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FIN 200 Final Exam 4

Business / Economics

4/4/13

Asked: 4/4/13 8:35 AM
Opening Offer: $20.00
Due Date: 12/31/69

1) Corporate governance is the 

 2) Regarding risk levels, financial managers should 

 3) One of the major disadvantages of a sole proprietorship is 

 4) Which of the following would represent a use of funds and, indirectly, a reduction in cash balances? 

 5) Which of the following is an inflow of cash? 

 6) Which account represents the cumulative earnings of the firm since its formation, minus dividends paid? 

 7) A quick ratio that is much smaller than the current ratio reflects 

 8) For a given level of profitability as measured by profit margin, the firm's return on equity will 

 9) The most rigorous test of a firm's ability to pay its short-term obligations is its 

 10) Refer to the figure above. The firm's inventory turnover ratio is 

 11) Refer to the figure above. The firm's debt to asset ratio is 

 12) Refer to the figure above. Megaframe's current ratio is 

 13) The percent-of-sales method of financial forecasting 

 14) In order to estimate production requirements, we 

 15) In the percent-of-sales method, an increase in dividends 

 16) In developing the pro forma income statement we follow four important steps: 

 17) The pro forma income statement is important to the overall process of constructing pro forma statements because it allows us to determine a value for: 

 18) The difference between total receipts and total payments is referred to as 

 19) Financial leverage deals with: 

 20) The degree of operating leverage is computed as 

 21) When a firm employs no debt 

 22) If a firm has a price of $4.00, variable cost per unit of $2.50 and a breakeven point of 20,000 units, fixed costs are equal to: 

 23) In break-even analysis, the contribution margin is defined as 

 24) If TechCor has fixed costs of $80,000, variable costs of $1.20/unit, sales price/unit of $6, and depreciation expense of $25,000, what is their cash breakeven in units? 

 25) When the yield curve is upward sloping, generally a financial manager should: 

 26) Normally, permanent current assets should be financed by 

 27) During tight money periods 

 28) An aggressive working capital policy would have which of following characteristics? 

 29) Risk exposure due to heavy short-term borrowing can be compensated for by 

 30) An aggressive, risk-oriented firm will likely 

 31) The system whereby funds are moved between computer terminals without use of checks is 

 32) The difference between the amount of cash on the firm's books and the amount credited to it by the bank is 

 33) How would electronic funds transfer affect the use of "float"? 

 34) When developing a credit scoring report, many variables would be considered. Which of the following best represent the major factors Dun & Bradstreet would examine? 

 35) The most subjective and also significant segment of the 5 C's of credit for giving final approval is 

 36) The three primary policy variables to consider when extending credit include all of the following except 

 37) Large firms tend to be 

 38) Which of the following is not a true statement about commercial paper? 

 39) Commercial paper that is sold without going through a broker or dealer is known as 

 40) General Rent-All's officers arrange a $50,000 loan. The company is required to maintain a minimum checking account balance of 10% of the outstanding loan. This practice is called 

 41) Firms exposed to the risk of interest rate changes may reduce that risk by 

 42) From the banker's point of view, short-term bank credit is an excellent way of financing 

 43) As the interest rate increases, the present value of an amount to be received at the end of a fixed period 

 44) Increasing the number of periods will increase all of the following except 

 45) As the discount rate becomes higher and higher, the present value of inflows approaches 

 46) If you invest $8,000 at 12% interest, how much will you have in 7 years? 

 47) Ali Shah sets aside 2,000 each year for 5 years. He then withdraws the funds on an equal annual basis for the next 4 years. If Ali wishes to determine the amount of the annuity to be withdrawn each year, he should use the following two tables in this order: 

 48) Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn an 8% annual rate of return. How much money will his daughter have when she starts college?

FIN 200 Final Exam 3

Business / Economics

4/4/13

Asked: 4/4/13 8:32 AM
Opening Offer: $20.00
Due Date: 12/31/69

1) What is the primary goal of financial management?

A.        Minimizing risk of the firm

B.        Maximizing shareholder wealth

C.        Increased earnings

D.        Maximizing cash flow

 

2) Regarding risk levels, financial managers should

A.        evaluate investor's desire for risk

B.        focus primarily on market fluctuations

C.        pursue higher risk projects because they increase value

D.        avoid higher risk projects because they destroy value

 

3) Maximization of shareholder wealth is a concept in which

A.        optimally increasing the long-term value of the firm is emphasized.

B.        virtually all earnings are paid as dividends to common stockholders.

C.        increased earnings is of primary importance.

D.        profits are maximized on a quarterly basis.

 

4) An increase in investments in long-term securities will:

A.        decrease cash flow from financing activities.

B.        increase cash flow from financing activities.

C.        increase cash flow from investing activities.

D.        decrease cash flow from investing activities.

 

5) Which of the following is not a primary source of capital to the firm?

A.        bonds

B.        preferred stock

C.        assets

D.        common stock

 

6) The statement of cash flows does NOT include which of the following sections?

A.        cash flows from financing activities

B.        cash flows from investing activities

C.        cash flows from operating activities

D.        cash flows from sales activities

 

7) For a given level of profitability as measured by profit margin, the firm's return on equity will

A.        decrease as its current ratio increases.

B.        decrease as its times-interest-earned ratio decreases.

C.        increase as its debt-to-assets ratio decreases.

D.        increase as its debt-to assets ratio increases.

 

8) In examining the liquidity ratios, the primary emphasis is the firm's

A.        overall debt position.

B.        ability to earn an adequate return.

C.        ability to effectively employ its resources.

D.        ability to pay short-term obligations on time.

 

9) The most rigorous test of a firm's ability to pay its short-term obligations is its

A.        quick ratio.

B.        times-interest-earned ratio.

C.        current ratio.

D.        debt-to-assets ratio.

 

10) A firm has current assets of $75,000 and total assets of $375,000. The firm's sales are $900,000. The firm's fixed asset turnover is

A.        12.0x

B.        5.0x

C.        3.0x  

D.        2.4x

 

11)   Refer to the figure above. The firm's fixed asset turnover ratio is

A.        1.5x.

B.        0.1x.

C.        3.1x.

D.        2x.

 

12)   Refer to the figure above. The firm's inventory turnover ratio is

A.        8x.

B.        0.1x.

C.        10x.  

D.        2.7x.

 

13) In order to estimate production requirements, we

A.        add projected sales in units to desired ending inventory and subtract beginning inventory.

B.        add beginning inventory to desired ending inventory and subtract projected sales in units.

C.        add beginning inventory to projected sales in units and subtract desired ending inventory.

D.        add beginning inventory to desired ending inventory and divide by two.

 

14) The percent-of-sales method of financial forecasting

A.        requires more time than a cash budget approach.

B.        provides a month-to-month breakdown of data.

C.        is more detailed than a cash budget approach.

D.        assumes that balance sheet accounts maintain a constant relationship to sales.

 

15) In general, the larger the portion of a firm's sales that are on credit, the

A.        higher will be the firm's need to borrow.

B.        more the firm can buy raw materials on credit.

C.        lower will be the firm's need to borrow.

D.        more rapidly credit sales will be paid off.

 

16) A firm utilizing LIFO inventory accounting would, in calculating gross profits, assume that

A.        all sales were from beginning inventory.

B.        all sales were for cash.

C.        all sales were from current production.

D.        sales were from current production until current production was depleted, and then use sales from beginning inventory.

 

17) In developing the pro forma income statement we follow four important steps:

a)       compute other expenses,

b)       determine a production schedule,

c)       establish a sales projection,

d)       determine profit by completing the actual pro forma statement.

 

What is the correct order for these four steps?

A.        3,2,4,1

B.        3,2,1,4

C.        1,2,3,4

D.        2,1,3,4

 

18) The difference between total receipts and total payments is referred to as

A.        cash balance.

B.        net cash flow.

C.        beginning cash flow.

D.        cumulative cash flow.

 

19) The degree of operating leverage is computed as

A.        percent change in operating income divided by percent change in volume.

B.        percent change in EPS divided by percent change in operating income.

C.        percent change in volume divided by percent change in operating profit.

D.        percent change in operating profit divided by percent change in net income.

 

20) Firms with a high degree of operating leverage are

A.        trading off higher fixed costs for lower per-unit variable costs.

B.        significantly affected by changes in interest rates.

C.        usually trading off lower levels of risk for higher profits.

D.        easily capable of surviving large changes in sales volume

 

21) The concept of operating leverage involves the use of __________ to magnify returns at high levels of operation.

A.        semi-variable costs

B.        marginal costs

C.        variable costs

D.        fixed costs

 

22) The break-even point can be calculated as

A.        fixed cost divided by contribution margin.

B.        variable cost times contribution margin.

C.        total costs divided by contribution margin.

D.        variable costs divided by contribution margin.

 

23)   Refer to the figure above. This firm's break-even point is

A.        18,000 units

B.        7,142 units

C.        14,634 units

D.        4,800 units

 

24) A firm's break-even point will rise if

 A.        variable cost per unit rises

 B.        price per unit rises

 C.        contribution margins increase

 D.        fixed costs decrease

 

25) Normally, permanent current assets should be financed by

A.        internally generated funds.

B.        borrowed funds.

C.        short-term funds.

D.        long-term funds.

 

26) During tight money periods

A.        the relationship between short and long-term rates remains unchanged.

B.        short-term rates are equal to long-term rates.

C.        short-term rates are higher than long-term rates.

D.        long-term rates are higher than short-term rates.

 

27) A conservatively financed firm would

A.        use long-term financing for permanent current assets and fixed assets and a portion of the short-term fluctuating assets and use short-term financing for all other short-term assets

B.        use equity to finance fixed assets, long-term debt to finance permanent assets, and short-term debt to finance fluctuating current assets.

C.        finance a portion of permanent assets and short-term assets with short-term debt.

D.        use long-term financing for all fixed assets and short-term financing for all other assets.

 

28) Which of the following combinations of asset structures and financing patterns is likely to create the most volatile earnings?

A.        Liquid assets and heavy short-term borrowing

B.        Liquid assets and heavy long-term borrowing

C.        Illiquid assets and heavy long-term borrowing

D.        Illiquid assets and heavy short-term borrowing

 

29) Which of the following combinations of asset structures and financing patterns is likely to create the least volatile earnings?

A.        Liquid assets and heavy short-term borrowing

B.        Liquid assets and heavy long-term borrowing

C.        Illiquid assets and heavy long-term borrowing

D.        Illiquid assets and heavy short-term borrowing

 

30) Which of the following is not a condition under which a prudent manager would accept some risk in financing?

A.        Easy access to capital markets

B.        Price of inventory is stable

C.        Inventory is highly perishable

D.        Predictable cash-flow patterns

 

31) How would electronic funds transfer affect the use of "float"?

A.        Have no effect on its use

B.        Virtually eliminate its use

C.        Decrease its use somewhat

D.        Increase its use somewhat

 

32) "Float" takes place because

A.        a customer writes "hot" checks.

B.        a lag exists between writing a check and clearing it through the banking system.

C.        the level of cash on the firm's books is equal to the level of cash in the bank.

D.        a firm is early in paying its bills.

 

33) In managing cash and marketable securities, what should be the manager's primary concern?

A.        Maximization of liquid assets

B.        Liquidity and safety

C.        Maximization of profit

D.        Acceptable return on investment

 

34) When developing a credit scoring report, many variables would be considered. Which of the following best represent the major factors Dun & Bradstreet would examine?

A.        The age of the company, the number of employees, the level of current assets.

B.        The company's cash balances, return on equity, and its average tax rates.

C.        The age of the management team, the dollar amount of sales, net profits, and long-term debt.

D.        The financial statements, satisfactory or slow payment experiences, negative public records (suits, liens, judgments, bankruptcies).

