the industry average.

c. Its TIE ratio must be below the industry average.

d. Its total assets turnover must be below the industry average.

e. Its total assets turnover must equal the industry average.

 

 

Question 25

Which of the following would indicate an improvement in a company’s financial position, holding other things constant?

 

a. The inventory and total assets turnover ratios both decline.

b. The debt ratio increases.

c. The profit margin declines.

d. The EBITDA coverage ratio declines.

e. The current and quick ratios both increase.

 

 

 

 

Question 26

A firm wants to strengthen its financial position.  Which of the following actions would increase its quick ratio?

 

a. Offer price reductions along with generous credit terms that would (1) enable the firm to sell some of its excess inventory and (2)lead to an increase in accounts receivable.

b. Issue new common stock and use the proceeds to increase inventories.

c. Speed up the collection of receivables and use the cash generated to increase inventories.

d. Use some of its cash to purchase additional inventories.

e. Issue new common stock and use the proceeds to acquire additional fixed assets.

 

 

Question 27

If a bank loan officer were considering a company’s request for a loan, which of the following statements would you consider to be CORRECT?

 

a. The lower the company’s EBITDA coverage ratio, other things held constant, the lower the interest rate the bank would charge the firm.

b. Other things held constant, the higher the debt ratio, the lower the interest rate the bank would charge the firm.

c. Other things held constant, the lower the debt ratio, the lower the interest rate the bank would charge the firm.

d. The lower the company’s TIE ratio, other things held constant, the lower the interest rate the bank would charge the firm.

e. Other things held constant, the lower the current ratio, the lower the interest rate the bank would charge the firm.

 

 

Question 28

Companies HD and LD are both profitable, and they have the same total assets (TA), Sales (S), return on assets (ROA), and profit margin (PM). However, Company HD has the higher debt ratio.  Which of the following statements is CORRECT?

 

a. Company HD has a lower total assets turnover than Company LD.

b. Company HD has a lower equity multiplier than Company LD.

c. Company HD has a higher fixed assets turnover than Company B.

d. Company HD has a higher ROE than Company LD.

e. Company HD has a lower operating income (EBIT) than Company LD.

 

 

Question 29

Which of the following statements is CORRECT?

 

a. Suppose a firm’s total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10% and its debt increases from 40% of total assets to 60%.  Under these conditions, the ROE will increase.

b. Suppose a firm’s total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10% and its debt increases from 40% of total assets to 60%.  Without additional information, we cannot tell what will happen to the ROE.

c. The modified Du Pont equation provides information about how operations affect the ROE, but the equation does not include the effects of debt on the ROE.

d. Other things held constant, an increase in the debt ratio will result in an increase in the profit margin on sales.

e. Suppose a firm’s total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10%, and its debt increases from 40% of total assets to 60%.  Under these conditions, the ROE will decrease.

 

 

Question 30

Considered alone, which of the following would increase a company’s current ratio?

 

a. An increase in net fixed assets.

b. An increase in accrued liabilities.

c. An increase in notes payable.

d. An increase in accounts receivable.

e. An increase in accounts payable.

 

FIN 534 Quiz 1 Week 1

Business / Economics

11/21/12

Asked: 11/21/12 6:47 PM
Opening Offer: $15.99
Due Date: 11/20/13

You recently sold 100 shares of your new company, XYZ Corporation, to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following statements best describes this transaction?

1) This is an example of an exchange of physical assets.
2) This is an example of a primary market transaction.
3) This is an example of a direct transfer of capital.
4) This is an example of a money market transaction.
5) This is an example of a derivatives market transaction.

Question 2
Which of the following statements is CORRECT?

1) While the distinctions are blurring, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise capital from other parties
2) A liquid security is a security whose value is derived from the price of some other "underlying" asset
3) Money market mutual funds usually invest most of their money in a well-diversified portfolio of liquid common stocks.
4) Money markets are markets for long-term debt and common stocks.
5) The NYSE operates as an auction market, whereas the Nasdaq is a dealer market

Question 3
Which of the following statements is CORRECT?

1) The NYSE does not exist as a physical location; rather it represents a loose collection of
dealers who trade stock electronically.
2) An example of a primary market transaction would be your uncle transferring 100 shares of
Wal-Mart stock to you as a birthday gift.
3) Capital market instruments include both long-term debt and common stocks.
4) If your uncle in New York sold 100 shares of Microsoft through his broker to an investor in
Los Angeles, this would be a primary market transaction.
5) While the two frequently perform similar functions, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise large blocks of capital from investors.

Question 4
Which of the following statements is CORRECT?

1) It is usually easier to transfer ownership in a corporation than it is to transfer ownership in a sole proprietorship
2) Corporate shareholders are exposed to unlimited liability.
3) Corporations generally face fewer regulations than sole proprietorships.
4) Corporate shareholders are exposed to unlimited liability, and this factor may be compounded by the tax disadvantages of incorporation.
5) There is a tax disadvantage to incorporation, and there is no way any corporation can escape this disadvantage, even if it is very small
Question 5
Which of the following statements is CORRECT?

1) One disadvantage of operating as a corporation rather than as a partnership is that corporate shareholders are exposed to more personal liability than partners
2) There is no good reason to expect a firm's stockholders and bondholders to react differently to the types of new asset investments a firm makes
3) Bondholders are generally more willing than stockholders to have managers invest in risky projects with high potential returns as opposed to safer projects with lower expected returns
4) Stockholders are generally more willing than bondholders to have managers invest in risky projects with high potential returns as opposed to safer projects with lower expected returns
5) Relative to sole proprietorships, corporations generally face fewer regulations, and this makes it easier for corporations to raise capital

Question 6
Suppose the U.S. Treasury announces plans to issue $50 billion of new bonds. Assuming the announcement was not expected, what effect, other things held constant, would that have on bond prices and interest rates?

1) Prices and interest rates would both rise.
2) Prices would rise and interest rates would decline.
3) Prices and interest rates would both decline.
4) There would be no changes in either prices or interest rates.
5) Prices would decline and interest rates would rise.

Question 7
Which of the following statements is CORRECT?

1) Corporations are at a disadvantage relative to partnerships because they have to file more reports to state and federal agencies, including the Securities and Exchange Administration, even if they are not publicly owned
2) In a regular partnership, liability for the firm's debts is limited to the amount a particular partner has invested in the business
3) A fast-growth company would be more likely to set up as a partnership for its business organization than would a slow-growth company
4) Partnerships have difficulty attracting capital in part because of their unlimited liability, the lack of impermanence of the organization, and difficulty in transferring ownership
5) A major disadvantage of a partnership relative to a corporation as a form of business organization is the high cost and practical difficulty of its formation

Question 8
Which of the following statements is CORRECT?

1) In a regular partnership, liability for other partners' misdeeds is limited to the amount of a particular partner's investment in the business
2) Partnerships have more difficulty attracting large amounts of capital than corporations because of such factors as unlimited liability, the need to reorganize when a partner dies, and the illiquidity (difficulty buying and selling) of partnership interests
3) A slow-growth company, with little need for new capital, would be more likely to organize as a corporation than would a faster growing company
4) In a limited partnership, the limited partners have voting control, while the general partner has operating control over the business. Also, the limited partners are individually responsible, on a pro rata basis, for the firm's debts in the event of bankruptcy.
5) A major disadvantage of all partnerships relative to all corporations is the fact that federal income taxes must be paid by the partners rather than by the firm itself

Question 9
Which of the following statements is CORRECT?

1) If you purchase 100 shares of Disney stock from your brother-in-law, this is an example of a primary market transaction.
2) If Disney issues additional shares of common stock through an investment banker, this would be a secondary market transaction.
3) The NYSE is an example of an over-the-counter market.
4) Only institutions, and not individuals, can engage in derivative market transactions.
5) As they are generally defined, money market transactions involve debt securities with maturities of less than one year

Question 10
Which of the following factors would be most likely to lead to an increase in interest rates in the economy?

1) Households reduce their consumption and increase their savings
2) The Federal Reserve decides to try to stimulate the economy.
3) There is a decrease in expected inflation
4) The economy falls into a recession
5) Most businesses decide to modernize and expand their manufacturing capacity, and to install new equipment to reduce labor costs

Question 11
Which of the following statements is CORRECT?

1) Hedge funds are legal in Europe and Asia, but they are not permitted to operate in the United States
2) Hedge funds have more in common with commercial banks than with any other type of financial institution
3) Hedge funds have more in common with investment banks than with any other type of financial institution
4) Hedge funds are legal in the United States, but they are not permitted to operate in Europe or Asia
5) The justification for the "light" regulation of hedge funds is that only "sophisticated" investors with high net worths and high incomes are permitted to invest in these funds, and such investors supposedly can do the necessary "due diligence" on their own rather than have it done by the SEC or some other regulator

Question 12
Which of the following statements is CORRECT?

1) The New York Stock Exchange is an auction market with a physical location
2) Capital market transactions involve only the purchase and sale of equity securities, i.e., common stocks
3) If an investor sells shares of stock through a broker, then this would be a primary market transaction.
4) Consumer automobile loans are evidenced by legal documents called "promissory notes," and these individual notes are traded in the money market
5) Consumer automobile loans are evidenced by legal documents called "promissory notes," and these individual notes are traded in the money market

Question 13
Which of the following statements is CORRECT?

1) The corporate bylaws are a standard set of rules established by the state of incorporation. These rules are identical for all corporations in the state, and their purpose is to ensure that the firm's managers run the firm in accordance with state laws
2) The corporate charter is a standard document prescribed by the state of incorporation, and its purpose is to ensure that the firm's managers run the firm in accordance with state laws. Procedures for electing corporate directors are contained in bylaws, while the declaration of the activities that the firm will pursue and the number of directors are included in the corporate charter.
3) Companies must establish a home office, or domicile, in a particular state, and that state must be the one in which most of their business (sales, manufacturing, and so forth) is conducted
4) Attorney fees are generally involved when a company develops its charter and bylaws, but since these documents are voluntary, a new corporation can avoid these costs by deciding not to have either a charter or bylaws
5) The corporate charter is concerned with things like what business the company will engage in, whereas the bylaws are concerned with things like procedures for electing the board of directors

Question 14
Which of the following statements is CORRECT?

1) If expected inflation increases, interest rates are likely to increase
2) If individuals in general increase the percentage of their income that they save, interest rates are likely to increase
3) If companies have fewer good investment opportunities, interest rates are likely to increase
4) Interest rates on all debt securities tend to rise during recessions because recessions increase the possibility of bankruptcy, hence the riskiness of all debt securities
5) Interest rates on long-term bonds are more volatile than rates on short-term debt securities like T-bills

Question 15
The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to ____

1) maximize its expected total corporate income
2) maximize its expected EPS
3) minimize the chances of losses
4) maximize the stock price per share over the long run, which is the stock's intrinsic value
5) maximize the stock price on a specific target date

 

 

FIN 534 Quiz 3 Week 4

Business / Economics

12/4/12

Asked: 12/4/12 11:51 AM
Opening Offer: $22.00
Due Date: 12/3/13

.1. Which of the following statements is CORRECT?

1) A time line is not meaningful unless all cash flows occur annually

2) Time lines are useful for visualizing complex problems prior to doing actual calculations

3) Time lines cannot be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly

4) Time lines can only be constructed for annuities where the payments occur at the ends of the periods, i.e., for ordinary annuities

5) Time lines cannot be constructed where some of the payments constitute an annuity but others are unequal and thus are not part of the annuity

2. Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT?

1) The monthly payments will decline over time.

2) A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment

3) The total dollar amount of principal being paid off each month gets smaller as the loan approaches maturity

4) The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 10%.

5) Exactly 10% of the first monthly payment represents interest

3. A Treasury bond promises to pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiannual compounding. Which of the following statements is CORRECT?

1) The periodic interest rate is greater than 3%

2) The periodic rate is less than 3%

3) The present value would be greater if the lump sum were discounted back for more periods

4) The present value of the $1,000 would be smaller if interest were compounded monthly rather than semiannually

5) The PV of the $1,000 lump sum has a higher present value than the PV of a 3-year, $333.33 ordinary annuity

4. You are analyzing the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following would lower the calculated value of the investment?

1) The cash flows are in the form of a deferred annuity, and they total to $100,000. You learn that the annuity lasts for only 5 rather than 10 years, hence that each payment is for $20,000 rather than for $10,000

2) The discount rate increases

3) The riskiness of the investment's cash flows decreases

4) The total amount of cash flows remains the same, but more of the cash flows are received in the earlier years and less are received in the later years

5) The discount rate decreases

5. You are considering two equally risky annuities, each of which pays $5,000 per year for 10 years. Investment ORD is an ordinary (or deferred) annuity, while Investment DUE is an annuity due. Which of the following statements is CORRECT?

1) A rational investor would be willing to pay more for DUE than for ORD, so their market prices should differ.

2) The present value of DUE exceeds the present value of ORD, while the future value of DUE is less than the future value of ORD.

3) The present value of ORD exceeds the present value of DUE, and the future value of ORD also exceeds the future value of DUE.

4) The present value of ORD exceeds the present value of DUE, while the future value of DUE exceeds the future value of ORD.

5) If the going rate of interest decreases from 10% to 0%, the difference between the present value of ORD and the present value of DUE would remain constant.

6. Which of the following statements regarding a 30-year monthly payment amortized mortgage with a nominal interest rate of 10% is CORRECT?

1) The monthly payments will decline over time

2) A smaller proportion of the last monthly payment will be interest, and a larger proportion will be principal, than for the first monthly payment

3) The total dollar amount of principal being paid off each month gets smaller as the loan approaches maturity.

4) The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 10%

5) Exactly 10% of the first monthly payment represents interest

7. A $150,000 loan is to be amortized over 7 years, with annual end-of-year payments. Which of these statements is CORRECT?

1) The annual payments would be larger if the interest rate were lower.

2) If the loan were amortized over 10 years rather than 7 years, and if the interest rate were the same in either case, the first payment would include more dollars of interest under the 7-year amortization plan.

3) The proportion of each payment that represents interest as opposed to repayment of principal would be higher if the interest rate were lower.

4) The proportion of each payment that represents interest versus repayment of principal would be higher if the interest rate were higher.

5) The proportion of interest versus principal repayment would be the same for each of the 7 payments.

8. Which of the following statements is CORRECT?

1) A time line is not meaningful unless all cash flows occur annually.

2) Time lines are not useful for visualizing complex problems prior to doing actual calculations.

3) Time lines cannot be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly.

4) Time lines can only be constructed for annuities where the payments occur at the end of the periods, i.e., for ordinary annuities.

5) Time lines can be constructed where some of the payments constitute an annuity but others are unequal and thus are not part of the annuity.

9. Which of the following investments would have the highest future value at the end of 10 years? Assume that the effective annual rate for all investments is the same and is greater than zero.

1) Investment A pays $250 at the beginning of every year for the next 10 years (a total of 10 payments).

2) Investment B pays $125 at the end of every 6-month period for the next 10 years (a total of 20 payments).

3) Investment C pays $125 at the beginning of every 6-month period for the next 10 years (a total of 20 payments).

4) Investment D pays $2,500 at the end of 10 years (just one payment).

5) Investment E pays $250 at the end of every year for the next 10 years (a total of 10 payments).

10. Which of the following statements is CORRECT?

The present value of a 3-year, $150 annuity due will exceed the present value of a 3-year, $150 ordinary annuity.

If a loan has a nominal annual rate of 8%, then the effective rate can never be greater than 8%.

If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different.

The proportion of the payment that goes toward interest on a fully amortized loan increases over time.

An investment that has a nominal rate of 6% with semiannual payments will have an effective rate that is smaller than 6%

11. Which of the following statements regarding a 15-year (180-month) $125,000, fixed-rate mortgage is CORRECT? (Ignore taxes and transactions costs.)

1) The remaining balance after three years will be $125,000 less one third of the interest paid during the first three years.

2) Because the outstanding balance declines over time, the monthly payments will also decline over time.

3) Interest payments on the mortgage will increase steadily over time, but the total amount of each payment will remain constant.

4) The proportion of the monthly payment that goes towards repayment of principal will be lower 10 years from now than it will be the first year.

5) The outstanding balance declines at a faster rate in the later years of the loan's life

12. Which of the following bank accounts has the highest effective annual return?

1) An account that pays 8% nominal interest with monthly compounding

2) An account that pays 8% nominal interest with annual compounding.

3) An account that pays 7% nominal interest with daily (365-day) compounding

4) An account that pays 7% nominal interest with monthly compounding

5) An account that pays 8% nominal interest with daily (365-day) compounding

13. A U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest rate is 6%, semiannual compounding. Which of the following statements is CORRECT?

1) The periodic interest rate is greater than 3%.

2) The periodic rate is less than 3%.

3) The present value would be greater if the lump sum were discounted back for more periods.

4) The present value of the $1,000 would be smaller if interest were compounded monthly rather than semiannually.

5) The PV of the $1,000 lump sum has a higher present value than the PV of a 3-year, $333.33 ordinary annuity.

14. Which of the following statements is CORRECT?

1) If you have a series of cash flows, each of which is positive, you can solve for I, where the solution value of I causes the PV of the cash flows to equal the cash flow at Time 0.

2) If you have a series of cash flows, and CF0 is negative but each of the following CFs is positive, you can solve for I, but only if the sum of the undiscounted cash flows exceeds the cost.

3) To solve for I, one must identify the value of I that causes the PV of the positive CFs to equal the absolute value of the PV of the negative CFs. This is, essentially, a trial-and-error procedure that is easy with a computer or financial calculator but quite difficult otherwise.

4) If you solve for I and get a negative number, then you must have made a mistake.

5) If CF0 is positive and all the other CFs are negative, then you cannot solve for I.

15. You are considering two equally risky annuities, each of which pays $5,000 per year for 10 years. Investment ORD is an ordinary (or deferred) annuity, while Investment DUE is an annuity due. Which of the following statements is CORRECT?

1) The present value of ORD must exceed the present value of DUE, but the future value of ORD may be less than the future value of DUE.

2) The present value of DUE exceeds the present value of ORD, while the future value of DUE is less than the future value of ORD.

3) The present value of ORD exceeds the present value of DUE, and the future value of ORD also exceeds the future value of DUE.

4) The present value of DUE exceeds the present value of ORD, and the future value of DUE also exceeds the future value of ORD.

5) If the going rate of interest decreases from 10% to 0%, the difference between the present value of ORD and the present value of DUE would remain constant.

16. Amram Inc. can issue a 20-year bond with a 6% annual coupon. This bond is not convertible, is not callable, and has no sinking fund. Alternatively, Amram could issue a 20-year bond that is convertible into common equity, may be called, and has a sinking fund. Which of the following most accurately describes the coupon rate that Amram would have to pay on the convertible, callable bond?

1.

Exactly equal to 6%.

2.

It could be less than, equal to, or greater than 6%.

3.

Greater than 6%.

4.

Exactly equal to 8%.

5.

Less than 6%.

17. A Treasury bond has an 8% annual coupon and a 7.5% yield to maturity. Which of the following statements is CORRECT?

1 The bond has a current yield greater than 8 percent.

2 The bond sells at a price above par.

3. If the yield to maturity remains constant, the price of the bond is expected to fall over time.

4. Statements b and c are correct.

5 All of the statements above are correct.

18. Which of the following bonds has the greatest interest rate price risk?

1) A 10-year $100 annuity.

2) All 10-year bonds have the same price risk since they have the same maturity.

3) A 10-year, $1,000 face value, zero coupon bond.

4) A 10-year, $1,000 face value, 10% coupon bond with annual interest payments.

5) A 10-year, $1,000 face value, 10% coupon bond with semiannual interest payments

19. Which of the following statements is CORRECT?

A time line is not meaningful unless all cash flows occur annually.

Time lines are not useful for visualizing complex problems prior to doing actual calculations.

Time lines can be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly.

Time lines can only be constructed for annuities where the payments occur at the end of the periods, i.e., for ordinary annuities.

Time lines cannot be constructed where some of the payments constitute an annuity but others are unequal and thus are not part of the annuity.

20. Which of the following statements is CORRECT?

All else equal, senior debt generally has a lower yield to maturity than subordinated debt.

An indenture is a bond that is less risky than a mortgage bond.

The expected return on a corporate bond will generally exceed the bond's yield to maturity.

If a bond's coupon rate exceeds its yield to maturity, then its expected return to investors exceeds the yield to maturity.

Under our bankruptcy laws, any firm that is in financial distress will be forced to declare bankruptcy and then be liquidated.

21. A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is CORRECT?

1. The bond's yield to maturity is greater than its coupon rate.

2. If the yield to maturity stays constant until the bond matures, the bond's price will remain at $850.

3. The bond's current yield is equal to its coupon rate.

4. The bond's current yield exceeds its yield to maturity.

5. The bond's coupon rate exceeds its current yield.

22. Which of the following statements is CORRECT?

1) Sinking fund provisions never require companies to retire their debt; they only establish "targets" for the company to reduce its debt over time.

2) A sinking fund provision makes a bond more risky to investors at the time of issuance.

3) Sinking fund provisions sometimes turn out to adversely affect bondholders, and this is most likely to occur if interest rates decline after the bond was issued.

4) Most sinking funds require the issuer to provide funds to a trustee, who holds the money so that it will be available to pay off bondholders when the bonds mature.

5) If interest rates increase after a company has issued bonds with a sinking fund, the company will be less likely to buy bonds on the open market to meet its sinking fund obligation and more likely to call them in at the sinking fund call price.

23. Assume that all interest rates in the economy decline from 10% to 9%. Which of the following bonds would have the largest percentage increase in price?

1. A 10-year bond with a 10 percent coupon.

2. An 8-year bond with a 9 percent coupon.

3. A 10-year zero coupon bond.

4. A 1-year bond with a 15 percent coupon.

24. A 12-year bond has an annual coupon rate of 9%. The coupon rate will remain fixed until the bond matures. The bond has a yield to maturity of 7%. Which of the following statements is CORRECT?

1. The bond is currently selling at a price below its par value.

2. If market interest rates decline today, the price of the bond will also decline today.

3. If market interest rates remain unchanged, the bond's price one year from now will be lower than it is today.

4. All of the statements above are correct.

5. None of the statements above is correct.

25. A 10-year bond pays an annual coupon. The bond has a yield to maturity of 8 percent. The bond currently trades at a premium--its price is above the par value of $1,000. Which of the following statements is CORRECT?

1. If the yield to maturity remains at 8 percent, then the bond's price will decline over the next year.

2. The bond's current yield is less than 8 percent.

3. If the yield to maturity remains at 8 percent, then the bond's price will remain the same over the next year.

4. The bond's coupon rate is less than 8 percent.

5. If the yield to maturity increases, then the bond's price will increase.

26. Which of the following statements is CORRECT?

One advantage of a zero coupon Treasury bond is that no one who owns the bond has to pay any taxes on it until it matures or is sold.

Long-term bonds have less interest rate price risk but more reinvestment rate risk than short-term bonds.

If interest rates increase, all bond prices will increase, but the increase will be greater for bonds that have less interest rate risk.

Relative to a coupon-bearing bond with the same maturity, a zero coupon bond has more interest rate price risk but less reinvestment rate risk.

Long-term bonds have less interest rate price risk and also less reinvestment rate risk than short-term bonds.

27. Which of the following statements is CORRECT?

A zero coupon bond's current yield is equal to its yield to maturity.

If a bond's yield to maturity exceeds its coupon rate, the bond will sell at par.

All else equal, if a bond's yield to maturity increases, its price will fall.

If a bond's yield to maturity exceeds its coupon rate, the bond will sell at a premium over par.

All else equal, if a bond's yield to maturity increases, its current yield will fall.

28. A 10-year bond with a 9% annual coupon has a yield to maturity of 8%. Which of the following statements is CORRECT?

1. If the yield to maturity remains constant, the bond's price one year from now will be higher than its current price.

2. The bond is selling below its par value.

3. The bond is selling at a discount.

4. If the yield to maturity remains constant, the bond's price one year from now will be lower than its current price.

5. The bond's current yield is greater than 9%.

29. A 10-year corporate bond has an annual coupon of 9%. The bond is currently selling at par ($1,000). Which of the following statements is CORRECT?

a. The bond s expected capital gains yield is zero.

b. The bond s yield to maturity is above 9%.

c. The bond s current yield is above 9%.

d. If the bond s yield to maturity declines, the bond will sell at a discount.

e. The bond s current yield is less than its expected capital gains yield.

30. If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immediate increase in bond prices.

The total yield on a bond is derived from dividends plus changes in the price of the bond.

Bonds are riskier than common stocks and therefore have higher required returns.

Bonds issued by larger companies always have lower yields to maturity (less risk) than bonds issued by smaller companies.

The market value of a bond will always approach its par value as its maturity date approaches, provided the bond's required return remains constant.

 

LDR 531 Final Exam

Business / Economics

12/5/12

Asked: 12/5/12 2:07 PM
Opening Offer: $25.00
Due Date: 12/4/13

1) Which of the following is best defined as a consciously coordinated social unit, composed of two or more people, which functions on a relatively continuous basis to achieve a common goal or set of goals?

 

a. party

 

b. unit

 

c. team

 

d. community

 

e. organization

 

2) Over the past 2 decades, business schools have added required courses on organizational design to many of their curricula. Why have they done this?

 

a. Managers no longer need technical skills in subjects such as economics and accounting to succeed.

 

b. There is an increased emphasis in controlling employee behavior in the workplace.

 

c. Managers need to understand human behavior if they are to be effective.

 

d. These skills enable managers to effectively lead human resources departments.

 

e. A manager with good people skills can help create a pleasant workplace.

 

3) Robert Katz identified three essential skills that managers must have to reach their goals. What are these skills?

 

a. technical, decisional and interpersonal

 

b. technical, human, and conceptual

 

c. interpersonal, informational and decisional

 

d. conceptual, communication and networking

 

e. human, informational and communication

 

4) __________ is a field of study that investigates the effect that individuals, groups, and structures have on behavior within organizations for the purpose of applying such knowledge toward improving an organization's effectiveness.

 

Organizational developmentHuman Resources Managementc. Organizational behaviorPeople managementCorporate strategy

 

5) What do the fundamental consistencies underlying the behavior of all individuals enable researchers to do?

 

a. observe human behavior

 

b. systematize human behavior

 

c. research human behavior

 

d. predict human behavior

 

e. detect human behavior

 

6) Which of the following is a generic term that covers a broad range of feelings that people experience?

 

a. Affect emotionsmoodsemotional laborcognition

 

7) What term is used for intense feelings that are directed at someone or something?

 

affectcognitionmoodsthoughtse. emotions

 

8) If personality characteristics were completely dictated by __________, they would be fixed at

 

birth and no amount of experience could alter them.

 

job satisfactionb. heredityenvironmentsituationsreligion

 

9) Which of the following are classifications on the Myers-Briggs Type Indicator?

 

a. extroverted/introverted

 

b. sensing/intuitive

 

c. perceiving/judging

 

d. independent/dependent

 

e. thinking/feeling

 

10) Maria is dissatisfied with the way that her manager treats her. She has quit her job and found a new position with another firm. How has she expressed her dissatisfaction?

 

a. exit

 

b. voice

 

c. loyalty

 

d. neglect

 

e. social voice

 

11) You quietly continue to do your work when you know things will not improve. This is what type of response to dissatisfaction?

 

a. exit

 

b. voice

 

c. loyalty

 

d. neglect

 

e. social voice

 

12) A group

 

a. generates positive synergy through coordinated effort

 

b. generates greater outputs with no increase in inputs

 

c. is two or more individuals interacting and interdependent

 

d. engages in collective work that requires joint effort

 

13) __________ results in a level of performance that is greater than the sum of the individual input.