 

35) Variables important to credit scoring models include

A.        negative public records.

B.        all of these variables apply.

C.        age of company in years.

D.        facility ownership.

 

36) The three primary policy variables to consider when extending credit include all of the following except

A.        the level of inflation.

B.        collection policy.

C.        credit standards.

D.        the terms of trade.

 

37) Which of the following is not a method for lenders to control pledged inventory?

A.        Trust receipts

B.        Factoring

C.        Blanket inventory liens

D.        Warehousing

 

38) What is generally the largest source of short-term credit small firms?

A.        Commercial paper

B.        Trade credit

C.        Bank loans

D.        Installment loans

 

39) Commercial paper that is sold without going through a broker or dealer is known as

A.        dealer paper.

B.        term paper.

C.        direct paper.

D.        book-entry transactions.

 

40) General Rent-All's officers arrange a $50,000 loan. The company is required to maintain a minimum checking account balance of 10% of the outstanding loan. This practice is called

A.        a compensating balance.

B.        a balloon payment.

C.        an installment loan.

D.        a discounted loan.

 

41) Which method of controlling pledged inventory provides the greatest degree of security to the lender?

A.        Overall inventory liens

B.        Warehousing

C.        Blanket inventory liens

D.        Trust receipts

 

42) Firms exposed to the risk of interest rate changes may reduce that risk by

A.        hedging in the financial futures market.

B.        pledging or factoring accounts receivable.

C.        obtaining a Eurodollar loan.

D.        hedging in the commodities market.

 

43) As the discount rate becomes higher and higher, the present value of inflows approaches

A.        minus infinity

B.        need more information

C.        0

D.        plus infinity

 

44) Increasing the number of periods will increase all of the following except

A.        the present value of $1.

B.        the future value of an annuity.

C.        the present value of an annuity.

D.        the future value of $1.

 

45) In determining the future value of a single amount, one measures

A.        the present value of an amount discounted at a given interest rate.

B.        the present value of periodic payments at a given interest rate.

C.        the future value of periodic payments at a given interest rate.

D.        the future value of an amount allowed to grow at a given interest rate.

 

46) John Doeber borrowed $125,000 to buy a house. His loan cost was 11% and he promised to repay the loan in 15 equal annual payments. How much are the annual payments?

A.        $9,250

B.        $17,383

C.        $3,633

D.        $13,113

 

47) Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn an 8% annual rate of return. How much money will his daughter have when she starts college?

A.        $23,079

B.        $12,263

C.        $24,003

D.        $11,250

 

48) If you were to put $1,000 in the bank at 6% interest each year for the next ten years, which table would you use to find the ending balance in your account?

A.        Future value of an annuity of $1

B.        Future value of $1

C.        Present value of an annuity of $1

D.        Present value of $1

FIN 200 Final Exam 2

Business / Economics

4/4/13

Asked: 4/4/13 8:30 AM
Opening Offer: $20.00
Due Date: 12/31/69

1) Maximization of shareholder wealth is a concept in which

A.         profits are maximized on a quarterly basis.

B.         virtually all earnings are paid as dividends to common stockholders.

C.         increased earnings is of primary importance.

D.        optimally increasing the long-term value of the firm is emphasized.

 

 

2) Regarding risk levels, financial managers should

A.        evaluate investor's desire for risk

B.         pursue higher risk projects because they increase value

C.         focus primarily on market fluctuations

D.        avoid higher risk projects because they destroy value

 

3) One of the major disadvantages of a sole proprietorship is

A.         low operating costs.

B.         the simplicity of decision making.

C.         low organizational costs.

D.        that there is unlimited liability to the owner

 

4) The statement of cash flows does NOT include which of the following sections?

A.        cash flows from sales activities

B.         cash flows from investing activities

C.         cash flows from operating activities

D.        cash flows from financing activities

 

5) Which account represents the cumulative earnings of the firm since its formation, minus dividends paid?

A.         Common stock

B.         Accumulated depreciation

C.         Paid-in capital

D.        Retained earnings

 

 

6) Which of the following would represent a use of funds and, indirectly, a reduction in cash balances?

A.         the sale of new bonds by the firm

B.         a decrease in marketable securities

C.         an increase in accounts payable

D.        an increase in inventories

 

 

7) Which of the following is not considered to be a profitability ratio?

A.        times interest earned

B.         return on assets (investment)

C.         profit margin

D.        return on equity

 

 

8) If a firm has both interest expense and lease payments,

A. times interest earned will be the same as fixed charge coverage.

B. times interest earned will be greater than fixed charge coverage.

C. fixed charge coverage cannot be computed.

D. times interest earned will be smaller than fixed charge coverage.

 

9) In examining the liquidity ratios, the primary emphasis is the firm's

A.         overall debt position.

B.         ability to earn an adequate return.

C.         ability to effectively employ its resources.

D.        ability to pay short-term obligations on time.

 

 

10) A firm has current assets of $75,000 and total assets of $375,000. The firm's sales are $900,000. The firm's fixed asset turnover is

A.      5.0x

B.      3.0x

C.      12.0x

D.      2.4x

 

 

11) Refer to the figure above. Megaframe's current ratio is

A.         3.2:1

B.         1.625:1

C.         1.5:1

D.        1.9:1

 

 

12) TEW Company, Refer to the figure above. The firm's inventory turnover ratio is

A.        8x.

B.        0.1x.

C.        10x.  

D.        2.7x.

 

 

13) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced

A.         is lower.

B.         can be either higher or lower.

C.         is higher.

D.        is the same.

 

14) The percent-of-sales method of financial forecasting

A.         provides a month-to-month breakdown of data.

B.         requires more time than a cash budget approach.

C.         assumes that balance sheet accounts maintain a constant relationship to sales.

D.        is more detailed than a cash budget approach.

 

 

15) The need for an increase or decrease in short-term borrowing can be predicted by

 A.      an income statement.

 B.      a cash budget.

 C.      ratio analysis.

 D.      trend analysis.

 

16) A firm has beginning inventory of 300 units at a cost of $11 each. Production during the period was 650 units at $12 each. If sales were 700 units, what is the cost of goods sold (assume FIFO)?

  A.      $8,100

  B.      $7,700

  C.      $9,000

  D.      $8,000

 

17) The pro forma income statement is important to the overall process of constructing pro forma statements because it allows us to determine a value for:

A.         prepaid expenses.

B.         interest expense.

C.         change in retained earnings.

D.        gross profit.

 

18) A firm utilizing LIFO inventory accounting would, in calculating gross profits, assume that

A. all sales were from beginning inventory.

 B. sales were from current production until current production was depleted, and then use sales from beginning inventory.

 C. all sales were from current production.

 D. all sales were for cash.

 

19) When a firm employs no debt

A.        it will not be profitable.

B.         its operating leverage is equal to its financial leverage.

C.         it has a financial leverage of one.

D.        it has a financial leverage of zero.

 

 

20) The degree of operating leverage is computed as

A.        percent change in operating income divided by percent change in volume.

B.         percent change in EPS divided by percent change in operating income.

C.         percent change in operating profit divided by percent change in net income.

D.        percent change in volume divided by percent change in operating profit.

 

 

21) The concept of operating leverage involves the use of __________ to magnify returns at high levels of operation.

A.         variable costs

B.         marginal costs

C.         fixed costs

D.        semi-variable costs

 

22) In break-even analysis, the contribution margin is defined as

A.         price minus fixed cost.

B.         variable cost minus fixed cost.

C.         price minus variable cost.

D.        fixed cost minus variable cost.

 

23) Refer to the figure above. This firm's break-even point is

A. 7,142 units

B. 4,800 units

C. 18,000 units

D. 14,634 units

 

24) If TechCor has fixed costs of $80,000, variable costs of $1.20/unit, sales price/unit of $6, and depreciation expense of $25,000, what is their cash breakeven in units?

A.         45,833

B.         21,875

C.         9,167

D.        11,458

 

 

25) Kuznets Rental Center requires $1,000,000 in financing over the next two years. Kuznets can borrow long-term at 9 percent interest per year for two years. Alternatively, Kuznets can borrow short-term and pay 7 percent interest in the first year. Then, Kuznets projects paying 10 percent interest in the second year. Assuming Kuznets pays off the accrued interest at the end of each year, which of the following statements is true?

  A. Kuznets will definitely end up paying more under the long-term financing plan.

  B. Kuznets will definitely end up paying less under the long-term financing plan.

  C. Kuznets will probably pay more under the short-term financing plan.

  D. Kuznets will probably pay less under the short-term financing plan.

 

 

26) The theory of the term structure of interest rates which suggests that long-term rates are determined by the average of short-term rates expected over the time that a long-term bond is outstanding is the

A.         segmentation theory.

B.         liquidity premium theory.

C.         expectations hypothesis.

D.        market average rate theory.

 

 

27) Normally, permanent current assets should be financed by

A.         short-term funds.

B.         long-term funds.

C.         borrowed funds.

D.        internally generated funds.

 

 

28) Which of the following is not a condition under which a prudent manager would accept some risk in financing?

  A.      Easy access to capital markets

  B.      Price of inventory is stable

  C.      Inventory is highly perishable

  D.      Predictable cash-flow patterns

 

29) An aggressive working capital policy would have which of following characteristics?

A.         A short average collection period.

B.         A high ratio of short-term debt to long-term sources of funds.

C.         A high ratio of long-term debt to fixed assets.

D.        A low ratio of short-term debt to fixed assets.

 

 

30) Which of the following combinations of asset structures and financing patterns is likely to create the most volatile earnings?

A.         Illiquid assets and heavy long-term borrowing

B.         Illiquid assets and heavy short-term borrowing

C.         Liquid assets and heavy long-term borrowing

D.        Liquid assets and heavy short-term borrowing

 

31) The system whereby funds are moved between computer terminals without use of checks is

A.         magnetic character recognition.

B.         electronic funds transfer.

C.         float.

D.        a lock-box system.

 

 

32) The difference between the amount of cash on the firm's books and the amount credited to it by the bank is

A.        float.

B.         an overdraft.

C.         interest revenue.

D.        extended disbursement.

 

 

33) "Float" takes place because

A.         the level of cash on the firm's books is equal to the level of cash in the bank.

B.         a firm is early in paying its bills.

C.         a lag exists between writing a check and clearing it through the banking system.

D.        a customer writes "hot" checks.

 

 

 

34) Dun & Bradstreet is known for providing

A.        credit scoring reports that rank a company's payment habits relative to its peer group.

B.         interest rate information to cash managers.

C.         cash management systems to corporate treasurers.

D.        consumer credit reports to credit card companies.

 

 

35) The three primary policy variables to consider when extending credit include all of the following except

A.        the level of inflation.

B.         credit standards.

C.         the terms of trade.

D.        collection policy.

 

 

36) When developing a credit scoring report, many variables would be considered. Which of the following best represent the major factors Dun & Bradstreet would examine?

A.         The company's cash balances, return on equity, and its average tax rates.

B.         The age of the management team, the dollar amount of sales, net profits, and long-term debt.

C.         The age of the company, the number of employees, the level of current assets.

D.        The financial statements, satisfactory or slow payment experiences, negative public records (suits, liens, judgments, bankruptcies).

 

 

37) Which of the following is not a true statement about commercial paper?

A.         Industrial companies, utility firms or finance companies too small to sell direct paper sell dealer paper.

B.         Finance paper is sold directly to the lender by the finance company.

C.         Finance paper is also referred to as direct paper.

D.        Dealer paper is sold directly to the lender by a finance company.

 

38) Commercial paper that is sold without going through a broker or dealer is known as

A.         term paper.

B.         direct paper.

C.         dealer paper.

D.        book-entry transactions.

 

 

39) Which of the following is not a method for lenders to control pledged inventory?