 

a. Synergy

 

b. Enthusiasm

 

c. Energy

 

d. Initiative

 

e. Inversion

 

14) What happens in the second stage of Tuckman's five stage model of group development?

 

a. Close relationships are developed.

 

b. The group demonstrates cohesiveness.

 

c. Intragroup conflict often occurs.

 

d. Groups disband.

 

15) Zach is devout and very active in his church. He is also a very dedicated employee. His manager offers him a promotion, but the new role will require him to work Sundays. Zach would like the promotion, but realizes that it would force him to miss some church activities. It is likely that Zach is experiencing which of the following:

 

a. role conflict

 

b. role expectation

 

c. role perception

 

d. psychological conflict

 

16) Which role focuses on bringing about order and consistency by drawing up formal plans?

 

leadershipb. managementtask structureinitiating structurenone of the above

 

17) Which statement regarding leadership is true?

 

All leaders are managers.Formal rights enable managers to lead effectively.All managers are leaders.All leaders are hierarchically superior to followers.e. Nonsanctioned leadership is as important as or more important than formal influence.

 

18) What are three situational criteria identified in the Fiedler model?

 

a. job requirements, position power, and leadership ability

 

b. charisma, influence, and leader-member relations

 

c. leader-member relations, task structure, and position power

 

d. task structure, leadership ability, and group conflict

 

e. emotional intelligence, group orientation, and employee status

 

19) The reconceptualization of the contingency model by Garcia and Fiedler is called _____ theory.

 

a. situational

 

b. cognitive resource

 

c. evaluative

 

d. leadership recognition

 

e. cognitive dissonance

 

20) Which path-goal leadership style leads to greater satisfaction when tasks are ambiguous or stressful?

 

a. directivesupportiveparticipativemixedreactive

 

21) According the Path-Goal Theory, what leader is friendly and shows concern for the needs of followers?

 

the achievement-oriented leaderthe directive leaderthe laissez-faire leaderthe participative leadere. the supportive leader

 

22) Phrases such as "more cultural diversity," "many new entrants with inadequate skills," and "increase in professionals" are all examples of what force for change?

 

a. technology

 

b. world politics

 

c. nature of the work force

 

d. social trends

 

23) What is a goal of planned change?

 

a. to change the forces of change

 

b. to alter the agents of change

 

c. to change employees' responsibilities

 

d. to improve the ability to adapt to the environment

 

e. to alter the employees' environment

 

24) Using covert influence to overcome resistance to change is called what?

 

a. negotiation

 

b. cooptation

 

c. education

 

d. coercion

 

e. manipulation

 

25) If individuals resisting change are included in making change decisions in an attempt to gain their support, what is this approach is called?

 

a. cooptation

 

b. exploitation

 

c. manipulation

 

d. coercion

 

e. education

 

26) Which of the following is a characteristic of organizational control?

 

a. Formality orientation

 

b. Decision orientation

 

c. Team orientation

 

d. Managerial orientation

 

27) What term describes the key characteristic of organizational control that addresses the degree to which employees are expected to exhibit precision?

 

a. accuracy orientation

 

b. accountability

 

c. attention to detail

 

d. stability

 

e. reactivity

 

28) Power is

 

a. a means for leaders to achieve goals

 

b. defined by leaders' hopes and aspirations

 

c. a goal in and of itself

 

d. not an influence on leaders' goals

 

29) Leaders achieve goals, and power is

 

a. defined by leaders' hopes and aspirations

 

b. usually used by poor leaders

 

c. a means of achieving goals

 

d. a goal in and of itself

 

e. a strong influence on leaders' goals

 

30) The most important aspect of power is probably that it _____.

 

a. is needed to get things done in an organization

 

b. is a function of dependency

 

c. tends to corrupt people

 

d. is counterproductive

 

e. involves control

FIN 370 Final Exam

Business / Economics

12/6/12

Asked: 12/6/12 9:34 AM
Opening Offer: $27.00
Due Date: 12/5/13

1) The goal of the firm should be

A. maximization of profits

B. maximization of shareholder wealth

C. maximization of consumer satisfaction

D. maximization of sales

2) An example of a primary market transaction is

A. a new issue of common stock by AT&T

B. a sale of some outstanding common stock of AT&T

C. AT&T repurchasing its own stock from a stockholder

D. one stockholder selling shares of common stock to another individual

3) According to the agency problem, _________ represent the principals of a corporation.

A. shareholders

B. managers

C. employees

D. suppliers

4) Which of the following is a principle of basic financial management?

A. Risk/return tradeoff

B. Derivatives

C. Stock warrants

D. Profit is king

5) Another name for the acid test ratio is the

A. current ratio

B. quick ratio

C. inventory turnover ratio

D. average collection period

6) The accounting rate of return on stockholders' investments is measured by

A. return on assets

B. return on equity

C. operating income return on investment

D. realized rate of inflation

7) If you are an investor, which of the following would you prefer?

A. Earnings on funds invested compound annually

B. Earnings on funds invested compound daily

C. Earnings on funds invested would compound monthly

D. Earnings on funds invested would compound quarterly

8) The primary purpose of a cash budget is to

A. determine the level of investment in current and fixed assets

B. determine accounts payable

C. provide a detailed plan of future cash flows

D. determine the estimated income tax for the year

9) Which of the following is a non-cash expense?

A. Depreciation expenses

B. Interest expense

C. Packaging costs

D. Administrative salaries

10) The break-even model enables the manager of a firm to

A. calculate the minimum price of common stock for certain situations

B. set appropriate equilibrium thresholds

C. determine the quantity of output that must be sold to cover all operating costs

D. determine the optimal amount of debt financing to use

11) A zero-coupon bond

A. pays no interest

B. pays interest at a rate less than the market rate

C. is a junk bond

D. is sold at a deep discount at less than the par value

12) If you have $20,000 in an account earning 8% annually, what constant amount could you withdraw each year and have nothing remaining at the end of 5 years?

A. $3,525.62

B. $5,008.76

C. $3,408.88

D. $2,465.78

13) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?

A. 6%

B. 5%

C. 7%

D. 8%

I = Interest
P = Principal
R = Rate
T= Time
 

I = P x R x T
So, R = I / (P x T)

R = $316.40 / ($400 x 10) = ($316.40 / $4,000) = 0.0791 ≈ 0.08 or 8%
 

14) The present value of a single future sum

A. increases as the number of discount periods increase

B. is generally larger than the future sum

C. depends upon the number of discount periods

D. increases as the discount rate increases

15) Which of the following is considered to be a spontaneous source of financing?

A. Operating leases

B. Accounts receivable

C. Inventory

D. Accounts payable

16) Compute the payback period for a project with the following cash flows, if the company's discount rate is 12%.

Initial outlay = $450

Cash flows:

Year 1 = $325

Year 2 = $65

Year 3 = $100

A. 3.43 years

B. 3.17 years

C. 2.88 years

D. 2.6 years

17) For the NPV criteria, a project is acceptable if the NPV is __________, while for the profitability index, a project is acceptable if the profitability index is __________.

A. less than zero, greater than the required return

B. greater than zero, greater than one

C. greater than one, greater than zero

D. greater than zero, less than one

18) Which of the following is considered to be a deficiency of the IRR?

A. It fails to properly rank capital projects.

B. It could produce more than one rate of return.

C. It fails to utilize the time value of money.

D. It is not useful in accounting for risk in capital budgeting.

19) The firm should accept independent projects if

A. the payback is less than the IRR

B. the profitability index is greater than 1.0

C. the IRR is positive

D. the NPV is greater than the discounted payback

20) The most expensive source of capital is

A. preferred stock

B. new common stock

C. debt

D. retained earnings

21) The cost associated with each additional dollar of financing for investment projects is

A. the incremental return

B. the marginal cost of capital

C. risk-free rate

D. beta

22) The XYZ Company is planning a $50 million expansion. The expansion is to be financed by selling $20 million in new debt and $30 million in new common stock. The before-tax required rate of return on debt is 9%, and the required rate of return on equity is 14%. If the company is in the 40% tax bracket, what is the marginal cost of capital?

A. 14.0%

B. 9.0%

C. 10.6%

D. 11.5%

23) Shawhan Supply plans to maintain its optimal capital structure of 30% debt, 20% preferred stock, and 50% common stock far into the future. The required return on each component is: debt–10%; preferred stock–11%; and common stock–18%. Assuming a 40% marginal tax rate, what after-tax rate of return must Shawhan Supply earn on its investments if the value of the firm is to remain unchanged?

A. 18.0%

B. 13.0%

C. 10.0%

D. 14.2%

WACC

 

= 20% X 11 + 50% X 18 + 30% X 6

 

= 2.2 + 9 + 1.8

 

= 13




24 ) Lever Brothers has a debt ratio (debt to assets) of 40%. Management is wondering if its current capital structure is too conservative. Lever Brothers' present EBIT is $3 million, and profits available to common shareholders are $1,560,000, with 342,857 shares of common stock outstanding. If the firm were to instead have a debt ratio of 60%, additional interest expense would cause profits available to stockholders to decline to $1,440,000, but only 228,571 common shares would be outstanding. What is the difference in EPS at a debt ratio of 60% versus 40%?

A. $1.75

B. $2.00

C. $3.25

D. $4.50

25) Zybeck Corp. projects operating income of $4 million next year. The firm's income tax rate is 40%. Zybeck presently has 750,000 shares of common stock which have a market value of $10 per share, no preferred stock, and no debt. The firm is considering two alternatives to finance a new product: (a) the issuance of $6 million of 10% bonds, or (b) the issuance of 60,000 new shares of common stock. If Zybeck issues common stock this year, what will be the projected EPS next year?

A. $4.94

B. $2.96

C. $5.33

D. $3.20

26) _________ risk is generally considered only a paper gain or loss.

A. Transaction

B. Translation

C. Economic

D. Financial

27) Capital markets in foreign countries

A. offer lower returns than those obtainable in the domestic capital markets

B. provide international diversification

C. in general are becoming less integrated due to the widespread availability of interest rate and currency swaps

D. have been getting smaller in the past decade

28) Buying and selling in more than one market to make a riskless profit is called

A. profit maximization

B. arbitrage

C. international trading

D. an efficient market

29) What keeps foreign exchange quotes in two different countries in line with each other?

A. Cross rates

B. Forward rates

C. Arbitrage

D. Spot rates

30) One reason for international investment is to reduce

A. portfolio risk

B. price-earnings (P/E) ratios

C. advantages in a foreign country

D. exchange rate risk

 

 

FIN 534 quiz 9 week 10

Business / Economics

1/20/13

Asked: 1/20/13 5:01 AM
Opening Offer: $15.00
Due Date: 1/19/13

1. Which of the following statement completions is CORRECT? If the yield curve is upward sloping, then the marketable securities held in a firm's portfolio, assumed to be held for emergencies, should

 

Answer

 

consist mainly of long-term securities because they pay higher rates.

 

consist mainly of short-term securities because they pay higher rates.

 

consist mainly of U.S. Treasury securities to minimize interest rate risk.

 

consist mainly of short-term securities to minimize interest rate risk.

 

be balanced between long- and short-term securities to minimize the adverse effects of either an upward or a downward trend in interest rates.

 

2 points

 

Question 2

 

A lockbox plan is most beneficial to firms that

 

have suppliers who operate in many different parts of the country.

 

have widely dispersed manufacturing facilities.

 

have a large marketable securities portfolio and cash to protect.

 

receive payments in the form of currency, such as fast food restaurants, rather than in the form of checks.

 

have customers who operate in many different parts of the country.

 

2 points

 

Question 3

 

Which of the following actions would be likely to shorten the cash conversion cycle?

 

Adopt a new manufacturing process that speeds up the conversion of raw materials to finished goods from 20 days to 10 days.

 

Change the credit terms offered to customers from 3/10 net 30 to 1/10 net 50.

 

Begin to take discounts on inventory purchases; we buy on terms of 2/10 net 30.

 

Adopt a new manufacturing process that saves some labor costs but slows down the conversion of raw materials to finished goods from 10 days to 20 days.

 

Change the credit terms offered to customers from 2/10 net 30 to 1/10 net 60.

 

2 points

 

Question 4

 

Which of the following statements is CORRECT?

 

Other things held constant, the higher a firm's days sales outstanding (DSO), the better its credit department.

 

If a firm that sells on terms of net 30 changes its policy to 2/10 net 30, and if no change in sales volume occurs, then the firm's DSO will probably increase.

 

If a firm sells on terms of 2/10 net 30, and its DSO is 30 days, then the firm probably has some past-due accounts.

 

If a firm sells on terms of net 60, and if its sales are highly seasonal, with a sharp peak in December, then its DSO as it is typically calculated (with sales per day = Sales for past 12 months/365) would probably be lower in January than in July.

 

If a firm changed the credit terms offered to its customers from 2/10 net 30 to 2/10 net 60, then its sales should increase, and this should lead to an increase in sales per day, and that should lead to a decrease in the DSO.

 

2 points

 

Question 5

 

Which of the following statements is NOT CORRECT?

 

A company may hold a relatively large amount of cash and marketable securities if it is uncertain about its volume of sales, profits, and cash flows during the coming year.

 

Credit policy has an impact on working capital because it influences both sales and the time before receivables are collected.

 

The cash budget is useful to help estimate future financing needs, especially the need for short-term working capital loans.

 

If a firm wants to generate more cash flow from operations in the next month or two, it could change its credit policy from 2/10 net 30 to net 60.

 

Managing working capital is important because it influences financing decisions and the firm's profitability.

 

2 points

 

Question 6

 

Which of the following statements is CORRECT?

 

Net working capital is defined as current assets minus the sum of payables and accruals, and any increase in the current ratio automatically indicates that net working capital has increased.

 

Although short-term interest rates have historically averaged less than long-term rates, the heavy use of short-term debt is considered to be an aggressive strategy because of the inherent risks associated with using short-term financing.

 

If a company follows a policy of "matching maturities," this means that it matches its use of common stock with its use of long-term debt as opposed to short-term debt.

 

Net working capital is defined as current assets minus the sum of payables and accruals, and any decrease in the current ratio automatically indicates that net working capital has decreased.

 

If a company follows a policy of "matching maturities," this means that it matches its use of short-term debt with its use of long-term debt.

 

2 points

 

Question 7

 

Other things held constant, which of the following will cause an increase in net working capital?

 

Cash is used to buy marketable securities.

 

A cash dividend is declared and paid.

 

Merchandise is sold at a profit, but the sale is on credit.

 

Long-term bonds are retired with the proceeds of a preferred stock issue.

 

Missing inventory is written off against retained earnings.

 

2 points

 

Question 8

 

Which of the following statements is CORRECT?

 

Accruals are an expensive but commonly used way to finance working capital.

 

A conservative financing policy is one where the firm finances part of its fixed assets with short-term capital and all of its net working capital with short-term funds.

 

If a company receives trade credit under terms of 2/10 net 30, this implies that the company has 10 days of free trade credit.

 

One cannot tell if a firm has a conservative, aggressive, or moderate current asset financing policy without an examination of its cash budget.

 

If a firm has a relatively aggressive current asset financing policy vis-à-vis other firms in its industry, then its current ratio will probably be relatively high.

 

2 points

 

Question 9

 

Which of the following statements is CORRECT?

 

Under normal conditions, a firm's expected ROE would probably be higher if it financed with short-term rather than with long-term debt, but using short-term debt would probably increase the firm's risk.

 

Conservative firms generally use no short-term debt and thus have zero current liabilities.

 

A short-term loan can usually be obtained more quickly than a long-term loan, but the cost of short-term debt is normally higher than that of long-term debt.

 

If a firm that can borrow from its bank at a 6% interest rate buys materials on terms of 2/10 net 30, and if it must pay by Day 30 or else be cut off, then we would expect to see zero accounts payable on its balance sheet.

 

If one of your firm's customers is "stretching" its accounts payable, this may be a nuisance but it will not have an adverse financial impact on your firm if the customer periodically pays off its entire balance.

 

2 points

 

Question 10

 

Which of the following statements is NOT CORRECT?

 

Commercial paper can be issued by virtually any firm so long as it is willing to pay the going interest rate.

 

Accruals are "free" in the sense that no explicit interest is paid on these funds.

 

A conservative approach to working capital management will result in most if not all permanent current operating assets being financed with long-term capital.

 

The risk to a firm that borrows with short-term credit is usually greater than if it borrowed using long-term debt. This added risk stems from the greater variability of interest costs on short-term debt and possible difficulties with rolling over short-term debt.

 

Bank loans generally carry a higher interest rate than commercial paper.

 

2 points

 

Question 11

 

Firms generally choose to finance temporary current operating assets with short-term debt because

 

Answer

 

matching the maturities of assets and liabilities reduces risk under some circumstances, and also because short-term debt is often less expensive than long-term capital.

 

short-term interest rates have traditionally been more stable than long-term interest rates.

 

a firm that borrows heavily on a long-term basis is more apt to be unable to repay the debt than a firm that borrows short term.

 

the yield curve is normally downward sloping.

 

short-term debt has a higher cost than equity capital.

 

2 points

 

Question 12

 

Which of the following statements is CORRECT?

 

Depreciation is included in the estimate of cash flows (Cash flow = Net income + Depreciation), hence depreciation is set forth on a separate line in the cash budget.

 

If cash inflows from collections occur in equal daily amounts but most payments must be made on the 10th of each month, then a regular monthly cash budget will be misleading. The problem can be corrected by using a daily cash budget.

 

Sound working capital policy is designed to maximize the time between cash expenditures on materials and the collection of cash on sales.

 

If a firm wants to generate more cash flow from operations in the next month or two, it could change its credit policy from 2/10 net 30 to net 60.

 

If a firm sells on terms of net 90, and if its sales are highly seasonal, with 80% of its sales in September, then its DSO as it is typically calculated (with sales per day = Sales for past 12 months/365) would probably be lower in October than in August.

 

2 points

 

Question 13

 

A lockbox plan is

 

used to protect cash, i.e., to keep it from being stolen.

 

used to identify inventory safety stocks.

 

used to slow down the collection of checks our firm writes.

 

used to speed up the collection of checks received.

 

used primarily by firms where currency is used frequently in transactions, such as fast food restaurants, and less frequently by firms that receive payments as checks.

 

2 points

 

Question 14

 

Which of the following statements is most consistent with efficient inventory management? The firm has a

 

below average inventory turnover ratio.

 

low incidence of production schedule disruptions.

 

below average total assets turnover ratio.

 

relatively high current ratio.

 

relatively low DSO.

 

2 points

 

Question 15

 

Other things held constant, which of the following would tend to reduce the cash conversion cycle?

 

Carry a constant amount of receivables as sales decline.

 

Place larger orders for raw materials to take advantage of price breaks.

 

Take all discounts that are offered.

 

Continue to take all discounts that are offered and pay on the net date.

 

Offer longer payment terms to customers.

 

FIN 534 quiz 10 week 11

Business / Economics

1/20/13

Asked: 1/20/13 5:56 AM
Opening Offer: $15.00
Due Date: 1/19/13

Question 1

2 out of 2 points

Suppose 6 months ago a Swiss investor bought a 6-month U.S. Treasury bill at a price of $9,708.74, with a maturity value of $10,000. The exchange rate at that time was 1.420 Swiss francs per dollar. Today, at maturity, the exchange rate is 1.324 Swiss francs per dollar. What is the annualized rate of return to the Swiss investor?

Question 2

2 out of 2 points

Suppose hockey skates sell in Canada for 105 Canadian dollars, and 1 Canadian dollar equals 0.71 U.S. dollars. If purchasing power parity (PPP) holds, what is the price of hockey skates in the United States?

Question 3

2 out of 2 points

A box of candy costs 28.80 Swiss francs in Switzerland and $20 in the United States. Assuming that purchasing power parity (PPP) holds, what is the current exchange rate?

Question 4

2 out of 2 points

Which of the following statements is NOT CORRECT?

Question 5

2 out of 2 points

Suppose a foreign investor who holds tax-exempt Eurobonds paying 9% is considering investing in an equivalent-risk domestic bond in a country with a 28% withholding tax on interest paid to foreigners. If 9% after-tax is the investor's required return, what before-tax rate would the domestic bond need to pay to provide the required after-tax return?

Question 6

2 out of 2 points

If the inflation rate in the United States is greater than the inflation rate in Britain, other things held constant, the British pound will

Question 7

2 out of 2 points

If one Swiss franc can purchase $0.71 U.S. dollars, how many Swiss francs can one U.S. dollar buy?

Question 8

2 out of 2 points

Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day) return. In the U.S., 90-day investments of similar risk have a 4% annualized return and a 1% quarterly (90-day) return. In the 90day forward market, 1 British pound equals $1.65. If interest rate holds, what parity is the spot exchange rate?

Question 9

2 out of 2 points

If one U.S. dollar buys 1.64 Canadian dollars, how many U.S. dollars can you purchase for one Canadian dollar?

Question 10 2 out of 2 points

Suppose one year ago, Hein Company had inventory in Britain valued at 240,000 pounds. The exchange rate for dollars to pounds was 1 = 2 U.S. dollars. This year the exchange rate is 1 = 1.82 U.S. dollars. The inventory in Britain is still valued at 240,000 pounds. What is the gain or loss in inventory value in U.S. dollars as a result of the change in exchange rates?

Question 11

2 out of 2 points

Suppose 144 yen could be purchased in the foreign exchange market for one U.S. dollar today. If the yen depreciates by 8.0% tomorrow, how many yen could one U.S. dollar buy tomorrow?

Question 12

2 out of 2 points

Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.41 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.64 euros. What is the cross-rate of Swiss francs to euros?

Question 13

2 out of 2 points

Suppose in the spot market 1 U.S. dollar equals 1.60 Canadian dollars. 6-month Canadian securities have an annualized return of 6% (and thus a 6-month periodic return of 3%). 6month U.S. securities have an annualized return of 6.5% and a periodic return of 3.25%. If interest rate parity holds, what is the U.S. dollar-Canadian dollar exchange rate in the 180-day forward market?

Question 14

2 out of 2 points

Suppose one British pound can purchase 1.82 U.S. dollars today in the foreign exchange market, and currency forecasters predict that the U.S. dollar will depreciate by 12.0% against the pound over the next 30 days. How many dollars will a pound buy in 30 days?

Question 15

2 out of 2 points

Suppose that currently, 1 British pound equals 1.62 U.S. dollars and 1 U.S. dollar equals 1.62 Swiss francs. What is the cross exchange rate between the pound and the franc?

 

FIN 534 quiz 5 Week 6

Business / Economics

2/4/13

Asked: 2/4/13 12:24 PM
Opening Offer: $22.90
Due Date: 2/3/13

.Question 1

Which of the following statements is CORRECT?

Answer

If the underlying stock does not pay a dividend, it does not make good economic sense to exercise a call option prior to its expiration date, even if this would yield an immediate profit.

 

Call options generally sell at a price greater than their exercise value, and the greater the exercise value, the higher the premium on the option is likely to be.

 

Call options generally sell at a price below their exercise value, and the greater the exercise value, the lower the premium on the option is likely to be.

 

Call options generally sell at a price below their exercise value, and the lower the exercise value, the lower the premium on the option is likely to be.

 

Because of the put-call parity relationship, under equilibrium conditions a put option on a stock must sell at exactly the same price as a call option on the stock.

 

2 points

Question 2

Call options on XYZ Corporation's common stock trade in the market. Which of the following statements is most correct, holding other things constant?

Answer

The price of these call options is likely to rise if XYZ's stock price rises.

The higher the strike price on XYZ's options, the higher the option's price will be.

Assuming the same strike price, an XYZ call option that expires in one month will sell at a higher price than one that expires in three months.

If XYZ's stock price stabilizes (becomes less volatile), then the price of its options will increase.

If XYZ pays a dividend, then its option holders will not receive a cash payment, but the strike price of the option will be reduced by the amount of the dividend.

 

2 points

Question 3

Which of the following statements is CORRECT?

Answer

If the underlying stock does not pay a dividend, it does not make good economic sense to exercise a call option prior to its expiration date, even if this would yield an immediate profit.

Call options generally sell at a price greater than their exercise value, and the greater the exercise value, the higher the premium on the option is likely to be.

Call options generally sell at a price below their exercise value, and the greater the exercise value, the lower the premium on the option is likely to be.

Call options generally sell at a price below their exercise value, and the lower the exercise value, the lower the premium on the option is likely to be.

Because of the put-call parity relationship, under equilibrium conditions a put option on a stock must sell at exactly the same price as a call option on the stock.

 

2 points

Question 4

Which of the following statements is CORRECT?

Answer

An option's value is determined by its exercise value, which is the market price of the stock less its striking price. Thus, an option can't sell for more than its exercise value.

As the stock's price rises, the time value portion of an option on a stock increases because the difference between the price of the stock and the fixed strike price increases.

Issuing options provides companies with a low cost method of raising capital.

The market value of an option depends in part on the option's time to maturity and also on the variability of the underlying stock's price.

The potential loss on an option decreases as the option sells at higher and higher prices because the profit margin gets bigger.

 

2 points

 

Question 5

An option that gives the holder the right to sell a stock at a specified price at some future time is

Answer

a call option.

a put option.

an out-of-the-money option.

a naked option.

a covered option.

 

2 points

Question 6

Other things held constant, the value of an option depends on the stock's price, the risk-free rate, and the

Answer

Strike price.

Variability of the stock price.

Option's time to maturity.

All of the above.

None of the above.

 

2 points

Question 7

Suppose you believe that Delva Corporation's stock price is going to decline from its current level of $82.50 sometime during the next 5 months. For $510.25 you could buy a 5-month put option giving you the right to sell 100 shares at a price of $85 per share. If you bought this option for $510.25 and Delva's stock price actually dropped to $60, what would your pre-tax net profit be?

Answer

-$510.25

$1,989.75

$2,089.24

$2,193.70

$2,303.38

2 points

Question 8

Which of the following statements is CORRECT?

Answer

Put options give investors the right to buy a stock at a certain strike price before a specified date.

Call options give investors the right to sell a stock at a certain strike price before a specified date.

Options typically sell for less than their exercise value.

LEAPS are very short-term options that were created relatively recently and now trade in the market.

An option holder is not entitled to receive dividends unless he or she exercises their option before the stock goes ex dividend.

2 points

Question 9

Deeble Construction Co.'s stock is trading at $30 a share. Call options on the company's stock are also available, some with a strike price of $25 and some with a strike price of $35. Both options expire in three months. Which of the following best describes the value of these options?

Answer

The options with the $25 strike price will sell for $5.

The options with the $25 strike price will sell for less than the options with the $35 strike price.

The options with the $25 strike price have an exercise value greater than $5.

The options with the $35 strike price have an exercise value greater than $0.

If Deeble's stock price rose by $5, the exercise value of the options with the $25 strike price would also increase by $5.

2 points

Question 10

Warner Motors' stock is trading at $20 a share. Call options that expire in three months with a strike price of $20 sell for $1.50. Which of the following will occur if the stock price increases 10%, to $22 a share?

Answer

The price of the call option will increase by $2.

The price of the call option will increase by more than $2.

The price of the call option will increase by less than $2, and the percentage increase in price will be less than 10%.

The price of the call option will increase by less than $2, but the percentage increase in price will be more than 10%.

The price of the call option will increase by more than $2, but the percentage increase in price will be less than 10%.

2 points

Question 11

Which of the following statements is CORRECT?

Answer

If the underlying stock does not pay a dividend, it makes good economic sense to exercise a call option as soon as the stock's price exceeds the strike price by about 10%, because this permits the option holder to lock in an immediate profit.

Call options generally sell at a price less than their exercise value.

If a stock becomes riskier (more volatile), call options on the stock are likely to decline in value.