A. Blanket inventory liens

B. Warehousing

C. Factoring

D. Trust receipts

 

 

40) From the banker's point of view, short-term bank credit is an excellent way of financing

A.        seasonal bulges in inventory and receivables.

B.         fixed assets.

C.         repayment of long-term debt.

D.        permanent working capital needs.

 

 

41) Firms exposed to the risk of interest rate changes may reduce that risk by

A.        hedging in the financial futures market.

B.         pledging or factoring accounts receivable.

C.         hedging in the commodities market.

D.        obtaining a Eurodollar loan.

 

42) Trade credit may be used to finance a major part of the firm's working capital when

A.      the firm and the supplier both extend the same credit terms.

B.      the firm extends less liberal credit terms than the supplier.

C.      neither the firm nor the supplier extends credit.

D.      the firm extends more liberal credit terms than the supplier.

 

43) In determining the future value of a single amount, one measures

A.         the present value of an amount discounted at a given interest rate.

B.         the present value of periodic payments at a given interest rate.

C.         the future value of an amount allowed to grow at a given interest rate.

D.        the future value of periodic payments at a given interest rate.

 

 

44) As the discount rate becomes higher and higher, the present value of inflows approaches

A.         need more information

B.         0

C.         plus infinity

D.        minus infinity

 

45) As the compounding rate becomes lower and lower, the future value of inflows approaches

A. 0.

B. the present value of the inflows.

C. infinity.

D. Need more information.

 

46) Ali Shah sets aside 2,000 each year for 5 years. He then withdraws the funds on an equal annual basis for the next 4 years. If Ali wishes to determine the amount of the annuity to be withdrawn each year, he should use the following two tables in this order:

A.         future value of an annuity of $1; future value of a $1

B.         present value of an annuity of $1; future value of an annuity of $1

C.         future value of an annuity of $1; present value of a $1

D.        future value of an annuity of $1; present value of an annuity of $1

 

 

47) If you were to put $1,000 in the bank at 6% interest each year for the next ten years, which table would you use to find the ending balance in your account?

A.         Future value of $1

B.         Future value of an annuity of $1

C.         Present value of an annuity of $1

D.        Present value of $1

 

 

48) John Doeber borrowed $125,000 to buy a house. His loan cost was 11% and he promised to repay the loan in 15 equal annual payments. How much are the annual payments?

    A.      $13,113

    B.      $17,383

    C.      $9,250

    D.      $3,633

FIN 200 Final Exam 1

Business / Economics

4/4/13

Asked: 4/4/13 8:27 AM
Opening Offer: $20.00
Due Date: 12/30/13

1) Maximization of shareholder wealth is a concept in which 

 2) What is the primary goal of financial management? 

 3) One of the major disadvantages of a sole proprietorship is 

 4) The statement of cash flows does NOT include which of the following sections? 

 5) Which of the following is not a primary source of capital to the firm? 

 6) Which account represents the cumulative earnings of the firm since its formation, minus dividends paid? 

 7) The most rigorous test of a firm's ability to pay its short-term obligations is its 

 8) In examining the liquidity ratios, the primary emphasis is the firm's 

 9) Which of the following is not considered to be a profitability ratio? 

 View Full Image

 10) Refer to the figure above. The firm's inventory turnover ratio is 

 View Full Image

 11) Refer to the figure above. Megaframe's current ratio is 

 View Full Image

 12) Refer to the figure above. The firm's debt to asset ratio is 

 13) In general, the larger the portion of a firm's sales that are on credit, the 

 14) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced 

 15) In order to estimate production requirements, we 

 16) The key initial element in developing pro forma statements is 

 17) A firm has beginning inventory of 300 units at a cost of $11 each. Production during the period was 650 units at $12 each. If sales were 700 units, what is the cost of goods sold (assume FIFO)? 

 18) The difference between total receipts and total payments is referred to as 

 19) The concept of operating leverage involves the use of __________ to magnify returns at high levels of operation. 

 20) Financial leverage deals with: 

 21) When a firm employs no debt 

 22) A firm's break-even point will rise if 

 23) If a firm has a price of $4.00, variable cost per unit of $2.50 and a breakeven point of 20,000 units, fixed costs are equal to: 

 24) In break-even analysis, the contribution margin is defined as 

 26) The theory of the term structure of interest rates which suggests that long-term rates are determined by the average of short-term rates expected over the time that a long-term bond is outstanding is the 

 27) Normally, permanent current assets should be financed by 

 28) Risk exposure due to heavy short-term borrowing can be compensated for by 

 29) An aggressive working capital policy would have which of following characteristics? 

 30) Which of the following combinations of asset structures and financing patterns is likely to create the most volatile earnings? 

 31) "Float" takes place because 

 32) In managing cash and marketable securities, what should be the manager's primary concern? 

 33) How would electronic funds transfer affect the use of "float"? 

 34) Dun & Bradstreet is known for providing 

 35) The three primary policy variables to consider when extending credit include all of the following except 

 36) Variables important to credit scoring models include 

 37) What is generally the largest source of short-term credit small firms? 

 38) Commercial paper that is sold without going through a broker or dealer is known as 

 39) Which of the following is not a true statement about commercial paper? 

 42) Firms exposed to the risk of interest rate changes may reduce that risk by 

 43) As the interest rate increases, the present value of an amount to be received at the end of a fixed period 

 44) In determining the future value of a single amount, one measures 

 45) An annuity may be defined as 

 46) Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn an 8% annual rate of return. How much money will his daughter have when she starts college? 

 47) If you were to put $1,000 in the bank at 6% interest each year for the next ten years, which table would you use to find the ending balance in your account? 

 48) If you invest $8,000 at 12% interest, how much will you have in 7 years?

MGT350 Week 5 Team Thinking Critically..

Business / Economics

12/14/12

Asked: 12/14/12 6:29 PM
Opening Offer: $7.00
Due Date: 12/31/69

MGT350 Wk 5 Team Thinking Critically Simulation

MGT350 Wk 5 Decisions In Paradise Part 3

Business / Economics

12/14/12

Asked: 12/14/12 6:28 PM
Opening Offer: $7.00
Due Date: 12/31/69

MGT350 Wk 5 Decisions In Paradise Part 3

MGT350 Week 4 Team Problem formulation..

Business / Economics

12/14/12

Asked: 12/14/12 6:27 PM
Opening Offer: $7.00
Due Date: 12/31/69

MGT350 Wk 4 Team Problem formulation and Identification

MGT350 Wk 4 Decisions In Paradise Part 2

Business / Economics

12/14/12

Asked: 12/14/12 6:26 PM
Opening Offer: $7.00
Due Date: 12/31/69

MGT350 Wk 4 Decisions In Paradise Part 2

MGT350 Wk 3 Team Problem Formulation a..

Business / Economics

12/14/12

Asked: 12/14/12 6:25 PM
Opening Offer: $7.00
Due Date: 12/31/69

MGT350 Wk 3 Team Problem Formulation and Identification

MGT350 Wk 3 Decisions In Paradise Part 1

Business / Economics

12/14/12

Asked: 12/14/12 6:25 PM
Opening Offer: $7.00
Due Date: 12/31/69

MGT350 Wk 3 Decisions In Paradise Part 1

MGT350 Wk 2 Team Thinking Decision Mak..

Business / Economics

12/14/12

Asked: 12/14/12 6:24 PM
Opening Offer: $7.00
Due Date: 12/31/69

MGT350 Wk 2 Team Thinking Decision Making Paper

MGT350 Week 1 Critical Thinking Paper A+

Business / Economics

12/14/12

Asked: 12/14/12 6:23 PM
Opening Offer: $7.00
Due Date: 12/31/69

MGT350 Wk 1 Critical Thinking Paper

BUS 475 Final Exam 8

Business / Economics

11/8/12

Asked: 11/8/12 4:43 PM
Opening Offer: $30.00
Due Date: 12/31/69

1) The first step in activity-based costing is to __________.

2) 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?

3) Balance sheet accounts are considered to be __________.

4) In what situations will a static budget be most effective in evaluating a manager's effectiveness?

5) Sam's Used Cars uses the specific identification method of costing inventory. During March, Sam purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for $9,000 each. Sam determines that at March 31, the $9,750 car is still on hand. What is Sam’s gross profit for March?

6) The conceptual framework developed by the Financial Accounting Standards Board __________.

7) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals:

 Income Statement  Balance Sheet

Dr.                  Cr.        Dr.                 Cr.

Totals               $58,000 $48,000       $34,000           $44,000

The net income (or loss) for the period is __________.

8) Of the following companies, which one would not likely employ the specific identification method for inventory costing?

9) What is value chain management best defined as?

10) A well-designed activity-based costing system starts with __________.

11) Multinational corporations __________.

12) A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $240 and used FIFO costing, the gross profit for the period would be _____.

13) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.

14) The major reporting standard for management accounts is __________.

15: A tax on an imported good is called a __________.

16) In economics, the cost of something is __________.

17) Which of the following statements about GDP is correct?

18) The price of a good that prevails in a world market is called the

19) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.

20) One characteristic of an oligopoly market structure is:

21) When a firm sells a good or a service, the sale contributes to the nation’s income __________.

22) The model of short-run economic fluctuations focuses on the price level and __________.

23) The open-economy macroeconomic model examines the determination of __________.

24) In general, the longest lag for __________.

25) The political business cycle refers to __________.

26) The open-economy macroeconomic model includes __________.

27) In the open-economy macroeconomic model, other things the same, a decrease in the interest rate shifts __________.

28) An invisible barrier that makes it difficult for certain groups, such as minorities and women, to move beyond a certain level in the organizational hierarchy is referred to as the:

29) An organization that is managed aggressively and has growth and high profits as primary objectives may be considered a(n):

30) A series of quality standards developed by a committee working under the International Organization for Standardization to improve total quality in all businesses for the benefit of both producers and consumers is:

31) One of the most important contributors to total quality management has been the introduction of statistical tools to analyze the causes of product defects in an approach called:

32) __________ is the process of working with people and resources to accomplish organizational goals.

33) The Aquatic Center, Inc. periodically reviews the goals of the company. During the process, The Aquatic Center managers analyze their current strategies as compared to their competitors, determine goals that they will pursue and decide upon specific actions for each area of the company to take in pursuit of these goals. The Aquatic Center managers have been engaged in the management function of:

34) Managers will utilize __________ skills with increasing frequency as they rise within an organization.

35) Which of these represent skills that managers need?

36) Which of the following statements does NOT support Total Quality Management?

37) Which of these refers to the practices aimed at discovering and harnessing an organization's intellectual resources?

38) Which of these describes a vision, as it pertains to leadership?

39) The most dominant areas in the global economy include:

40) Which of the following best describes a mental image of a possible and desirable future state of the organization?

41) Teams that operate separately from the regular work structure and exist temporarily are known as:

42) From its 32 regions, the Federal Aviation Administration selects 5 regions, and then randomly audits 20 departing commercial flights in each region for compliance with legal fuel and weight requirements. This is __________.

43) Sampling error can be reduced by __________.

44) In a right-tail test, a statistician came up with a z test statistic of 1.469. What is the p-value?

45) A financial institution wishes to estimate the mean balances owed by its credit card customers. The population standard deviation is estimated to be $300. If a 98 percent confidence interval is used and an interval of ±$75 is desired, how many cardholders should be sampled?

46) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18.

For this sample, the standard deviation is approximately _____.

47) William used a sample of 68 U.S. cities to estimate the relationship between Crime (annual property crimes per 100,000 persons) and Income (median income per capita). His estimated regression equation was + .050 Income.

Assuming b1 is significant, if Income decreases by 1000 we would predict that Crime will __________.

48) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:

49) Companies using lean systems generally have:

50) Likely reasons for inaccurate control limits would include which of the following?

51) You are faced with a linear programming objective function of:

Max P = $20X + $30Y and constraints of:

 3X + (Constraint A)

 5X – (Constraint B)

You discover that the shadow price for Constraint A is 7.5 and the shadow price for Constraint B is 0. Which of these statements is TRUE?

52) A computer analysis reveals that the best-fitting trend model is e 0.987 t. The trend was fitted using year-end common stock prices for Melodic Kortholt Outlet for the last six years. The R2 is 0.8571.

If we fit a linear trend to data that are growing exponentially __________.

53) It is very difficult to manage data for which of the following reasons?

54) When customers access a Web site and make purchases, they generate __________.

55) When your purchases are swiped over the bar-code reader at the point-of-sale terminals at Wal-Mart, a _____ records the data.

56) Which of the following is NOT an advantage of the buy option for acquiring IS applications?

57) A set of programs that enable the hardware to process data is _____.

58) Which of the following statements about information systems is not correct?

59) Computer support is greatest for which of the following problems?

60) Competitive advantage for an organization manifests as all of the following except:

61) Geocoding is __________.

62) The management cockpit best exemplifies which type of system?

63) Given the following annual net cash flows, determine the IRR to the nearest whole percent of a project with an initial outlay of $1,520.

Year Net Cash Flow

1 $1,000

2 $1,500

3 $  500

64) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:

65) A stock with a beta greater than 1.0 has returns that are _____ volatile than the market, and a stock with a beta of less than 1.0 exhibits returns which are _____ volatile than those of the market portfolio.

66) At 8% compounded annually, how long will it take $750 to double?

67) Petrified Forest Skin Care, Inc. pays an annual perpetual dividend of $1.70 per share. If the stock is currently selling for $21.25 per share, what is the expected rate of return on this stock?

68) Bondholders have a priority claim on assets ahead of:

69) Exchange rate risk:

70) An increase in future value can be caused by an increase in the __________.

71) You hold a portfolio with the following securities:

Security Percent of Portfolio Beta Return

X Corporation 20% 1.35 14%

Y Corporation 35% .95 10%

Z Corporation 45% .75 8%

Compute the expected return and beta for the portfolio.

72) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?

73) What is the yield to maturity of a nine-year bond that pays a coupon rate of 20% per year, has a $1,000 par value, and is currently priced at $1,407? Round your answer to the nearest whole percent and assume annual coupon payments.

74) PepsiCo calculates unlevered betas for each peer group in order to:

75) Disadvantages of using current liabilities as opposed to long-term debt include:

76) When evaluating macro-marketing:

77) "Marketing strategy planning" means:

78) Marketing:

79) A firm's "marketing mix" decision areas would NOT include:

80) Regarding organizational buying, the people who have the power to select or approve the supplier--especially for larger purchases--are called:

81) The economists' view of buyers:

82) The difference between target marketing and mass marketing is that target marketing:

83) When doing "positioning," a marketing manager should:

84) The clustering techniques that can be used in segmenting:

85) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:

86) Good marketing strategy planners know that:

87) The basic objective of the U.S. market-directed economic system is to:

88) In a criminal proceeding, what is the difference between an indictment and an information?

89) Which of the following is true about the Sherman Act?

90) Which of the following is correct about litigating commercial disputes?

91) The tort of intentional interference with contractual relations requires the following except:

92) Which of the following is correct about interpretive rules?

93) If you are a creditor, your best protection in the event of the debtor’s bankruptcy (including protection from the debtor’s other creditors) is usually obtained if you had previously received:

94) A “closely held corporation” is a corporation that is owned by:

95) Which of the following terms is not required to be disclosed under the Truth-in-Lending Act?

96) If the value of the collateral is less than the debt owed to the secured party, then:

97) If a minor wishes to be bound to a contract after becoming an adult, she must:

98) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States' second largest trading partner.

99) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.

100) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?

BUS 475 Final Exam 5

Business / Economics

11/8/12

Asked: 11/8/12 4:41 PM
Opening Offer: $30.00
Due Date: 12/31/69

1) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead?


2) Managerial accounting __________.

   

3) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals:  

    Income Statement         Balance Sheet

    Dr.                 Cr.                  Dr.             Cr.

Totals    $58,000        $48,000        $34,000        $44,000

The net income (or loss) for the period is __________.

   

4) Of the following companies, which one would not likely employ the specific identification method for inventory costing?

    

5) The standards and rules that are recognized as a general guide for financial reporting are called __________.

    

6) 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?

    

7) Balance sheet accounts are considered to be __________.      


8) Multinational corporations __________.

    

9) What effect do current technology changes have on managerial accounting?

    

10) The cost principle is the basis for preparing financial statements because it is __________.

    

11) Which one of the following items is not generally used in preparing a statement of cash flows?

    

12) The cost of an asset and its fair market value are __________.

    

13) 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?

    

14) A well-designed activity-based costing system starts with __________.

    

15) For a college student who wishes to calculate the true costs of going to college, the costs of room and board __________.

    

16) In computing GDP, market prices are used to value final goods and services because __________.

    

17) In economics, the cost of something is __________.

    

18) A logical starting point from which the study of international trade begins is __________.

    

19) When, in a particular market, the law of demand and the law of supply both apply, the imposition of a binding price ceiling in that market causes quantity demanded to be __________.

    

20) What you give up to obtain an item is called your __________.

     

21) One characteristic of an oligopoly market structure is:

    

22) Edward Prescott and Finn Kydland won the Nobel Prize in Economics in 2004. One of their contributions was to argue that if a central bank could convince people to expect zero inflation, then the Fed would be tempted to raise output by increasing inflation. This possibility is known as __________.

    

23) In general, the longest lag for __________.

    

24) The model of short-run economic fluctuations focuses on the price level and __________.

    

25) Real GDP __________.

    

26) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?

    

27) Which of the following statements about GDP is correct?

    

28) Which of these refers to the practices aimed at discovering and harnessing an organization's intellectual resources?

    

29) The term used to refer to all kinds of differences including religious affiliation, age, disability status, economic class and lifestyle in addition to gender, race, ethnicity and nationality is:

    

30) Which of the following has proven to be a particularly good predictor for jobs that require cognitive complexity?

    

31) When a company establishes technology leadership by pioneering unique products or services that command premium prices, it has benefited from a:

    

32) Sebastian Stabilio just joined a team of people from throughout his organization whose primary task is to recommend valuable uses for the scrap generated in the manufacturing process. The team meets twice per week; otherwise members work within the usual organizational structure. The team, not permanent, which Sebastian has joined, would be considered a:

    

33) An organization that is managed aggressively and has growth and high profits as primary objectives may be considered a(n):

    

34) One of the most important contributors to total quality management has been the introduction of statistical tools to analyze the causes of product defects in an approach called:

    

35) ABC International carefully watches the actions of its most innovative competitor and learns from them. ABC can establish a low-cost position by:

    

36) The Aquatic Center, Inc. periodically reviews the goals of the company. During the process, The Aquatic Center managers analyze their current strategies as compared to their competitors, determine goals that they will pursue and decide upon specific actions for each area of the company to take in pursuit of these goals. The Aquatic Center managers have been engaged in the management function of:

    

37) To be competitive in a global economy, Europeans must increase their level of:

    

38) A series of quality standards developed by a committee working under the International Organization for Standardization to improve total quality in all businesses for the benefit of both producers and consumers is:

    

39) Teams that work on long-term projects but disband once the work is completed are known as:

    

40) The pursuit of lucrative opportunities by enterprising individuals is called:

    

41) The best way for an employer to find out if a potential employee can do a job is by __________.

    

42) A poll showed that 48 out of 120 randomly chosen graduates of California medical schools last year intended to specialize in family practice. What is the width of a 90% confidence interval for the proportion that plan to specialize in family practice?

    

43) Two events are complementary when __________.

    

44) From its 32 regions, the Federal Aviation Administration selects 5 regions, and then randomly audits 20 departing commercial flights in each region for compliance with legal fuel and weight requirements. This is __________.

    

45) Use the following table to answer question:


Are Service provider and county independent events?

    

46) William used a sample of 68 U.S. cities to estimate the relationship between Crime (annual property crimes per 100,000 persons) and Income (median income per capita). His estimated regression equation was Crime = 428 + .050 Income.


Assuming b1 is significant, if Income decreases by 1000 we would predict that Crime will __________.

    

47) Dullco Manufacturing claims that its alkaline batteries last forty hours on average in a certain type of portable CD player. Tests on a random sample of 18 batteries showed a mean battery life of 37.8 hours with a standard deviation of 5.4 hours.


In determining the p-value for reporting the study's findings, which of the following is true?

    

48) In lean systems, if a defective product is found, which of the following is generally NOT done?

    

49) Queuing models use an A/B/C notation. What do these variables represent?

   

50) Suppose the estimated quadratic model Yt = 500 + 20 t - t2 is the best-fitting trend of sales of XYZ Inc. using data for the past twenty years (t = 1, 2,.., 20).


Which statement is incorrect?

    

51) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:

    

52) A computer analysis reveals that the best-fitting trend model is Yt = 4.12 e 0.987 t. The trend was fitted using year-end common stock prices for Melodic Kortholt Outlet for the last six years. The R2 is 0.8571.


Which conclusion is not correct?

    

53) The Global, Web-Based Platform enables individuals to do which of the following?    


54) A set of programs that enable the hardware to process data is _____.

    

55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.    


56) What is _____ is not necessarily _____.

    

57) Which of the following is not a source for external data?

    

58) The management cockpit best exemplifies which type of system?

   

59) _____ provides users with a view of what is happening, where _____ addresses why it is happening.

    

60) International Game Technology’s new ERP system produced all of the following benefits except:

    

61) Which of the following is not a reason that managers need IT support?     


62) Credit card companies would most likely use which of the following to check for fraudulent credit card use?

    

63) Exchange rate risk:

    

64) PepsiCo calculates unlevered betas for each peer group in order to:

    

65) At 8% compounded annually, how long will it take $750 to double?

    

66) Tri State Pickle Company preferred stock pays a perpetual annual dividend of 2 1/2% of its par value. Par value of TSP preferred stock is $100 per share. If investors’ required rate of return on this stock is 15%, what is the value of per share?

    

67) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?

    

68) Which of the following best represents operating income?

    

69) Given the following annual net cash flows, determine the IRR to the nearest whole percent of a project with an initial outlay of $1,520.

Year           Net Cash Flow

1        $1,000

2        $1,500

3        $  500

    

70) Which of the following is most consistent with the hedging principle in working capital management?

    

71) Which of the following best represents the stream of income that is available to common stockholders?

    

72) A machine costs $1,000, has a three-year life, and has an estimated salvage value of $100. It will generate after-tax annual cash flows (ACF) of $600 a year, starting next year. If your required rate of return for the project is 10%, what is the NPV of this investment? (Round your answerwer to the nearest $10.)

    

73) Dublin International Corporation’s marginal tax rate is 40%. It can issue three-year bonds with a coupon rate of 8.5% and par value of $1,000. The bonds can be sold now at a price of $938.90 each. The underwriters will charge $23 per bond in flotation costs. Determine the appropriate after-tax cost of debt for Dublin International to use in a capital budgeting analysis.

    

74) A stock with a beta greater than 1.0 has returns that are _____ volatile than the market, and a stock with a beta of less than 1.0 exhibits returns which are _____ volatile than those of the market portfolio.  


75) Bondholders have a priority claim on assets ahead of:

    

76) Clustering techniques applied to segmenting markets __________.

    

77) Economists' economic-buyer theory assumes that __________.

   

78) The difference between target marketing and mass marketing is that target marketing:

    

79) Which of the following is a business or organizational customer?

    

80) In an effort to increase its total sales, Champion has started exporting its spark plugs for use by several German auto producers. Champion is pursuing a _____ opportunity.