Call options generally sell at prices above their exercise value, but for an in-the-money option, the greater the exercise value in relation to the strike price, the lower the premium on the option is likely to be.

Because of the put-call parity relationship, under equilibrium conditions a put option on a stock must sell at exactly the same price as a call option on the stock.

2 points

Question 12

The current price of a stock is $22, and at the end of one year its price will be either $27 or $17. The annual risk-free rate is 6.0%, based on daily compounding. A 1-year call option on the stock, with an exercise price of $22, is available. Based on the binominal model, what is the option's value?

Answer

$2.43

$2.70

$2.99

$3.29

$3.62

2 points

Question 13

Suppose you believe that Johnson Company's stock price is going to increase from its current level of $22.50 sometime during the next 5 months. For $310.25 you can buy a 5-month call option giving you the right to buy 100 shares at a price of $25 per share. If you buy this option for $310.25 and Johnson's stock price actually rises to $45, what would your pre-tax net profit be?

Answer

-$310.25

$1,689.75

$1,774.24

$1,862.95

$1,956.10

2 points

Question 14

GCC Corporation is planning to issue options to its key employees, and it is now discussing the terms to be set on those options. Which of the following actions would decrease the value of the options, other things held constant?

Answer

GCC's stock price suddenly increases.

The exercise price of the option is increased.

The life of the option is increased, i.e., the time until it expires is lengthened.

The Federal Reserve takes actions that increase the risk-free rate.

GCC's stock price becomes more risky (higher variance).

2 points

Question 15

An investor who writes standard call options against stock held in his or her portfolio is said to be selling what type of options?

Answer

In-the-money

Put

Naked

Covered

Out-of-the-money

2 points

Question 16

Which of the following statements is CORRECT?

Answer

The bond-yield-plus-risk-premium approach to estimating the cost of common equity involves adding a risk premium to the interest rate on the company's own long-term bonds. The size of the risk premium for bonds with different ratings is published daily in The Wall Street Journal.

The WACC is calculated using a before-tax cost for debt that is equal to the interest rate that must be paid on new debt, along with the after-tax costs for common stock and for preferred stock if it is used.

An increase in the risk-free rate is likely

to reduce the marginal costs of both debt and equity.

The relevant WACC can change depending on the amount of funds a firm raises during a given year. Moreover, the WACC at each level of funds raised is a weighted average of the marginal costs of each capital component, with the weights based on the firm's target capital structure.

Beta measures market risk, which is generally

the most relevant risk measure for a publicly-owned firm that seeks to maximize its intrinsic value. However, this is not true unless all of the firm's stockholders are well diversified.

2 points

Question 17

Which of the following statements is CORRECT?

Answer

The WACC is calculated using before-tax

costs for all components.

The after-tax cost of debt usually exceeds

the after-tax cost of equity.

For a given firm, the after-tax cost of debt is always more expensive than the after-tax cost of non-convertible preferred stock.

Retained earnings that were generated in the past and are reported on the firm's balance sheet are available to finance the firm's capital budget during the coming year.

The WACC that should be used in capital budgeting is the firm's marginal, after-tax cost of capital.

2 points

Question 18

For a typical firm, which of the following sequences is CORRECT? All rates are after taxes, and assume that the firm operates

at its target capital structure.

Answer

rs> re > rd > WACC.

re> rs > WACC > rd.

WACC > re > rs> rd.

rd> re > rs > WACC.

WACC > rd > rs > re.

2 points

Question 19

Which of the following statements is CORRECT?

Answer

The WACC as used in capital budgeting is an estimate of a company's before-tax cost of capital.

The percentage flotation cost associated with issuing new common equity is typically smaller than the flotation cost for new debt.

The WACC as used in capital budgeting is an estimate of the cost of all the capital a company has raised to acquire its assets.

There is an "opportunity cost" associated with using retained earnings, hence they are not "free."

The WACC as used in capital budgeting would

be simply the after-tax cost of debt if the firm plans to use only debt to finance its capital budget during the coming year.

2 points

Question 20

The MacMillen Company has equal amounts of low-risk, average-risk, and high-risk projects. The firm's overall WACC is 12%. The CFO believes that this is the correct WACC for the company's average-risk projects, but that a lower rate should be used for lower-risk projects and a higher rate for higher-risk projects. The CEO disagrees, on the grounds that even though projects have different risks, the WACC used to evaluate each project should be the same because the company obtains capital for all projects from the same sources. If the CEO's position is accepted, what is likely to happen over time?

Answer

The company will take on too many high-risk projects and reject too many low-risk projects.

The company will take on too many low-risk projects and reject too many high-risk projects.

Things will generally even out over time, and, therefore, the firm's risk should remain constant over time.

The company's overall WACC should decrease

over time because its stock price should be increasing.

The CEO's recommendation would maximize the

firm's intrinsic value.

2 points

Question 21

Which of the following statements is CORRECT?

Answer

Since the costs of internal and external

equity are related, an increase in the flotation cost required to sell a new issue of stock will increase the cost of retained earnings.

Since its stockholders are not directly

responsible for paying a corporation's income taxes, corporations should focus on before-tax cash flows when calculating the WACC.

An increase in a firm's tax rate will increase the component cost of debt, provided the YTM on the firm's bonds is not affected by the change in the tax rate.

When the WACC is calculated, it should reflect the costs of new common stock, retained earnings, preferred stock, long-term debt, short-term bank loans if the firm normally finances with bank debt, and accounts payable if the firm normally has accounts payable on its balance sheet.

If a firm has been suffering accounting losses that are expected to continue into the foreseeable future, and therefore its tax rate is zero, then it is possible for the after-tax cost of preferred stock to be less than the after-tax cost of debt.

2 points

Question 22

Which of the following statements is CORRECT? Assume that the firm is a publicly-owned corporation and is seeking to maximize shareholder wealth.

Answer

If a firm has a beta that is less than 1.0, say 0.9, this would suggest that the expected returns on its assets are negatively

correlated with the returns on most other firms' assets.

If a firm's managers want to maximize the value of their firm's stock, they should, in theory, concentrate on project risk as measured by the standard deviation of the project's expected future cash flows.

If a firm evaluates all projects using the same cost

of capital, and the CAPM is used to help determine that cost, then its risk as measured by beta will probably decline over time.

Projects with above-average risk typically have higher

than average expected returns. Therefore, to maximize a firm's intrinsic value, its managers should favor high-beta projects over those with lower betas.

Project A has a standard deviation of expected returns

of 20%, while Project B's standard deviation is only 10%. A's returns are negatively correlated with both the firm's other assets and the returns on most stocks in the economy, while B's returns are positively correlated. Therefore, Project A is less risky to a firm and should be evaluated with a lower cost of capital.

2 points

Question 23

Which of the following statements is CORRECT?

Answer

A change in a company's target capital

structure cannot affect its WACC.

WACC calculations should be based on the before-tax costs of all the individual capital components.

Flotation costs associated with issuing new common stock normally reduce the WACC.

If a company's tax rate increases, then, all else equal, its weighted average cost of capital will decline.

An increase in the risk-free rate will normally lower the marginal costs of both debt and equity financing.

2 points

Question 24

Which of the following statements is CORRECT?

Answer

In the WACC calculation, we must adjust the cost of preferred stock (the market yield) to reflect the fact that 70% of the dividends received by corporate investors are excluded from their taxable income.

We should use historical measures of the component costs from prior financings that are still outstanding when estimating a company's WACC for capital budgeting purposes.

The cost of new equity (re) could possibly be lower than the cost of retained earnings (rs) if the market risk premium, risk-free rate, and the company's beta all decline by a sufficiently large amount.

A firm's cost of retained earnings is the rate of return stockholders require on a firm's common stock.

The component cost of preferred stock is expressed as rp(1 - T), because preferred stock dividends are treated as

fixed charges, similar to the treatment of interest on debt.

2 points

Question 25

Firm M's earnings and stock price tend to move up and down with other firms in the S&P 500, while Firm W's earnings and stock price move counter cyclically with M and other S&P companies. Both M and W estimate their costs of equity using the CAPM, they have identical market values, their standard deviations of returns are identical, and they both finance only with common equity. Which of the following statements is CORRECT?

Answer

M should have the lower WACC because it is like most other companies, and investors like that fact.

M and W should have identical WACCs because their risks as measured by the standard deviation of returns are identical.

If M and W merge, then the merged firm MW should have a WACC that is a simple average of M's and W's WACCs.

Without additional information, it is impossible to predict what the merged firm's WACC would be if M and W merged.

Since M and W move counter cyclically to one another, if they merged, the merged firm's WACC would be less than the simple average of the two firms' WACCs.

2 points

Question 26

Duval Inc. uses only equity capital, and it has two equally-sized divisions. Division A's cost of capital is 10.0%, Division B's cost is 14.0%, and the corporate (composite) WACC is 12.0%. All of Division A's projects are equally risky, as are all of Division B's projects. However, the projects of Division A are less risky than those of Division B. Which of the following projects should the firm accept?

Answer

A Division B project with a 13% return.

A Division B project with a 12% return.

A Division A project with an 11% return.

A Division A project with a 9% return.

A Division B project with an 11% return.

2 points

Question 27

Schalheim Sisters Inc. has always paid out all of its earnings as dividends; hence, the firm has no retained earnings. This same situation is expected to persist in the future. The company uses the CAPM to calculate its cost of equity, and its target capital structure consists of common stock, preferred stock, and debt. Which of the following events would REDUCE its WACC?

Answer

The market risk premium declines.

The flotation costs associated with issuing new common stock increase.

The company's beta increases.

Expected inflation increases.

The flotation costs associated with issuing preferred stock increase.

2 points

Question 28

Norris Enterprises, an all-equity firm, has a beta of 2.0. The chief financial officer is evaluating a project with an expected

return of 14%, before any risk adjustment. The risk-free rate is 5%, and the market risk premium is 4%. The project being evaluated is riskier than an average project, in terms of both its beta risk and its total risk. Which of the following statements is CORRECT?

Answer

The project should definitely be accepted because its expected return (before any risk adjustments) is greater than its required return.

The project should definitely be rejected because its expected return (before risk adjustment) is less than its required return.

Riskier-than-average projects should have their expected returns increased to reflect their higher risk. Clearly, this would make the project acceptable regardless of the amount of the adjustment.

The accept/reject decision depends on the firm's risk-adjustment policy. If Norris' policy is to increase the required return on a riskier-than-average project to 3% over rS, then it should reject the project.

Capital budgeting projects should be evaluated solely on the basis of their total risk. Thus, insufficient information has been provided to make the accept/reject decision.

2 points

Question 29

For a company whose target capital structure calls for 50% debt and 50% common equity, which of the following statements is CORRECT?

Answer

The interest rate used to calculate the WACC is the average after-tax cost of all the company's outstanding debt as shown on its balance sheet.

The WACC is calculated on a before-tax basis.

The WACC exceeds the cost of equity.

The cost of equity is always equal to or greater than the cost of debt.

The cost of retained earnings typically exceeds the cost of new common stock.

2 points

Question 30

Which of the following statements is CORRECT?

Answer

The discounted cash flow method of estimating the cost

of equity cannot be used unless the growth rate, g, is expected to be constant forever.

If the calculated beta underestimates the firm's true investment risk--i.e., if the forward-looking beta that investors think exists exceeds the historical beta--then the CAPM method based on the historical beta will produce an estimate of rs and thus WACC that is too high.

Beta measures market risk, which is, theoretically, the most relevant risk measure for a publicly-owned firm that seeks to maximize its intrinsic value. This is true even if not all of the firm's stockholders are well diversified.

An advantage shared by both the DCF and CAPM methods when they are used to estimate the cost of equity is that they

are both "objective" as opposed to "subjective," hence little or no judgment is required.

The specific risk premium used in the CAPM is the same as the risk premium used in the bond-yield-plus-risk-premium approach.

FIN 534 quiz 4 Week 5

Business / Economics

2/6/13

Asked: 2/6/13 1:09 PM
Opening Offer: $22.99
Due Date: 2/5/13

1) Which of the following statements is CORRECT?

Answer

a)A two-stock portfolio will always have a lower standard deviation than a one-stock portfolio.

b)A portfolio that consists of 40 stocks that are not highly correlated with "the market" will probably be less risky than a portfolio of 40 stocks that are highly correlated with the market, assuming the stocks all have the same standard deviations.

c)A two-stock portfolio will always have a lower beta than a one-stock portfolio.

d)If portfolios are formed by randomly selecting stocks, a 10-stock portfolio will always have a lower beta than a one-stock portfolio.

e)A stock with an above-average standard deviation must also have an above-average beta.

2 points

 

Question 2

 

Your portfolio consists of $50,000 invested in Stock X and $50,000 invested in Stock Y. Both stocks have an expected return of 15%, betas of 1.6, and standard deviations of 30%. The returns of the two stocks are independent, so the correlation coefficient between them, rXY, is zero. Which of the following statements best describes the characteristics of your 2-stock portfolio?

Answer

a)Your portfolio has a standard deviation of 30%, and its expected return is 15%.

b)Your portfolio has a standard deviation less than 30%, and its beta is greater than 1.6.

c)Your portfolio has a beta equal to 1.6, andits expected return is 15%.

d)Your portfolio has a beta greater than 1.6, and its expected return is greater than 15%.

e)Your portfolio has a standard deviation greater than 30% and a beta equal to 1.6.

 

Question 3

 

Assume that in recent years both expected inflation and the market risk premium (rM− rRF) have declined. Assume also that all stocks have positive betas. Which of the following would be most likely to have occurred as a result of these changes?

Answer

The required returns on all stocks have fallen, but the decline has been greater for stocks with lower betas.

The required returns on all stocks have fallen, but the fall has been greater for stocks with higher betas.

The average required return on the market, rM, has remained constant, but the required returns have fallen for stocks that have betas greater than 1.0.

Required returns have increased for stocks with betas greater than 1.0 but have declined for stocks with betas less than 1.0.