   

81) "Positioning":

    

82) The basic objective of the U.S. market-directed economic system is to:

   

83) A cluster analysis of the "toothpaste market" would probably show that:

    

84) Marketing:

    

85) The clustering techniques that can be used in segmenting:

    

86) An Australian wine producer, facing declining sales at home, set up a new channel of distribution to sell wine in the United States. This seems to be an effort at:

    

87) The statement, "Of course people will buy our product--each of its features is better than the competition," most closely reflects which consumer behavior concept?

    

88) Bob, an employee of Risky Manufacturing, Inc. is accidentally injured by a fellow worker while working his shift. Under workers’ compensation, Bob can:

    

89) Which of the following statements is not true under the Fair Labor Standards Act?

    

90) The disclosures required under the Truth-in-Lending Act are required for:

    

91) Which of the following is correct about litigating commercial disputes?

    

92) Minimum wages, hours of employment, and child labor are regulated by the:

    

93) An agent’s duty of notification can best be described as a duty to:

    

94) Which of the following is correct about the states’ powers regarding foreign affairs?  


95) Which of the following is true about trademark registration?

    

96) What makes a publicly held corporation different from a public corporation?

    

97) The theory of business social responsibility that holds that a business owes duties solely to produce the highest return for its shareholders is:

    

98) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.

    

99) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?

    

100) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States' second largest trading partner.

BUS 475 Final Exam 2

Business / Economics

11/8/12

Asked: 11/8/12 4:39 PM
Opening Offer: $30.00
Due Date: 12/31/69

1) Which one of the following items is not generally used in preparing a statement of cash flows?


2) 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?


3) Of the following companies, which one would not likely employ the specific identification method for inventory costing?


4) Which one of the following is a product cost?


5) The conceptual framework developed by the Financial Accounting Standards Board __________.


6) What is the preparation of reports for each level of responsibility in the company’s organization chart called?


7) The cost principle requires that when assets are acquired, they be recorded at __________.


8) If a company reports a net loss, it __________.


9) The major reporting standard for management accounts is __________.


10) The primary purpose of the statement of cash flows is to __________.


11) Managerial accounting __________.


12) A well-designed activity-based costing system starts with __________.


13) Balance sheet accounts are considered to be __________.


14) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead?


15) There are two types of markets in which firms face some competition yet are still able to have some control over the prices of their products. The names given to these market structures are __________.


16) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.


17) A tax on an imported good is called a __________.


18) Lucy starts her own psychiatric practice, but her expenditures to open the practice exceed her income. Lucy is a __________.


19) One characteristic of an oligopoly market structure is:


20) When, in a particular market, the law of demand and the law of supply both apply, the imposition of a binding price ceiling in that market causes quantity demanded to be __________.


21) When a firm sells a good or a service, the sale contributes to the nation’s income __________.


22) The open-economy macroeconomic model includes __________.


23) Most economists use the aggregate demand and aggregate supply model primarily to analyze __________.


24) In the market for foreign-currency exchange in the open economy macroeconomic model, the amount of net capital outflow represents the quantity of dollars __________.


25) Which of the following is not correct?


26) The Federal Reserve will tend to tighten monetary policy when __________.


27) Which of the following statements about GDP is correct?


28) The most dominant areas in the global economy include:


29) The term used to refer to all kinds of differences including religious affiliation, age, disability status, economic class and lifestyle in addition to gender, race, ethnicity and nationality is:


30) A leader is:


31) Teams that operate separately from the regular work structure and exist temporarily are known as:


32) __________ is the process of working with people and resources to accomplish organizational goals.


33) An organization that is managed aggressively and has growth and high profits as primary objectives may be considered a(n):


34) A manager's ability to stimulate people to be high performers is referred to as:


35) A series of quality standards developed by a committee working under the International Organization for Standardization to improve total quality in all businesses for the benefit of both producers and consumers is:


36) Having individuals actually do the job they are applying for as a test to see if they can do it is __________.


37) The basic components of an effective sexual harassment policy include the following EXCEPT:


38) The best way for an employer to find out if a potential employee can do a job is by __________.


39) As related to managing of human resources, diversity refers to:


40) One of the most important contributors to total quality management has been the introduction of statistical tools to analyze the causes of product defects in an approach called:


41) Your roommate is interested in starting a business and everybody has been giving him different information about being an entrepreneur. Since you have been studying about entrepreneurship and new ventures, which of these would you tell him is true?


42) Jolly Blue Giant Health Insurance (JBGHI) is concerned about rising lab test costs and would like to know what proportion of the positive lab tests for prostate cancer are actually proven correct through subsequent biopsy. JBGHI demands a sample large enough to ensure an error of ± 2% with 90% confidence. What is the necessary sample size?


43) In a right-tail test, a statistician came up with a z test statistic of 1.469. What is the p-value?


44) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18.


For this sample, the median is _____.


45) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18.


For this sample, the standard deviation is approximately _____.


46) William used a sample of 68 U.S. cities to estimate the relationship between Crime (annual property crimes per 100,000 persons) and Income (median income per capita). His estimated regression equation was + .050 Income.


Which outcomes would be likely in a bivariate regression on 45 randomly chosen U.S. cities in 2005 with


 of robberies in each city (thousands of robberies) and


 of police force in each city (thousands of police)?


47) Dullco Manufacturing claims that its alkaline batteries last forty hours on average in a certain type of portable CD player. Tests on a random sample of 18 batteries showed a mean battery life of 37.8 hours with a standard deviation of 5.4 hours.

In determining the p-value for reporting the study's findings, which of the following is true?


48) In an activity-on-node [AON] network, the nodes represent ____________, whereas the arcs represent ____________.


49) Theoretically, service capacity must exceed demand, lest queues become infinitely long. If capacity does not exceed demand, what is likely to happen?


50) Queuing models use an A/B/C notation. What do these variables represent?


51) In a network diagram, an activity:


52) Suppose the estimated quadratic model + 20 t - t2 is the best-fitting trend of sales of XYZ Inc. using data for the past twenty years (, 2,.., 20).


Which statement is incorrect?


53) Which of the following statements is correct?


54) The Global, Web-Based Platform enables individuals to do which of the following?


55) It is very difficult to manage data for which of the following reasons?


56) Success in the _____ phase of the decision making process results in resolving the original problem, and failure leads to a return to previous phases.


57) When customers access a Web site and make purchases, they generate __________.


58) _____ is the efficient and effective execution of specific tasks.


59) Geocoding is __________.


60) Information-based industries are most susceptible to which one of Porter’s five forces?


61) International Game Technology’s new ERP system produced all of the following benefits except


62) Credit card companies would most likely use which of the following to check for fraudulent credit card use?


63) A machine costs $1,000, has a three-year life, and has an estimated salvage value of $100. It will generate after-tax annual cash flows (ACF) of $600 a year, starting next year. If your required rate of return for the project is 10%, what is the NPV of this investment? (Round your answerwer to the nearest $10.)


64) Your company is considering an investment in a project which would require an initial outlay of $300,000 and produce expected cash flows in Years 1 through 5 of $87,385 per year. You have determined that the current after-tax cost of the firm’s capital (required rate of return) for each source of  financing is as follows: 

Cost of debt   8%

Cost of preferred stock   12%

Cost of common stock   16%

Long-term debt currently makes up 20% of the capital structure, preferred stock 10%, and common stock 70%. What is the net present value of this project?


65) The common stockholders are most concerned with:


66) Tri State Pickle Company preferred stock pays a perpetual annual dividend of 2 1/2% of its par value. Par value of TSP preferred stock is $100 per share. If investors’ required rate of return on this stock is 15%, what is the value of per share?


67) Which of the following is most consistent with the hedging principle in working capital management?


68) At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?


69) PepsiCo calculates unlevered betas for each peer group in order to:


70) According to the hedging principle, permanent assets should be financed with _____ liabilities.


71) Bondholders have a priority claim on assets ahead of:


72) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?


73) Given the following annual net cash flows, determine the IRR to the nearest whole percent of a project with an initial outlay of $1,520.

   Year   Net Cash Flow

1   $1,000

2   $1,500

3   $  500


74) Bell Weather, Inc. has a beta of 1.25. The return on the market portfolio is 12.5%, and the risk-free rate is 5%. According to CAPM, what is the required return on this stock?


75) You hold a portfolio with the following securities:

   Security   Percent of Portfolio          Beta                          Return

X Corporation   20%              1.35                 14%

Y Corporation   35%              .95                   10%

Z Corporation   45%   .          75                      8%

Compute the expected return and beta for the portfolio.


76) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:


77) Analysis of demographic dimensions:


78) When evaluating macro-marketing:


79) "Marketing strategy planning" means:


A.  finding attractive opportunities and selecting a target market. B.  selecting an attractive marketing mix. C.  selecting a target market and developing a marketing strategy. D.  selecting an attractive target  market. E.  finding attractive opportunities and developing profitable marketing strategies.


80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.


81) When doing "positioning," a marketing manager should:


82) In comparison to the buying of final consumers, the purchasing of organizational buyers:


83) The clustering techniques that can be used in segmenting:


84) A firm's "marketing mix" decision areas would NOT include:


85) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:


86) Regarding organizational buying, the people who have the power to select or approve the supplier--especially for larger purchases--are called:


87) Clustering techniques applied to segmenting markets __________.


88) Justin was hired in February of 2004 as a salesperson. There is no written employment contract, and Justin is paid on a commission basis. Justin’s manager has said to Justin on several occasions that if Justin continues to meet his sales quotas, that the company “will keep him around for a long time.” Justin has always met his sales quotas, but is told one day that they have decided to replace him because he does not project the image that the company wants. If Justin is an at-will employee, which of the following is true?


89) Which of the following is correct about litigating commercial disputes?


90) Which article of the United States Constitution deals with the judicial power of the federal government?


91) Mary arrived at work one day, and her boss said to her, “That’s the ugliest dress I have ever seen. Because you wore that to work today, you are fired.” Assuming that Mary is an at-will employee, which of the following is true?


92) Which of the following is true about the Sherman Act?


93) If the value of the collateral is less than the debt owed to the secured party, then:


94) If you are a creditor, your best protection in the event of the debtor’s bankruptcy (including protection from the debtor’s other creditors) is usually obtained if you had previously received:


95) Which of the following terms is not required to be disclosed under the Truth-in-Lending Act?


96) Which of the following lists, in descending priority, of sources considered by most courts in settling questions of international law?


97) Generally speaking, the contract of a minor:


98) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States' second largest trading partner.


99) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.


100) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?

BUS 475 Final Exam 1

Business / Economics

11/8/12

Asked: 11/8/12 4:36 PM
Opening Offer: $30.00
Due Date: 12/31/69

1) The cost principle requires that when assets are acquired, they be recorded at __________.

2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.

3) The standards and rules that are recognized as a general guide for financial reporting are called _______.

4) Sam's Used Cars uses the specific identification method of costing inventory. During March, Sam purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for $9,000 each. Sam determines that at March 31, the $9,750 car is still on hand. What is Sam’s gross profit for March?

5) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of $74,400 and sales for the current year of $100,000. How much is Hess’s break even point? 

6) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead?

7) What is the preparation of reports for each level of responsibility in the company’s organization chart called?

8) 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?   

9) The cost of an asset and its fair market value are __________.

10) Which one of the following is a product cost?

11) What exists when budgeted costs exceed actual results?

12) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals:

                       Income Statement        Balance Sheet

                         Dr.    Cr.                        Dr.    Cr.

Totals        $58,000    $48,000        $34,000    $44,000

Closing entries are necessary for __________.

13) Managerial accounting __________.

14) 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?

15) Lekeisha's income exceeds her expenditures. Lekeisha is a __________.

16) Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally he decides on Option B. The opportunity cost of this decision is __________.

17) A production possibilities frontier will be a straight line if __________. 

18) In economics, the cost of something is __________.   

19) A tax on an imported good is called a __________.

20) Which of the following statements about GDP is correct?   

21) In computing GDP, market prices are used to value final goods and services because __________.

22) Which of the following statements about GDP is correct? 

23) Which of the following is not correct?  

24) The part of the balance of payments account that lists all long-term flows of payments is called the:

25) Edward Prescott and Finn Kydland won the Nobel Prize in Economics in 2004. One of their contributions was to argue that if a central bank could convince people to expect zero inflation, then the Fed would be tempted to raise output by increasing inflation. This possibility is known as __________.

26) In general, the longest lag for __________.

27) Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing; and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?

28) Managers will utilize __________ skills with increasing frequency as they rise within an organization.

29) Which of these represent skills that managers need?  

30) Building a dynamic organization is another way of describing which function of management?

31) Your roommate is interested in starting a business and everybody has been giving him different information about being an entrepreneur. Since you have been studying about entrepreneurship and new ventures, which of these would you tell him is true?

32) The term used to refer to all kinds of differences including religious affiliation, age, disability status, economic class and lifestyle in addition to gender, race, ethnicity and nationality is:

33) A manager's ability to stimulate people to be high performers is referred to as:

34) A series of quality standards developed by a committee working under the International Organization for Standardization to improve total quality in all businesses for the benefit of both producers and consumers is:

35) Japanese manufacturers' kaizen (continuous improvement) programs enable them to maintain:

36) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:

37) The basic components of an effective sexual harassment policy include the following EXCEPT:

38) Teams that operate separately from the regular work structure and exist temporarily are known as:   

39) The Aquatic Center, Inc. periodically reviews the goals of the company. During the process, The Aquatic Center managers analyze their current strategies as compared to their competitors, determine goals that they will pursue and decide upon specific actions for each area of the company to take in pursuit of these goals. The Aquatic Center managers have been engaged in the management function of:

40) As related to managing of human resources, diversity refers to:   

41) __________ is the process of working with people and resources to accomplish organizational goals.

42) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18.

For this sample, the median is _____.

43) Use the following table to answer question:

 P(S | W) is approximately _____.  

44) Use the following table to answer question:

 P(M  A) is approximately _____.

45) Dullco Manufacturing claims that its alkaline batteries last forty hours on average in a certain type of portable CD player. Tests on a random sample of 18 batteries showed a mean battery life of 37.8 hours with a standard deviation of 5.4 hours.

In determining the p-value for reporting the study's findings, which of the following is true?

46) William used a sample of 68 U.S. cities to estimate the relationship between Crime (annual property crimes per 100,000 persons) and Income (median income per capita). His estimated regression equation was Crime = 428 + .050 Income.

Which outcomes would be likely in a bivariate regression on 45 randomly chosen U.S. cities in 2005 with

Y = number of robberies in each city (thousands of robberies) and

X = size of police force in each city (thousands of police)?

47) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18.

For this sample, which measure of central tendency is least representative of the “typical” student?  

48) Likely reasons for inaccurate control limits would include which of the following?

49) You are faced with a linear programming objective function of:

Max P = $20X + $30Y

and constraints of:

3X + 4Y = 24 (Constraint A)

5X – Y = 18 (Constraint B)

You discover that the shadow price for Constraint A is 7.5 and the shadow price for Constraint B is 0. Which of these statements is TRUE?  

50) A project has three paths. A–B–C has a length of 25 days. A–D–C has a length of 15 days. Finally, A–E–C has a length of 20 days. Which one of the following statements is TRUE?

51) Which one of the following statements concerning production and staffing plans is best?

52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:

53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.

54) When customers access a Web site and make purchases, they generate __________.

55) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.

56) Various organizations that promote fair and responsible use of information systems often develop __________.

57) What is _____ is not necessarily _____.

58) _____ provides users with a view of what is happening, where _____ addresses why it is happening.

59) Computer support is greatest for which of the following problems?

60) The management cockpit best exemplifies which type of system?

61) _____ is the efficient and effective execution of specific tasks.

62) Geocoding is __________.

63) At 8% compounded annually, how long will it take $750 to double?

64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?

65) A machine costs $1,000, has a three-year life, and has an estimated salvage value of $100. It will generate after-tax annual cash flows (ACF) of $600 a year, starting next year. If your required rate of return for the project is 10%, what is the NPV of this investment? (Round your answerwer to the nearest $10.)

66) Disadvantages of using current liabilities as opposed to long-term debt include:

67) Petrified Forest Skin Care, Inc. pays an annual perpetual dividend of $1.70 per share. If the stock is currently selling for $21.25 per share, what is the expected rate of return on this stock?

68) Which of the following is most consistent with the hedging principle in working capital management? 

69) An increase in future value can be caused by an increase in the __________.

70) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:

71) Your company is considering an investment in a project which would require an initial outlay of $300,000 and produce expected cash flows in Years 1 through 5 of $87,385 per year. You have determined that the current after-tax cost of the firm’s capital (required rate of return) for each source of financing is as follows:

Cost of debt    8%

Cost of preferred stock    12%

Cost of common stock    16%

Long-term debt currently makes up 20% of the capital structure, preferred stock 10%, and common stock 70%. What is the net present value of this project?

72) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?   

73) The common stockholders are most concerned with:

74) PepsiCo calculates unlevered betas for each peer group in order to:

75) Which of the following best represents operating income?

76) In comparison to the buying of final consumers, the purchasing of organizational buyers:   

77) The basic objective of the U.S. market-directed economic system is to:

78) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:

79) A firm's "marketing mix" decision areas would NOT include:

80) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.

81) The "four Ps" of a marketing mix are:

82) When evaluating macro-marketing:

83) A cluster analysis of the "toothpaste market" would probably show that:

84) Clustering techniques applied to segmenting markets __________.

85) The three basic tasks of ALL managers, according to the text, are:

86) The difference between target marketing and mass marketing is that target marketing:

 87) When one considers the strategy decisions organized by the four Ps, branding is related to packaging as:

88) Which of the following statements is not true under the Fair Labor Standards Act?

89) Probable cause is most directly associated with which step of the criminal process?   

90) Which of the following statements is generally not true about state intermediate appellate courts?

91) Which of the following terms need not be disclosed under Truth-in-Lending Act?

92) Which of the following activities by an administrative agency requires public notice and participation?   

93) Which of the following is not one of the Caux Round Table Principles for International Business?  

94) The theory of business social responsibility that holds that a business owes duties solely to produce the highest return for its shareholders is:

95) Which social responsibility theory has been advocated by Novel Prizewinning economist Milton Friedman?

96) Which of the following lists, in descending priority, of sources considered by most courts in settling questions of international law?   

97) If the value of the collateral is less than the debt owed to the secured party, then:

98) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.

99) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?

100) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States' second largest trading partner.

BUS 475 Final Exam 8 sets

Business / Economics

10/13/12

Asked: 10/13/12 6:08 AM
Opening Offer: $70.00
Due Date: 12/31/69

BUS 475 Final Exam 1

 BUS 475 Final Exam 2

 BUS 475 Final Exam 3

 BUS 475 Final Exam 4

 BUS 475 Final Exam 5

 BUS 475 Final Exam 6

 BUS 475 Final Exam 7

 BUS 475 Final Exam 8

ACC 280 final exam

Business / Economics

10/13/12

Asked: 10/13/12 6:03 AM
Opening Offer: $25.00
Due Date: 12/30/12

1) The accounting process is correctly sequenced as

 2) Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?

 3) Generally accepted accounting principles are

 4) The private sector organization involved in developing accounting principles is the

 5) GAAP stands for

 6) The four primary financial statements are

 7) Which of the following financial statements is a point in time report?

 8) In recording an accounting transaction in a double-entry system,

 9) An account will have a credit balance if the

 10) Which of the following statements is true?

 11) On June 1, 2008, Leno Inc. buys a copier machine for its business and finances this purchase with cash and a note. When journalizing this transaction, the company's accountant will

 12) Posting of journal entries should be done in

 13) Bank errors

 14) A $2,000 advance payment for a 1-year insurance is recorded as

 15) Carson company purchased a 2-year insurance policy for $4,800 on January 1, 2010. The $4,800 was debited to the Prepaid Insurance account. What adjustment should be made to record expired insurance January 31, 2010?

 16) Can financial statements be prepared directly from the adjusted trial balance?

 17) The information for preparing a trial balance on a worksheet is obtained from

 18) If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has

 19) After all of the account balances have been extended to the income statement columns of the work sheet, the totals of the debit and credit columns are $50,000 and $40,000, respectively. What is the amount of net income or net loss for the period?

 20) The income summary account

 21) Which of the following is an income statement account?

 22) Which of the following is a balance sheet account?

 23) In order to close the dividends account, the

 24) In preparing closing entries,

 25) Profit margin is a measure of

 26) Working capital is

 27) Internal control is defined, in part, as a plan that safeguards

 28) Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of

 29) Certified Public Accounting firms that audit public companies are reviewed by

 30) The entity responsible for setting International Accounting Standards is

ACC 561 Final Exam Solutions in St..

Business / Economics

9/15/12

Asked: 9/15/12 10:30 AM
Opening Offer: $25.00
Due Date: 12/30/12

.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 _____.

BUS 475 Final Exam 3

Business / Economics

9/14/12

Asked: 9/14/12 4:36 PM
Opening Offer: $30.00
Due Date: 12/31/69

1) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals:

        Income Statement        Balance Sheet

    Dr.    Cr.        Dr.    Cr.

Totals        $58,000    $48,000        $34,000    $44,000

To enter the net income (or loss) for the period into the above worksheet requires an entry to the __________.

 2) Multinational corporations __________.

   3) Balance sheet accounts are considered to be __________.

 4) What is value chain management best defined as?

 5) The primary purpose of the statement of cash flows is to __________.

 6) In what situations will a static budget be most effective in evaluating a manager's effectiveness?

 7) Which one of the following is a product cost?

 8) These are selected account balances on December 31, 2008.    

Land (location of the corporation's office building)    $100,000

Land (held for future use)    150,000

Corporate Office Building    600,000

Inventory    200,000

Equipment    450,000

Office Furniture    100,000

Accumulated Depreciation    300,000

What is the net amount of property, plant, and equipment that will appear on the balance sheet?

 9) Of the following companies, which one would not likely employ the specific identification method for inventory costing?

 10) If a company reports a net loss, it __________.

 11) 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?

   12) The cost principle requires that when assets are acquired, they be recorded at __________.

   13) Which one of the following items is not generally used in preparing a statement of cash flows?

   14) Managerial accounting __________.

 15) A logical starting point from which the study of international trade begins is __________.

  16) Without trade, __________.

   17) Assume oligopoly firms are profit maximizers, they do not form a cartel, and they take other firms' production levels as given. Then in equilibrium the output effect __________.

   18) To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to __________.

 19) When, in a particular market, the law of demand and the law of supply both apply, the imposition of a binding price ceiling in that market causes quantity demanded to be __________.

 20) If a price ceiling is a binding constraint on the market, __________.

 21) A tax on an imported good is called a __________.

 22) The political business cycle refers to __________.

 23) Real GDP __________.

 24) The model of short-run economic fluctuations focuses on the price level and __________.

 25) In the market for foreign-currency exchange in the open economy macroeconomic model, the amount of net capital outflow represents the quantity of dollars __________.

 26) The open-economy macroeconomic model examines the determination of __________.

 27) The balance of payment account is made up of:

 28) To be competitive in a global economy, Europeans must increase their level of:

   29) Which of these refers to the practices aimed at discovering and harnessing an organization's intellectual resources?

 30) ABC International carefully watches the actions of its most innovative competitor and learns from them. ABC can establish a low-cost position by:

 31) The best way for an employer to find out if a potential employee can do a job is by __________.

   32) A manager's ability to stimulate people to be high performers is referred to as:

   33) One of the most important contributors to total quality management has been the introduction of statistical tools to analyze the causes of product defects in an approach called:

 34) The pursuit of lucrative opportunities by enterprising individuals is called:

 35) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:

 36) Managers will utilize __________ skills with increasing frequency as they rise within an organization.