The required returns on all stocks have fallen by the same amount

 

Question 4

1. Which of the following statements is CORRECT?

Answer

The beta of a portfolio of stocks is always smaller than the betas of any of the individual stocks.

If you found a stock with a zero historical beta and held it as the only stock in your portfolio, you would by definition have a riskless portfolio.

The beta coefficient of a stock is normally found by regressing past returns on a stock against past market returns. One could also construct a scatter diagram of returns on the stock versus those on the market, estimate the slope of the line of best fit, and use it as beta. However, this historical beta may differ from the beta that exists in the future.

The beta of a portfolio of stocks is always larger than the betas of any of the individual stocks.

It is theoretically possible for a stock to have a beta of 1.0. If a stock did have a beta of 1.0, then, at least in theory, its required rate of return would be equal to the risk-free (default-free) rate of return, rRF.

2 points

 

Question 5

1. Which is the best measure of risk for a single asset held in isolation, and which is the best measure for an asset held in a diversified portfolio?

Answer

Variance; correlation coefficient.

Standard deviation; correlation coefficient.

Beta; variance.

Coefficient of variation; beta.

Beta; beta.

2 points

 

Question 6

1. Bob has a $50,000 stock portfolio with a beta of 1.2, an expected return of 10.8%, and a standard deviation of 25%. Becky also has a $50,000 portfolio, but it has a beta of 0.8, an expected return of 9.2%, and a standard deviation that is also 25%. The correlation coefficient, r, between Bob's and Becky's portfolios is zero. If Bob and Becky marry and combine their portfolios, which of the following best describes their combined $100,000 portfolio?

Answer

The combined portfolio's expected return will be less than the simple weighted average of the expected returns of the two individual portfolios, 10.0%.

The combined portfolio's beta will be equal to a simple weighted average of the betas of the two individual portfolios, 1.0; its expected return will be equal to a simple weighted average of the expected returns of the two individual portfolios, 10.0%; and its standard deviation will be less than the simple average of the two portfolios' standard deviations, 25%.

The combined portfolio's expected return will be greater than the simple weighted average of the expected returns of the two individual portfolios, 10.0%.

The combined portfolio's standard deviation will be greater than the simple average of the two portfolios' standard deviations, 25%.

The combined portfolio's standard deviation will be equal to a simple average of the two portfolios' standard deviations, 25%.

2 points

 

Question 7

1. Stock X has a beta of 0.5 and Stock Y has a beta of 1.5. Which of the following statements must be true, according to the CAPM?

Answer

If you invest $50,000 in Stock X and $50,000 in Stock Y, your 2-stock portfolio would have a beta significantly lower than 1.0, provided the returns on the two stocks are not perfectly correlated.

Stock Y's realized return during the coming year will be higher than Stock X's return.

If the expected rate of inflation increases but the market risk premium is unchanged, the required returns on the two stocks should increase by the same amount.

Stock Y's return has a higher standard deviation than Stock X.

If the market risk premium declines, but the risk-free rate is unchanged, Stock X will have a larger decline in its required return than will Stock Y.

 

Question 8

1. Which of the following statements is CORRECT?

Answer

A large portfolio of randomly selected stocks will always have a standard deviation of returns that is less than the standard deviation of a portfolio with fewer stocks, regardless of how the stocks in the smaller portfolio are selected.

Diversifiable risk can be reduced by forming a large portfolio, but normally even highly-diversified portfolios are subject to market (or systematic) risk.

A large portfolio of randomly selected stocks will have a standard deviation of returns that is greater than the standard deviation of a 1-stock portfolio if that one stock has a beta less than 1.0.

A large portfolio of stocks whose betas are greater than 1.0 will have less market risk than a single stock with a beta = 0.8.

If you add enough randomly selected stocks to a portfolio, you can completely eliminate all of the market risk from the portfolio.

2 points

 

Question 9

1. Stock A's beta is 1.5 and Stock B's beta is 0.5. Which of the following statements must be true about these securities? (Assume market equilibrium.)

Answer

When held in isolation, Stock A has more risk than Stock B.

Stock B must be a more desirable addition to a portfolio than A.

Stock A must be a more desirable addition to a portfolio than B.

The expected return on Stock A should be greater than that on B.

The expected return on Stock B should be greater than that on A.

2 points

 

Question 10

1. Which of the following statements is CORRECT?

Answer

A stock's beta is less relevant as a measure of risk to an investor with a well-diversified portfolio than to an investor who holds only that one stock.

If an investor buys enough stocks, he or she can, through diversification, eliminate all of the diversifiable risk inherent in owning stocks. Therefore, if a portfolio contained all publicly traded stocks, it would be essentially riskless.

The required return on a firm's common stock is, in theory, determined solely by its market risk. If the market risk is known, and if that risk is expected to remain constant, then no other information is required to specify the firm's required return.

Portfolio diversification reduces the variability of returns (as measured by the standard deviation) of each individual stock held in a portfolio.

A security's beta measures its non-diversifiable, or market, risk relative to that of an average stock.

2 points

 

Question 11

1. During the coming year, the market risk premium (rM − rRF), is expected to fall, while the risk-free rate, rRF, is expected to remain the same. Given this forecast, which of the following statements is CORRECT?

Answer

The required return will increase for stocks with a beta less than 1.0 and will decrease for stocks with a beta greater than 1.0.

The required return on all stocks will remain unchanged.

The required return will fall for all stocks, but it will fall more for stocks with higher betas.

The required return for all stocks will fall by the same amount.

The required return will fall for all stocks, but it will fall less for stocks with higher betas.

2 points

 

Question 12

1. Stock A has a beta of 0.8, Stock B has a beta of 1.0, and Stock C has a beta of 1.2. Portfolio P has equal amounts invested in each of the three stocks. Each of the stocks has a standard deviation of 25%. The returns on the three stocks are independent of one another (i.e., the correlation coefficients all equal zero). Assume that there is an increase in the market risk premium, but the risk-free rate remains unchanged. Which of the following statements is CORRECT?

Answer

The required return of all stocks will remain unchanged since there was no change in their betas.

The required return on Stock A will increase by less than the increase in the market risk premium, while the required return on Stock C will increase by more than the increase in the market risk premium.

The required return on the average stock will remain unchanged, but the returns of riskier stocks (such as Stock C) will increase while the returns of safer stocks (such as Stock A) will decrease.

The required returns on all three stocks will increase by the amount of the increase in the market risk premium.

The required return on the average stock will remain unchanged, but the returns on riskier stocks (such as Stock C) will decrease while the returns on safer stocks (such as Stock A) will increase.

Question 13

1. Inflation, recession, and high interest rates are economic events that are best characterized as being

Answer

systematic risk factors that can be diversified away.

company-specific risk factors that can be diversified away.

among the factors that are responsible for market risk.

risks that are beyond the control of investors and thus should not be considered by security analysts or portfolio managers.

irrelevant except to governmental authorities like the Federal Reserve.

2 points

 

Question 14

1. Which of the following statements is CORRECT?

Answer

If a company with a high beta merges with a low-beta company, the best estimate of the new merged company's beta is 1.0.

Logically, it is easier to estimate the betas associated with capital budgeting projects than the betas associated with stocks, especially if the projects are closely associated with research and development activities.

The beta of an "average stock," which is also "the market beta," can change over time, sometimes drastically.

If a newly issued stock does not have a past history that can be used for calculating beta, then we should always estimate that its beta will turn out to be 1.0. This is especially true if the company finances with more debt than the average firm.

During a period when a company is undergoing a change such as increasing its use of leverage or taking on riskier projects, the calculated historical beta may be drastically different from the beta that will exist in the future.

2 points

 

Question 15

1. Which of the following is NOT a potential problem when estimating and using betas, i.e., which statement is FALSE?

Answer

The fact that a security or project may not have a past history that can be used as the basis for calculating beta.

Sometimes, during a period when the company is undergoing a change such as toward more leverage or riskier assets, the calculated beta will be drastically different from the "true" or "expected future" beta.

The beta of an "average stock," or "the market," can change over time, sometimes drastically.

Sometimes the past data used to calculate beta do not reflect the likely risk of the firm for the future because conditions have changed.

All of the statements above are true.

2 points

 

Question 16

1. If a stock's dividend is expected

to grow at a constant rate of 5% a year, which of the following statements is CORRECT? The stock is in equilibrium.

Answer

The expected return on the stock is 5% a year.

The stock's dividend yield is 5%.

The price of the stock is expected to decline in the future.

The stock's required return must be equal to or less than 5%.

The stock's price one year from now is expected to be 5% above the current price.

2 points

 

Question 17

1. Which of the following statements is CORRECT, assuming stocks are in equilibrium?

Answer

The dividend yield on a constant growth stock must equal its expected total return minus its expected capital gains yield.

Assume that the required return on a given stock is 13%. If the stock's dividend is growing at a constant rate of 5%, its expected dividend yield is 5% as well.

A stock's dividend yield can never exceed its expected growth rate.

A required condition for one to use the constant growth model is that the stock's expected growth rate exceeds its required rate of return.

Other things held constant, the higher a company's beta coefficient, the lower its required rate of return.

 

Question 18

1. Stocks X and Y have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of

the following statements is CORRECT?

X Y

Price $30 $30

Expected growth (constant) 6% 4%

Required return 12% 10%

Answer

Stock X has a higher dividend yield than Stock Y.

Stock Y has a higher dividend yield than Stock X.

One year from now, Stock X's price is expected to be higher than Stock Y's price.

Stock X has the higher expected year-end dividend.

Stock Y has a higher capital gains yield.

2 points

 

Question 19

1. Companies can issue different classes of common stock. Which of the following statements concerning stock classes is CORRECT?

Answer

All common stocks fall into one of three classes: A, B, and C.

All common stocks, regardless of class, must have the same voting rights.

All firms have several classes of common stock.

All common stock, regardless of class, must pay the same dividend.

Some class or classes of common stock are entitled to more votes per share than other classes.

2 points

 

Question 20

1. The required returns of Stocks X and Y are rX = 10% and rY = 12%. Which of the following statements is CORRECT?

Answer

If the market is in equilibrium, and if Stock Y has the lower expected dividend yield, then it must have the higher expected growth rate.

If Stock Y and Stock X have the same dividend yield, then Stock Y must have a lower expected capital gains yield than Stock X.

If Stock X and Stock Y have the same current dividend and the same expected dividend growth rate, then Stock Y must sell for a higher price.

The stocks must sell for the same price.

Stock Y must have a higher dividend yield than Stock X.

2 points

 

Question 21

1. Which of the following statements is CORRECT?

Answer

The constant growth model is often appropriate for evaluating start-up companies that do not have a stable history of growth but are expected to reach stable growth within the next few years.

If a stock has a required rate of return rs = 12% and its dividend is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%.

The stock valuation model, P0 = D1/(rs - g), can be used to value firms whose dividends are expected to decline at a constant rate, i.e., to grow at a negative rate.

The price of a stock is the present value of all expected future dividends, discounted at the dividend growth rate.

The constant growth model cannot be used for a zero growth stock, where the dividend is expected to remain constant over time.

2 points

 

Question 22

1. Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT?

A B

Required return 10% 12%

Market price $25 $40

Expected growth 7% 9%

Answer

These two stocks should have the same price.

These two stocks must have the same dividend yield.

These two stocks should have the same expected return.

These two stocks must have the same expected capital gains yield.

These two stocks must have the same expected year-end dividend.

 

Question 23

1. The preemptive right is important to shareholders because it

Answer

allows managers to buy additional shares below the current market price.

will result in higher dividends per share.

is included in every corporate charter.

protects the current shareholders against a dilution of their ownership interests.

protects bondholders, and thus enables the firm to issue debt with a relatively low interest rate.

2 points

 

Question 24

1. Two constant growth stocks are in equilibrium, have the same price, and have the same required rate of return. Which of the following statements is CORRECT?

Answer

The two stocks must have the same dividend per share.

If one stock has a higher dividend yield, it must also have a lower dividend growth rate.

If one stock has a higher dividend yield, it must also have a higher dividend growth rate.

The two stocks must have the same dividend growth rate.

The two stocks must have the same dividend yield.

2 points

 

Question 25

1. The expected return on Natter Corporation's stock is 14%. The stock's dividend is expected to grow at a constant rate of 8%, and it currently sells for $50 a share. Which of the following statements is CORRECT?

Answer

The stock's dividend yield is 7%.

The stock's dividend yield is 8%.

The current dividend per share is $4.00.

The stock price is expected to be $54 a share one year from now.

The stock price is expected to be $57 a share one year from now.

2 points

 

Question 26

1. If in the opinion of a given investor a stock's expected return exceeds its required return, this suggests that the investor thinks

Answer

the stock is experiencing supernormal growth.

the stock should be sold.

the stock is a good buy.

management is probably not trying to maximize the price per share.

dividends are not likely to be declared.

2 points

 

Question 27

1. Stocks A and B have the following data. Assuming the stock market is efficient and the stocks are in equilibrium, which of the following statements is CORRECT?

A B

Price $ 25 $40

Expected growth 7% 9%

Expected return 10% 12%

Answer

The two stocks should have the same expected dividend.

The two stocks could not be in equilibrium with the numbers given in the question.

A's expected dividend is $0.50.

B's expected dividend is $0.75.

A's expected dividend is $0.75 and B's expected dividend is $1.20.

2 points

 

Question 28

1. Which of the following statements is CORRECT?

Answer

If a company has two classes of common stock, Class A and Class B, the stocks may pay different dividends, but under all state charters the two classes must have the same voting rights.

The preemptive right gives stockholders the right to approve or disapprove of a merger between their company and some other company.

The preemptive right is a provision in the corporate charter that gives common stockholders the right to purchase (on a pro rata basis) new issues of the firm's common stock.

The stock valuation model, P0= D1/(rs - g), cannot be used for firms that have negative growth rates.

The stock valuation model, P0= D1/(rs - g), can be used only for firms whose growth rates exceed their required returns.

Question 29

 

1. For a stock to be in equilibrium, that is, for there to be no long-term pressure for its price to depart from its current level, then

Answer

the expected future return must be less than the most recent past realized return.

The past realized return must be equal to the expected return during the same period.

the required return must equal the realized return in all periods.

the expected return must be equal to both the required future return and the past realized return.

the expected future returns must be equal to the required return.

2 points

 

Question 30

1. If markets are in equilibrium, which of the following conditions will exist?

Answer

Each stock's expected return should equal its realized return as seen by the marginal investor.

Each stock's expected return should equal its required return as seen by the marginal investor.

All stocks should have the same expected return as seen by the marginal investor.

The expected and required returns on stocks and bonds should be equal.

All stocks should have the same realized return during the coming year.

 

FIN 534 quiz 6 week 7

Business / Economics

2/17/13

Asked: 2/17/13 8:22 AM
Opening Offer: $22.99
Due Date: 2/16/13

.Question 1

Which of the following statements is CORRECT?

Answer

One advantage of the NPV over the IRR is that NPV takes account of cash flows over a project's full life whereas IRR does not.

One advantage of the NPV over the IRR is that NPV assumes that cash flows will be reinvested at the WACC, whereas IRR assumes that cash flows are reinvested at the IRR. The NPV assumption is generally more appropriate.

One advantage of the NPV over the MIRR method is that NPV takes account of cash flows over a project's full life whereas MIRR does not.

One advantage of the NPV over the MIRR method is that NPV discounts cash flows whereas the MIRR is based on undiscounted cash flows.

Since cash flows under the IRR and MIRR are both discounted at the same rate (the WACC), these two methods always rank mutually exclusive projects in the same order.

2 points

Question 2

Westchester Corp. is considering two equally risky, mutually exclusive projects, both of which have normal cash flows. Project A has an IRR of 11%, while Project B's IRR is 14%. When the WACC is 8%, the projects have the same NPV. Given this information, which of the following statements is CORRECT?

Answer

If the WACC is 13%, Project A's NPV will be higher than Project B's.

f the WACC is 9%, Project A's NPV will be higher than Project B's.

If the WACC is 6%, Project B's NPV will be higher than Project A's.

If the WACC is greater than 14%, Project A's IRR will exceed Project B's.

If the WACC is 9%, Project B's NPV will be higher than Project A's.

Question 3

Four of the following statements are truly disadvantages of the regular payback method, but one is not a disadvantage of this method. Which one is NOT

a disadvantage of the payback method?

Answer

Lacks an objective, market-determined benchmark for making decisions.

Ignores cash flows beyond the payback period.

Does not directly account for the time value of money.

Does not provide any indication regarding a project's liquidity or risk.

Does not take account of differences in size among projects.

2 points

Question 4

Projects S and L are equally risky, mutually exclusive, and have normal cash flows. Project S has an IRR of 15%, while Project L's IRR is 12%. The two projects have the same NPV when the WACC is 7%. Which of the following statements is CORRECT?

Answer

If the WACC is 10%, both projects will have positive NPVs.

If the WACC is 6%, Project S will have the higher NPV.

If the WACC is 13%, Project S will have the lower NPV.

If the WACC is 10%, both projects will have a negative NPV.

Project S's NPV is more sensitive to changes in WACC than Project L's.

Question 5

Assume that the economy is enjoying a strong boom, and as a result interest rates and money costs generally are relatively high. The WACC for two mutually exclusive projects that are being considered is 12%. Project S has an IRR of 20% while Project L's IRR is 15%. The projects have the same NPV at the 12% current WACC. However, you believe that the economy will soon fall into a mild recession, and money costs and thus your WACC will soon decline. You also think that the projects will not be funded until the WACC has decreased, and their cash flows will not be affected by the change in economic conditions. Under these conditions, which of the following statements is CORRECT?

Answer

You should reject both projects because they will both have negative NPVs under the new conditions.

You should delay a decision until you have more information on the projects, even if this means that a competitor might come in and capture this market.

You should recommend Project L, because at the new WACC it will have the higher NPV.

You should recommend Project S, because at the new WACC it will have the higher NPV.

You should recommend Project L because it will have both a higher IRR and a higher NPV under the new conditions.

2 points

Question 6

Which of the following statements is CORRECT?

Answer

The MIRR and NPV decision criteria can never conflict.

The IRR method can never be subject to the multiple IRR problem, while the MIRR method can be.

One reason some people prefer the MIRR to the regular IRR is that the MIRR is based on a generally more reasonable reinvestment rate assumption.

The higher the WACC, the shorter the discounted payback period.

The MIRR method assumes that cash flows are reinvested at the crossover rate.

Question 7

Which of the following statements is CORRECT?

Answer

The NPV, IRR, MIRR, and discounted payback (using a payback requirement of 3 years or less) methods always lead to the same accept/reject decisions for independent projects.

For mutually exclusive projects with normal cash flows, the NPV and MIRR methods can never conflict, but their results could conflict with the discounted payback and the regular IRR methods.

Multiple IRRs can exist, but not multiple MIRRs. This is one reason some people favor the MIRR over the regular IRR.

If a firm uses the discounted payback method with a required payback of 4 years, then it will accept more projects than if it used a regular payback of 4 years.

The percentage difference between the MIRR and the IRR is equal to the project's WACC.

2 points

Question 8

Which of the following statements is CORRECT?

Answer

The shorter a project's payback period, the less desirable the project is normally considered to be by this criterion.

One drawback of the regular payback is that this method does not take account of cash flows beyond the payback period.

If a project's payback is positive, then the project should be accepted because it must have a positive NPV.

The regular payback ignores cash flows beyond the payback period, but the discounted payback method overcomes this problem.

One drawback of the discounted payback is that this method does not consider the time value of money, while the regular payback overcomes this drawback.

Question 9

Which of the following statements is CORRECT?

Answer

The IRR method appeals to some managers because it gives an estimate of the rate of return on projects rather than a dollar amount, which the NPV method provides.

The discounted payback method eliminates all of the problems associated with the payback method.

When evaluating independent projects, the NPV and IRR methods often yield conflicting results regarding a project's acceptability.

To find the MIRR, we discount the TV at the IRR.

A project's NPV profile must intersect the X-axis at the project's WACC.

2 points

Question 10

Which of the following statements is CORRECT?

Answer

The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the IRR.

The NPV method assumes that cash flows will be reinvested at the risk-free rate, while the IRR method assumes reinvestment at the IRR.

The NPV method assumes that cash flows will be reinvested at the WACC, while the IRR method assumes reinvestment at the risk-free rate.

The NPV method does not consider all relevant cash flows, particularly cash flows beyond the payback period.

The IRR method does not consider all relevant cash flows, particularly cash flows beyond the payback period.

Question 11

Assume that the economy is in a mild recession, and as a result interest rates and money costs generally are relatively low. The WACC for two mutually exclusive projects that are being considered is 8%. Project S has an IRR of 20% while Project L's IRR is 15%. The projects have the same NPV at the 8% current WACC. However, you believe that the economy is about to recover, and money costs and thus your WACC will also increase. You also think that the projects will not be funded until the WACC has increased, and their cash flows will not be affected by the change in economic conditions. Under these conditions, which of the following statements is CORRECT?

Answer

You should reject both projects because they will both have negative NPVs under the new conditions.

You should delay a decision until you have more information on the projects, even if this means that a competitor might come in and capture this market.

You should recommend Project L, because at the new WACC it will have the higher NPV.

You should recommend Project S, because at the new WACC it will have the higher NPV.

You should recommend Project S because it has the higher IRR and will continue to have the higher IRR even at the new WACC.

2 points

Question 12

Which of the following statements is CORRECT?

Answer

One defect of the IRR method is that it does not take account of cash flows over a project's full life.

One defect of the IRR method is that it does not take account of the time value of money.

One defect of the IRR method is that it does not take account of the cost of capital.

One defect of the IRR method is that it values a dollar received today the same as a dollar that will not be received until sometime in the future.

One defect of the IRR method is that it assumes that the cash flows to be received from a project can be reinvested at the IRR itself, and that assumption is often not valid.

Question 13

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.

Answer

A project's NPV is generally found by compounding the cash inflows at the WACC to find the terminal value (TV), then discounting the TV at the IRR to find its PV.

The higher the WACC used to calculate the NPV, the lower the calculated NPV will be.

If a project's NPV is greater than zero, then its IRR must be less than the WACC.

If a project's NPV is greater than zero, then its IRR must be less than zero.

The NPVs of relatively risky projects should be found using relatively low WACCs.

2 points

Question 14

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.

Answer

The longer a project's payback period, the more desirable the project is normally considered to be by this criterion.

One drawback of the regular payback for evaluating projects is that this method does not properly account for the time value of money.

If a project's payback is positive, then the project should be rejected because it must have a negative NPV.

The regular payback ignores cash flows beyond the payback period, but the discounted payback method overcomes this problem.

If a company uses the same payback requirement to evaluate all projects, say it requires a payback of 4 years or less, then the company will tend to reject projects with relatively short lives and accept long-lived projects, and this will cause its risk to increase over time.

Question 15

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.

Answer

A project's regular IRR is found by compounding the cash inflows at the WACC to find the terminal value (TV), then discounting this TV at the WACC.

A project's regular IRR is found by discounting the cash inflows at the WACC to find the present value (PV), then compounding this PV to find the IRR.

If a project's IRR is greater than the WACC, then its NPV must be negative.

To find a project's IRR, we must solve for the discount rate that causes the PV of the inflows to equal the PV of the project's costs.

To find a project's IRR, we must find a discount rate that is equal to the WACC.

2 points

Question 16

Which of the following statements is CORRECT?

Answer

An externality is a situation where a project would have an adverse effect on some other part of the firm's overall operations. If the project would have a favorable effect on other operations, then this is not an externality.

An example of an externality is a situation where a bank opens a new office, and that new office causes deposits in the bank's other offices to increase.

The NPV method automatically deals correctly with externalities, even if the externalities are not specifically identified, but the IRR method does not. This is another reason to favor the NPV.

Both the NPV and IRR methods deal correctly with externalities, even if the externalities are not specifically identified. However, the payback method does not.

Identifying an externality can never lead to an increase in the calculated NPV.

Question 17

Which of the following statements is CORRECT?

Answer

A sunk cost is any cost that must be expended in order to complete a project and bring it into operation.

A sunk cost is any cost that was expended in the past but can be recovered if the firm decides not to go forward with the project.

A sunk cost is a cost that was incurred and expensed in the past and cannot be recovered if the firm decides not to go forward with the project.

Sunk costs were formerly hard to deal with but now that the NPV method is widely used, it is possible to simply include sunk costs in the cash flows and then calculate the PV of the project.

A good example of a sunk cost is a situation where Home Depot opens a new store, and that leads to a decline in sales of one of the firm's existing stores.

2 points

Question 18

Which of the following statements is CORRECT?

Answer

An example of a sunk cost is the cost associated with restoring the site of a strip mine once the ore has been depleted.

Sunk costs must be considered if the IRR method is used but not if the firm relies on the NPV method.

A good example of a sunk cost is a situation where a bank opens a new office, and that new office leads to a decline in deposits of the bank's other offices.

A good example of a sunk cost is money that a banking corporation spent last year to investigate the site for a new office, then expensed that cost for tax purposes, and now is deciding whether to go forward with the project.

If sunk costs are considered and reflected in a project's cash flows, then the project's calculated NPV will be higher than it otherwise would be.

Question 19

Which of the following statements is CORRECT?

Answer

In a capital budgeting analysis where part of the funds used to finance the project would be raised as debt, failure to include interest expense as a cost when determining the project's cash flows will lead to an upward

bias in the NPV.

In a capital budgeting analysis where part of the funds used to finance the project would be raised as debt, failure to include interest expense as a cost when determining the project's cash flows will lead to a downward

bias in the NPV.

The existence of any type of "externality" will reduce the calculated NPV versus the NPV that would exist without the externality.

If one of the assets to be used by a potential project is already owned by the firm, and if that asset could be sold or leased to another firm if the new project were not undertaken, then the net after-tax proceeds that could be obtained should be charged as a cost to the project under consideration.

If one of the assets to be used by a potential project is already owned by the firm but is not being used, then any costs associated with that asset is a sunk cost and should be ignored.

2 points

Question 20

Which of the following statements is CORRECT?

Answer

Sensitivity analysis is a good way to measure market risk because it explicitly takes into account diversification effects.

One advantage of sensitivity analysis relative to scenario analysis is that it explicitly takes into account the probability of specific effects occurring, whereas scenario analysis cannot account for probabilities.

Well-diversified stockholders do not need to consider market risk when determining required rates of return.

Market risk is important, but it does not have a direct effect on stock prices because it only affects beta.

Simulation analysis is a computerized version of scenario analysis where input variables are selected randomly on the basis of their probability distributions.

Question 21

Which of the following factors should be included in the cash flows used to estimate a project's NPV?

Answer

All costs associated with the project that have been incurred prior to the time the analysis is being conducted.

Interest on funds borrowed to help finance the project.

The end-of-project recovery of any working capital required to operate the project.

Cannibalization effects, but only if those effects increase the project's projected cash flows.

Expenditures to date on research and development related to the project, provided those costs have already been expensed for tax purposes.

2 points

Question 22

Which of the following should be considered when a company estimates the cash flows used to analyze a proposed project?

Answer

The new project is expected to reduce sales of one of the company's existing products by 5%.

Since the firm's director of capital budgeting spent some of her time last year to evaluate the new project, a portion of her salary for that year should be charged to the project's initial cost.

The company has spent and expensed $1 million on R&D associated with the new project.

The company spent and expensed $10 million on a marketing study before its current analysis regarding whether to accept or reject the project.

The firm would borrow all the money used to finance the new project, and the interest on this debt would be $1.5 million per year.

Question 23

The relative risk of a proposed project is best accounted for by which of the following procedures?

Answer

Adjusting the discount rate upward if the project is judged to have above-average risk.

Adjusting the discount rate downward if the project is judged to have above-average risk.