 37) As related to managing of human resources, diversity refers to:

   

38) The term used to refer to all kinds of differences including religious affiliation, age, disability status, economic class and lifestyle in addition to gender, race, ethnicity and nationality is:

 39) Your roommate is interested in starting a business and everybody has been giving him different information about being an entrepreneur. Since you have been studying about entrepreneurship and new ventures, which of these would you tell him is true?

 40) Which of these represent skills that managers need?

 41) The basic components of an effective sexual harassment policy include the following EXCEPT:

 42) Which of the following statements is true?

A.   The sum of two mutually exclusive events is one. B.   If event (A) occurs, then its complement (A') will also occur. C.   If A and B are independent events, the P(B) = P(A) P(B). D.   The probability of A and its complement (A') will always sum to one.

   43) Dullco Manufacturing claims that its alkaline batteries last forty hours on average in a certain type of portable CD player. Tests on a random sample of 18 batteries showed a mean battery life of 37.8 hours with a standard deviation of 5.4 hours.

In a left-tailed test at  = .05 we would __________.

   

44) A poll showed that 48 out of 120 randomly chosen graduates of California medical schools last year intended to specialize in family practice. What is the width of a 90% confidence interval for the proportion that plan to specialize in family practice? A.   ± .07357

   

45) Use the following table to answer question:

 P(S | W) is approximately _____.

   

46) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18.

For this sample, which measure of central tendency is least representative of the “typical” student?

 

47) In a right-tail test, a statistician came up with a z test statistic of 1.469. What is the p-value?

 

48) In lean systems, if a defective product is found, which of the following is generally NOT done?

   

49) A computer analysis reveals that the best-fitting trend model is Yt = 4.12 e 0.987 t. The trend was fitted using year-end common stock prices for Melodic Kortholt Outlet for the last six years. The R2 is 0.8571.

Which conclusion is not correct?

 

50) In statistical process control a p-chart could __________.

 

51) Which one of the following statements concerning production and staffing plans is best?

 

52) Which one of the following statements about managerial inputs to production and staffing plans is best?

 

53) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.

  

54) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.

   

55) Which of the following statements is correct?

 

56) In the _____ phase of the decision making process, managers test potential solutions “on paper.”

 

57) Which of the following is NOT an advantage of the buy option for acquiring IS applications?

 

58) Which of the following is not a reason that managers need IT support?

 

59) _____ is a process that helps organizations identify, select, organize, disseminate, transfer, and apply expertise that are part of the organization’s memory and typically reside inside the organization in an unstructured manner.

 

60) Information-based industries are most susceptible to which one of Porter’s five forces?

 

61) _____ is the acquisition and efficient use of resources in accomplishing organizational goals.

 

62) _____ is the efficient and effective execution of specific tasks.

 

63) Disadvantages of using current liabilities as opposed to long-term debt include:

 

64) Bondholders have a priority claim on assets ahead of:

 

65) Which of the following best represents operating income?

 

66) Which of the following is most consistent with the hedging principle in working capital management?

 

   

67) PepsiCo calculates unlevered betas for each peer group in order to:

 

68) A stock with a beta greater than 1.0 has returns that are _____ volatile than the market, and a stock with a beta of less than 1.0 exhibits returns which are _____ volatile than those of the market portfolio.

 

69) The common stockholders are most concerned with:

 

70) An increase in future value can be caused by an increase in the __________.

 

71) A machine costs $1,000, has a three-year life, and has an estimated salvage value of $100. It will generate after-tax annual cash flows (ACF) of $600 a year, starting next year. If your required rate of return for the project is 10%, what is the NPV of this investment? (Round your answerwer to the nearest $10.)

 

72) Petrified Forest Skin Care, Inc. pays an annual perpetual dividend of $1.70 per share. If the stock is currently selling for $21.25 per share, what is the expected rate of return on this stock?

 

73) Exchange rate risk:

 

74) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:

 

75) Which of the following best represents the stream of income that is available to common stockholders?

 

76) The statement, "Of course people will buy our product--each of its features is better than the competition," most closely reflects which consumer behavior concept?

 

77) A firm's "marketing mix" decision areas would NOT include:

 

78) Clustering techniques applied to segmenting markets __________.

 

79) The "four Ps" of a marketing mix are:

 

80) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:

 

81) The economists' view of buyers:

 

82) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.

 

83) In comparison to the buying of final consumers, the purchasing of organizational buyers:

 

84) Regarding organizational buying, the people who have the power to select or approve the supplier--especially for larger purchases--are called:

 

85) An Australian wine producer, facing declining sales at home, set up a new channel of distribution to sell wine in the United States. This seems to be an effort at:

 

86) The three basic tasks of ALL managers, according to the text, are:

 

87) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:

 

88) Which of the following is correct about interpretive rules?

 

89) To be guilty of monopolization, the defendant must:

 

90) The tort of intentional interference with contractual relations requires the following except:

 

91) The tort of palming off involves:

   

92) Which of the following is correct about litigating commercial disputes?

   

93) An agent’s duty of notification can best be described as a duty to:

 

94) Which of the following statements is true regarding the relationship of law and ethics?

 

95) Which of the following is true about “proof of claims?”

   

96) An agent’s obligation to perform in accordance with the terms of the agency arrangement is the agent’s duty of:

 

97) Which social responsibility theory has been advocated by Novel Prizewinning economist Milton Friedman?

 

98) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?

 

99) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.

 

100) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States' second largest trading partner.

BUS 475 Final Exam 4

Business / Economics

9/14/12

Asked: 9/14/12 4:15 PM
Opening Offer: $30.00
Due Date: 12/31/69

1) A well-designed activity-based costing system starts with __________.

 2) "Generally accepted" in the phrase generally accepted accounting principles means that the principles __________.

 3) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals: 

        Income Statement        Balance Sheet

    Dr.    Cr.        Dr.    Cr.

Totals        $58,000    $48,000        $34,000    $44,000

The net income (or loss) for the period is __________.

4) These are selected account balances on December 31, 2008. 

Land (location of the corporation's office building)    $150,000

Land (held for future use)    225,000

Corporate Office Building    900,000

Inventory    300,000

Equipment    675,000

Office Furniture    150,000

Accumulated Depreciation    450,000

What is the net amount of property, plant, and equipment that will appear on the balance sheet?

 

5) The first step in activity-based costing is to __________.

 6) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of $74,400 and sales for the current year of $100,000. How much is Hess’s break even point?

7) Sam's Used Cars uses the specific identification method of costing inventory. During March, Sam purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for $9,000 each. Sam determines that at March 31, the $9,750 car is still on hand. What is Sam’s gross profit for March?

8) These are selected account balances on December 31, 2008. 

Land (location of the corporation's office building)    $100,000

Land (held for future use)    150,000

Corporate Office Building    600,000

Inventory    200,000

Equipment    450,000

Office Furniture    100,000

Accumulated Depreciation    300,000

What is the net amount of property, plant, and equipment that will appear on the balance sheet?

 9) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals: 

        Income Statement        Balance Sheet

    Dr.    Cr.        Dr.    Cr.

Totals        $58,000    $48,000        $34,000    $44,000

 

Closing entries are necessary for __________.

 10) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead?

11) The cost of an asset and its fair market value are __________.

    12) 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?

 

13) The cost principle is the basis for preparing financial statements because it is __________.

 

14) Which one of the following items is not generally used in preparing a statement of cash flows?

15) To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to __________.

16) Assume oligopoly firms are profit maximizers, they do not form a cartel, and they take other firms' production levels as given. Then in equilibrium the output effect __________.

 

17) The price of a good that prevails in a world market is called the

 

18) A country's consumption possibilities frontier can be outside its production possibilities frontier if __________.

 

19) When, in a particular market, the law of demand and the law of supply both apply, the imposition of a binding price ceiling in that market causes quantity demanded to be __________.

 

20) If a binding price ceiling were imposed in the computer market, __________.

 

21) For a college student who wishes to calculate the true costs of going to college, the costs of room and board __________.

 

22) In the market for foreign-currency exchange in the open economy macroeconomic model, the amount of net capital outflow represents the quantity of dollars __________.

 

23) The part of the balance of payments account that records the amount of foreign currency the government buys or sells is the:

 

24) The balance of payment account is made up of:

 

25) The model of aggregate demand and aggregate supply explains the relationship between __________.

 

26) The open-economy macroeconomic model includes __________.

 

27) The principal lag for monetary policy __________.

 

28) Which of the following best describes a mental image of a possible and desirable future state of the organization?

 

29) Sebastian Stabilio just joined a team of people from throughout his organization whose primary task is to recommend valuable uses for the scrap generated in the manufacturing process. The team meets twice per week; otherwise members work within the usual organizational structure. The team, not permanent, which Sebastian has joined, would be considered a:

 

30) An invisible barrier that makes it difficult for certain groups, such as minorities and women, to move beyond a certain level in the organizational hierarchy is referred to as the:

 

31) The term used to refer to all kinds of differences including religious affiliation, age, disability status, economic class and lifestyle in addition to gender, race, ethnicity and nationality is:

 

32) Which of the following has proven to be a particularly good predictor for jobs that require cognitive complexity?

 

33) To be competitive in a global economy, Europeans must increase their level of:

 

34) Teams that operate separately from the regular work structure and exist temporarily are known as:

 

35) A manager's ability to stimulate people to be high performers is referred to as:

 

36) The best way for an employer to find out if a potential employee can do a job is by __________.

 

37) Your roommate is interested in starting a business and everybody has been giving him different information about being an entrepreneur. Since you have been studying about entrepreneurship and new ventures, which of these would you tell him is true?

 

38) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.

 

39) One of the most important contributors to total quality management has been the introduction of statistical tools to analyze the causes of product defects in an approach called:

 

40) __________ is the process of working with people and resources to accomplish organizational goals.

 

41) The Aquatic Center, Inc. periodically reviews the goals of the company. During the process, The Aquatic Center managers analyze their current strategies as compared to their competitors, determine goals that they will pursue and decide upon specific actions for each area of the company to take in pursuit of these goals. The Aquatic Center managers have been engaged in the management function of:

 

42) William used a sample of 68 U.S. cities to estimate the relationship between Crime (annual property crimes per 100,000 persons) and Income (median income per capita). His estimated regression equation was Crime = 428 + .050 Income. 

Assuming b1 is significant, if Income decreases by 1000 we would predict that Crime will __________.

 

43) Sampling error can be reduced by __________.

 

44) Use the following table to answer question: 

 P(M  A) is approximately _____.

 

45) Use the following table to answer question: 

 Are Service provider and county independent events?

 

46) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18. 

For this sample, which measure of central tendency is least representative of the “typical” student?

 

47) Jolly Blue Giant Health Insurance (JBGHI) is concerned about rising lab test costs and would like to know what proportion of the positive lab tests for prostate cancer are actually proven correct through subsequent biopsy. JBGHI demands a sample large enough to ensure an error of ± 2% with 90% confidence. What is the necessary sample size?

 

48) Which one of the following statements concerning production and staffing plans is best?

 

49) Likely reasons for inaccurate control limits would include which of the following?

 

50) The one-worker, multiple machines approach functions as:

 

51) In an activity-on-node [AON] network, the nodes represent ____________, whereas the arcs represent ____________.

 

52) While glancing over the sensitivity report, you note that the stitching labor has a shadow price of $10 and a lower limit of 24 hours with an upper limit of 36 hours. If your original right hand value for stitching labor was 30 hours, you know that:

 

53) The force behind globalization in _____ was the amount of muscle, horsepower, wind power, or steam power that a country could deploy.

 

54) In the _____ phase of the decision making process, managers test potential solutions “on paper.”

 

55) A set of programs that enable the hardware to process data is _____.