Reducing the NPV by 10% for risky projects.

Picking a risk factor equal to the average discount rate.

Ignoring risk because project risk cannot be measured accurately.

2 points

Question 24

Rowell Company spent $3 million two years ago to build a plant for a new product. It then decided not to go forward with the project, so the building is available for sale or for a new product. Rowell owns the building free and clear--there is no mortgage on it. Which of the following statements is CORRECT?

Answer

Since the building has been paid for, it can be used by another project with no additional cost. Therefore, it should not be reflected in the cash flows for any new project.

If the building could be sold, then the after-tax proceeds that would be generated by any such sale should be charged as a cost to any new project that would use it.

This is an example of an externality, because the very existence of the building affects the cash flows for any new project that Rowell might consider.

Since the building was built in the past, its cost is a sunk cost and thus need not be considered when new projects are being evaluated, even if it would be used by those new projects.

If there is a mortgage loan on the building, then the interest on that loan would have to be charged to any new project that used the building.

Question 25

Suppose Tapley Inc. uses a WACC of 8% for below-average risk projects, 10% for average-risk projects, and 12% for above-average risk projects. Which of the following independent projects should Tapley accept, assuming that the company uses the NPV method when choosing projects?

Answer

Project A, which has average risk and an IRR = 9%.

Project B, which has below-average risk and an IRR = 8.5%.

Project C, which has above-average risk and an IRR = 11%.

Without information about the projects' NPVs we cannot determine which project(s) should be accepted.

All of these projects should be accepted.

2 points

Question 26

Which one of the following would NOT result in incremental cash flows and thus should NOT be included in the capital budgeting analysis for a new product?

Answer

Using some of the firm's high-quality factory floor space that is currently unused to produce the proposed new product. This space could be used for other products if it is not used for the project under consideration.

Revenues from an existing product would be lost as a result of customers switching to the new product.

Shipping and installation costs associated with a machine that would be used to produce the new product.

The cost of a study relating to the market for the new product that was completed last year. The results of this research were positive, and they led to the tentative decision to go ahead with the new product. The cost of the research was incurred and expensed for tax purposes last year.

It is learned that land the company owns and would use for the new project, if it is accepted, could be sold to another firm.

Question 27

Which one of the following would NOT result in incremental cash flows and thus should NOT be included in the capital budgeting analysis for a new product?

Answer

A firm has a parcel of land that can be used for a new plant site or be sold, rented, or used for agricultural purposes.

A new product will generate new sales, but some of those new sales will be from customers who switch from one of the firm's current products.

A firm must obtain new equipment for the project, and $1 million is required for shipping and installing the new machinery.

A firm has spent $2 million on R&D associated with a new product. These costs have been expensed for tax purposes, and they cannot be recovered regardless of whether the new project is accepted or rejected.

A firm can produce a new product, and the existence of that product will stimulate sales of some of the firm's other products.

2 points

Question 28

A company is considering a new project. The CFO plans to calculate the project's NPV by estimating the relevant cash flows for each year of the project's life (i.e., the initial investment cost, the annual operating cash flows, and the terminal cash flow), then discounting those cash flows at the company's overall WACC. Which one of the following factors should the CFO be sure to INCLUDE in the cash flows when estimating the relevant cash flows?

Answer

All sunk costs that have been incurred relating to the project.

All interest expenses on debt used to help finance the project.

The investment in working capital required to operate the project, even if that investment will be recovered at the end of the project's life.

Sunk costs that have been incurred relating to the project, but only if those costs were incurred prior to the current year.

Effects of the project on other divisions of the firm, but only if those effects lower the project's own direct cash flows.

Question 29

When evaluating a new project, firms should include in the projected cash flows all of the following EXCEPT:

Answer

Changes in net working capital attributable to the project.

Previous expenditures associated with a market test to determine the feasibility of the project, provided those costs have been expensed for tax purposes.

The value of a building owned by the firm that will be used for this project.

A decline in the sales of an existing product, provided that decline is directly attributable to this project.

The salvage value of assets used for the project that will be recovered at the end of the project's life.

2 points

Question 30

Which of the following statements is CORRECT?

Answer

Using accelerated depreciation rather than straight line would normally have no effect on a project's total projected cash flows but it would affect the timing of the cash flows and thus the NPV.

Under current laws and regulations, corporations must use straight-line depreciation for all assets whose lives are 5 years or longer.

Corporations must use the same depreciation method (e.g., straight line or accelerated) for stockholder reporting and tax purposes.

Since depreciation is not a cash expense, it has no effect on cash flows and thus no effect on capital budgeting decisions.

Under accelerated depreciation, higher depreciation charges occur in the early years, and this reduces the early cash flows and thus lowers a project's projected NPV.

 

fontd�Tiy�3h2sans-serif; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: 23px; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px; background-position: initial initial; background-repeat: initial initial;">Since depreciation is not a cash expense, it has no effect on cash flows and thus no effect on capital budgeting decisions.

 

Under accelerated depreciation, higher depreciation charges occur in the early years, and this reduces the early cash flows and thus lowers a project's projected NPV.

FIN 534 quiz 7 week 8

Business / Economics

2/17/13

Asked: 2/17/13 8:42 AM
Opening Offer: $22.99
Due Date: 2/16/13

A company expects sales to increase during the coming year, and it is using the AFN equation to forecast the additional capital that it must raise. Which of the following conditions would cause the AFN to increase?

Answer

The company previously thought its fixed assets were being operated at full capacity, but now it learns that it actually has excess capacity.

The company increases its dividend payout ratio.

The company begins to pay employees monthly rather than weekly.

The company's profit margin increases.

The company decides to stop taking discounts on purchased materials.

Which of the following statements is CORRECT?

Answer

Once a firm has defined its purpose, scope, and objectives, it must develop a strategy or strategies for achieving its goals. The statement of corporate strategies sets forth detailed plans rather than broad approaches for achieving a firm's goals.

A firm's corporate purpose states the general philosophy of the business and provides managers with specific operational objectives.

Operating plans provide management with detailed implementation guidance, consistent with the corporate strategy, to help meet the corporate objectives. These operating plans can be developed for any time horizon, but many companies use a 5-year horizon.

A firm's mission statement defines its lines of business and geographic area of operations.

The corporate scope is a condensed version of the entire set of strategic plans.

Last year Wei Guan Inc. had $350 million of sales, and it had $270 million of fixed assets that were used at 65% of capacity. In millions, by how much could Wei Guan's sales increase before it is required to increase its fixed assets?

Answer

$170.09

$179.04

$188.46

$197.88

$207.78

Last year Godinho Corp. had $250 million of sales, and it had $75 million of fixed assets that were being operated at 80% of capacity. In millions, how large could sales have been if the company had operated at full capacity?

Answer

$312.5

$328.1

$344.5

$361.8

$379.8

The term "additional funds needed (AFN)" is generally defined as follows:

Answer

Funds that are obtained automatically from routine business transactions.

Funds that a firm must raise externally from non-spontaneous sources, i.e., by borrowing or by selling new stock to support operations.

The amount of assets required per dollar of sales.

The amount of internally generated cash in a given year minus the amount of cash needed to acquire the new assets needed to support growth.

A forecasting approach in which the forecasted percentage of sales for each balance sheet account is held constant.

Spontaneous funds are generally defined as follows:

Answer

Assets required per dollar of sales.

A forecasting approach in which the forecasted percentage of sales for each item is held constant.

Funds that a firm must raise externally through short-term or long-term borrowing and/or by selling new common or preferred stock.

Funds that arise out of normal business operations from its suppliers, employees, and the government, and they include immediate increases in accounts payable, accrued wages, and accrued taxes.

The amount of cash raised in a given year minus the amount of cash needed to finance the additional capital expenditures and working capital needed to support the firm's growth.

Which of the following statements is CORRECT?

Answer

Any forecast of financial requirements involves determining how much money the firm will need, and this need is determined by adding together increases in assets and spontaneous liabilities and then subtracting operating income.

The AFN equation for forecasting funds requirements requires only a forecast of the firm's balance sheet. Although a forecasted income statement may help clarify the results, income statement data are not essential because funds needed relate only to the balance sheet.

Dividends are paid with cash taken from the accumulated retained earnings account, hence dividend policy does not affect the AFN forecast.

A negative AFN indicates that retained earnings and spontaneous liabilities are far more than sufficient to finance the additional assets needed.

If the ratios of assets to sales and spontaneous liabilities to sales do not remain constant, then the AFN equation will provide more accurate forecasts than the forecasted financial statements method.

Jefferson City Computers has developed a forecasting model to estimate its AFN for the upcoming year. All else being equal, which of the following factors is most likely to lead to an increase of the additional funds needed (AFN)?

Answer

A sharp increase in its forecasted sales.

A switch to a just-in-time inventory system and outsourcing production.

The company reduces its dividend payout ratio.

The company switches its materials purchases to a supplier that sells on terms of 1/5, net 90, from a supplier whose terms are 3/15, net 35.

The company discovers that it has excess capacity in its fixed assets.

Which of the following is NOT a key element in strategic planning as it is described in the text?

Answer

The mission statement.

The statement of the corporation's scope.

The statement of cash flows.

The statement of corporate objectives.

The corporation's strategies.

Which of the following statements is CORRECT?

Answer

Since accounts payable and accrued liabilities must eventually be paid off, as these accounts increase, AFN as calculated by the AFN equation must also increase.

Suppose a firm is operating its fixed assets at below 100% of capacity, but it has no excess current assets. Based on the AFN equation, its AFN will be larger than if it had been operating with excess capacity in both fixed and current assets.

If a firm retains all of its earnings, then it cannot require any additional funds to support sales growth.

Additional funds needed (AFN) are typically raised using a combination of notes payable, long-term debt, and common stock. Such funds are non-spontaneous in the sense that they require explicit financing decisions to obtain them.

If a firm has a positive free cash flow, then it must have either a zero or a negative AFN.

Which of the following statements is CORRECT?

Answer

When we use the AFN equation, we assume that the ratios of assets and liabilities to sales (A0*/S0 and L0*/S0) vary from year to year in a stable, predictable manner.

When fixed assets are added in large, discrete units as a company grows, the assumption of constant ratios is more appropriate than if assets are relatively small and can be added in small increments as sales grow.

Firms whose fixed assets are "lumpy" frequently have excess capacity, and this should be accounted for in the financial forecasting process.

For a firm that uses lumpy assets, it is impossible to have small increases in sales without expanding fixed assets.

There are economies of scale in the use of many kinds of assets. When economies occur the ratios are likely to remain constant over time as the size of the firm increases. The Economic Ordering Quantity model for establishing inventory levels demonstrates this relationship.

Which of the following is NOT one of the steps taken in the financial planning process?

Answer

Forecast the funds that will be generated internally. If internal funds are insufficient to cover the required new investment, then identify sources from which the required external capital can be raised.

Monitor operations after implementing the plan to spot any deviations and then take corrective actions.

Determine the amount of capital that will be needed to support the plan.

Develop a set of forecasted financial statements under alternative versions of the operating plan in order to analyze the effects of different operating procedures on projected profits and financial ratios.

Consult with key competitors about the optimal set of prices to charge, i.e., the prices that will maximize profits for our firm and its competitors.

Last year Handorf-Zhu Inc. had $850 million of sales, and it had $425 million of fixed assets that were used at only 60% of capacity. What is the maximum sales growth rate the company could achieve before it had to increase its fixed assets?

Answer

54.30%

57.16%

60.17%

63.33%

66.67%

Which of the following assumptions is embodied in the AFN equation?

Answer

None of the firm's ratios will change.

Accounts payable and accruals are tied directly to sales.

Common stock and long-term debt are tied directly to sales.

Fixed assets, but not current assets, are tied directly to sales.

Last year's total assets were not optimal for last year's sales.

Which of the following statements is CORRECT?

Answer

The sustainable growth rate is the maximum achievable growth rate without the firm having to raise external funds. In other words, it is the growth rate at which the firm's AFN equals zero.

If a firm's assets are growing at a positive rate, but its retained earnings are not increasing, then it would be impossible for the firm's AFN to be negative.

If a firm increases its dividend payout ratio in anticipation of higher earnings, but sales and earnings actually decrease, then the firm's actual AFN must, mathematically, exceed the previously calculated AFN.

Higher sales usually require higher asset levels, and this leads to what we call AFN. However, the AFN will be zero if the firm chooses to retain all of its profits, i.e., to have a zero dividend payout ratio.

Dividend policy does not affect the requirement for external funds based on the AFN equation.

Which of the following statements is NOT CORRECT?

Answer

The corporate valuation model can be used both for companies that pay dividends and those that do not pay dividends.

The corporate valuation model discounts free cash flows by the required return on equity.

The corporate valuation model can be used to find the value of a division.

An important step in applying the corporate valuation model is forecasting the firm's pro forma financial statements.

Free cash flows are assumed to grow at a constant rate beyond a specified date in order to find the horizon, or terminal, value.

Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments).

Year: 1 2

Free cash flow: -$50 $100

Answer

$1,456

$1,529

$1,606

$1,686

$1,770

Akyol Corporation is undergoing a restructuring, and its free cash flows are expected to be unstable during the next few years. However, FCF is expected to be $50 million in Year 5, i.e., FCF at t = 5 equals $50 million, and the FCF growth rate is expected to be constant at 6% beyond that point. If the weighted average cost of capital is 12%, what is the horizon value (in millions) at t = 5?

Answer

$719

$757

$797

$839

$883

Based on the corporate valuation model, the value of a company's operations is $900 million. Its balance sheet shows $70 million in accounts receivable, $50 million in inventory, $30 million in short-term investments that are unrelated to operations, $20 million in accounts payable, $110 million in notes payable, $90 million in long-term debt, $20 million in preferred stock, $140 million in retained earnings, and $280 million in total common equity. If the company has 25 million shares of stock outstanding, what is the best estimate of the stock's price per share?

Answer

$23.00

$25.56

$28.40

$31.24

$34.36

Suppos