 

56) What is _____ is not necessarily _____.

 

57) The Global, Web-Based Platform enables individuals to do which of the following?

 

58) The management cockpit best exemplifies which type of system?

 

59) _____ is the acquisition and efficient use of resources in accomplishing organizational goals.

 

60) International Game Technology’s new ERP system produced all of the following benefits except:

 

 

61) Which of the following are not provided by digital dashboards?

 

62) _____ provides users with a view of what is happening, where _____ addresses why it is happening.

 

63) An increase in future value can be caused by an increase in the __________.

 

64) Your company is considering an investment in a project which would require an initial outlay of $300,000 and produce expected cash flows in Years 1 through 5 of $87,385 per year. You have determined that the current after-tax cost of the firm’s capital (required rate of return) for each source of financing is as follows: 

Cost of debt    8%

Cost of preferred stock    12%

Cost of common stock    16%

Long-term debt currently makes up 20% of the capital structure, preferred stock 10%, and common stock 70%. What is the net present value of this project?

 

65) Disadvantages of using current liabilities as opposed to long-term debt include:

 

66) Bell Weather, Inc. has a beta of 1.25. The return on the market portfolio is 12.5%, and the risk-free rate is 5%. According to CAPM, what is the required return on this stock?

 

67) Dublin International Corporation’s marginal tax rate is 40%. It can issue three-year bonds with a coupon rate of 8.5% and par value of $1,000. The bonds can be sold now at a price of $938.90 each. The underwriters will charge $23 per bond in flotation costs. Determine the approximate after-tax cost of debt for Dublin International to use in a capital budgeting analysis.

 

68) Forward rates are quoted:

 

69) Tri State Pickle Company preferred stock pays a perpetual annual dividend of 2 1/2% of its par value. Par value of TSP preferred stock is $100 per share. If investors’ required rate of return on this stock is 15%, what is the value of per share?

 

70) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?

 

71) According to the hedging principle, permanent assets should be financed with _____ liabilities.

 

72) Exchange rate risk:

 

73) The common stockholders are most concerned with:

 

74) Which of the following is most consistent with the hedging principle in working capital management?

 

75) You hold a portfolio with the following securities: 

    Security    Percent of Portfolio    Beta    Return

X Corporation    20%    1.35    14%

Y Corporation    35%    .95    10%

Z Corporation    45%    .75    8%

Compute the expected return and beta for the portfolio.

 

76) Economists' economic-buyer theory assumes that __________.

 

77) The statement, "Of course people will buy our product--each of its features is better than the competition," most closely reflects which consumer behavior concept?

 

78) The three basic tasks of ALL managers, according to the text, are:

 

79) A cluster analysis of the "toothpaste market" would probably show that:

 

80) "Marketing strategy planning" means:

 

81) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:

 

82) Regarding organizational buying, the people who have the power to select or approve the supplier--especially for larger purchases--are called:

 

83) The economists' view of buyers:

 

84) __________ is a marketing management aid which refers to how customers think about proposed and/or present brands in a market.

 

85) When evaluating macro-marketing:

 

86) Marketing:

 

87) Clustering techniques applied to segmenting markets __________.

 

88) Product disparagement differs from defamation of a nonpublic figure in that:

 

89) Mary arrived at work one day, and her boss said to her, “That’s the ugliest dress I have ever seen. Because you wore that to work today, you are fired.” Assuming that Mary is an at-will employee, which of the following is true?

 

90) Which of the following is correct about interpretive rules?

 

91) In responding to a constitutional challenge to the Computer Decency Act, the U.S. Supreme Court ruled that:

 

92) In a criminal proceeding, what is the difference between an indictment and an information?

 

93) Which social responsibility theory has been advocated by Novel Prizewinning economist Milton Friedman?

 

94) If a minor wishes to be bound to a contract after becoming an adult, she must:

 

95) Which of the following statements is true regarding the relationship of law and ethics?

 

96) Information which comes to the knowledge of an agent is:

 

97) Which of the following is true about “proof of claims?”

 

98) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States' second largest trading partner.

 

99) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?

 

100) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.

BUS 475 Final Exam 7

Business / Economics

9/13/12

Asked: 9/13/12 9:25 AM
Opening Offer: $30.00
Due Date: 12/31/69

1) A well-designed activity-based costing system starts with __________.

2) Managerial accounting __________.

3) What effect do current technology changes have on managerial accounting?

4) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals: 

Income Statement     Balance Sheet

Dr.                  Cr.                   Dr.                  Cr.

Totals              $58,000           $48,000           $34,000           $44,000
The net income (or loss) for the period is __________.

5) "Generally accepted" in the phrase generally accepted accounting principles means that the principles _______.

6) If a company reports a net loss, it __________.

7) 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?

8) The first step in activity-based costing is to ________.

9) Which one of the following items is not generally used in preparing a statement of cash flows?

10) What exists when budgeted costs exceed actual results?

11) Which list below best describes the major services performed by public accountants?

12) The cost of an asset and its fair market value are __________.

13) Sam's Used Cars uses the specific identification method of costing inventory. During March, Sam purchased three cars for $6,000, $7,500, and $9,750, respectively. During March, two cars are sold for $9,000 each. Sam determines that at March 31, the $9,750 car is still on hand. What is Sam’s gross profit for March?

14) A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $240 and used FIFO costing, the gross profit for the period would be _____.

15) Lucy starts her own psychiatric practice, but her expenditures to open the practice exceed her income. Lucy is a __________.

16) Which of the following statements about GDP is correct?

17) A logical starting point from which the study of international trade begins is __________.

18) In computing GDP, market prices are used to value final goods and services because __________.

19) Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally he decides on Option B. The opportunity cost of this decision is __________.

20) To move the allocation of resources closer to the social optimum, policymakers should typically try to induce firms in an oligopoly to __________.

21) Resources are __________.

22) Many U.S. business leaders argue that the current state of U.S. net exports is the result of __________.

23) The balance of payment account is made up of:

24) Real GDP __________.

25) The model of aggregate demand and aggregate supply explains the relationship between __________.

26) Edward Prescott and Finn Kydland won the Nobel Prize in Economics in 2004. One of their contributions was to argue that if a central bank could convince people to expect zero inflation, then the Fed would be tempted to raise output by increasing inflation. This possibility is known as __________.

27) Over the past two decades, the United States has __________.

28) ABC International carefully watches the actions of its most innovative competitor and learns from them. ABC can establish a low-cost position by:

29) A leader is:

30) The pursuit of lucrative opportunities by enterprising individuals is called:

31) A series of quality standards developed by a committee working under the International Organization for Standardization to improve total quality in all businesses for the benefit of both producers and consumers is:

32) A manager's ability to stimulate people to be high performers is referred to as:

33) An invisible barrier that makes it difficult for certain groups, such as minorities and women, to move beyond a certain level in the organizational hierarchy is referred to as the:

34) The Aquatic Center, Inc. periodically reviews the goals of the company. During the process, The Aquatic Center managers analyze their current strategies as compared to their competitors, determine goals that they will pursue and decide upon specific actions for each area of the company to take in pursuit of these goals. The Aquatic Center managers have been engaged in the management function of:

35) Which of these refers to the practices aimed at discovering and harnessing an organization's intellectual resources?

36) Which of these represent skills that managers need?

37) Teams that work on long-term projects but disband once the work is completed are known as:

38) Building a dynamic organization is another way of describing which function of management?

39) When a company establishes technology leadership by pioneering unique products or services that command premium prices, it has benefited from a:

40) The most dominant areas in the global economy include: 

41) Listening to employee suggestions, gaining support for organizational objectives and fostering an atmosphere of teamwork are all considered:

42) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18. 
For this sample, the median is _____.

43) A poll showed that 48 out of 120 randomly chosen graduates of California medical schools last year intended to specialize in family practice. What is the width of a 90% confidence interval for the proportion that plan to specialize in family practice?

44) William used a sample of 68 U.S. cities to estimate the relationship between Crime (annual property crimes per 100,000 persons) and Income (median income per capita). His estimated regression equation was Crime = 428 + .050 Income. 
Which outcomes would be likely in a bivariate regression on 45 randomly chosen U.S. cities in 2005 with
of robberies in each city (thousands of robberies) and
of police force in each city (thousands of police)?

45) In a random sample of 810 women employees, it is found that 81 would prefer working for a female boss. The width of the 95% confidence interval for the proportion of women who prefer a female boss is _____.

46) Independent events A and B would be consistent with which of the following statements:

 

47) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18. 
For this sample, the standard deviation is approximately _____.

48) In lean systems, if a defective product is found, which of the following is generally NOT done?

49) In a network diagram, an activity:

50) Which is not a tool of statistical quality control?

51) A computer analysis reveals that the best-fitting trend model is Yt = 4.12 e 0.987 t. The trend was fitted using year-end common stock prices for Melodic Kortholt Outlet for the last six years. The R2 is 0.8571. 
If we fit a linear trend to data that are growing exponentially __________.

52) The one-worker, multiple machines approach functions as:

53) Zappos built the majority of its information systems using which of the following?

54) Search engines and metasearch engines are examples of which network application?

55) In the _____ phase of the decision making process, managers test potential solutions “on paper.”

56) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.

57) _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information.

58) Which of the following are not provided by digital dashboards?

59) A company wants to use data from past promotional mailings to identify people who would likely respond favorably to future mailings. This company would most likely use _____.

60) Credit card companies would most likely use which of the following to check for fraudulent credit card use?

61) Computer support is greatest for which of the following problems?

62) International Game Technology’s new ERP system produced all of the following benefits except:

63) Disadvantages of using current liabilities as opposed to long-term debt include:

64) Suppose you determine that the NPV of a project is $1,525,855. What does that mean?

65) An increase in future value can be caused by an increase in the __________.

66) Dublin International Corporation’s marginal tax rate is 40%. It can issue three-year bonds with a coupon rate of 8.5% and par value of $1,000. The bonds can be sold now at a price of $938.90 each. The underwriters will charge $23 per bond in flotation costs. Determine the approximate after-tax cost of debt for Dublin International to use in a capital budgeting analysis.

67) A stock with a beta greater than 1.0 has returns that are _____ volatile than the market, and a stock with a beta of less than 1.0 exhibits returns which are _____ volatile than those of the market portfolio.

68) At 8% compounded annually, how long will it take $750 to double?

69) Petrified Forest Skin Care, Inc. pays an annual perpetual dividend of $1.70 per share. If the stock is currently selling for $21.25 per share, what is the expected rate of return on this stock?

70) Exchange rate risk:

71) According to the hedging principle, permanent assets should be financed with _____ liabilities.

72) PepsiCo calculates unlevered betas for each peer group in order to:

73) If the quote for a forward exchange contract is greater than the computed price, the forward contract is:

74) Bondholders have a priority claim on assets ahead of:

75) The common stockholders are most concerned with:

76) Regarding organizational buying, the people who have the power to select or approve the supplier--especially for larger purchases--are called:

77) "Marketing strategy planning" means:

78) A cluster analysis of the "toothpaste market" would probably show that:

79) When doing "positioning," a marketing manager should:

80) Economists' economic-buyer theory assumes that __________.

81) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:

82) When evaluating macro-marketing:

83) "Positioning":

84) Coca-Cola is taking advantage of the new willingness of Chinese leaders to engage in international trade by marketing its soft drinks in China. What type of opportunity is Coke pursuing?

85) In comparison to the buying of final consumers, the purchasing of organizational buyers:

86) The basic objective of the U.S. market-directed economic system is to:

87) The clustering techniques that can be used in segmenting:

88) Which of the following terms need not be disclosed under Truth-in-Lending Act?

89) The tort of intentional interference with contractual relations requires the following except:

90) Which of the following is correct about litigating commercial disputes?

91) Which of the following activities by an administrative agency requires public notice and participation?

92) What type of commercial speech did the U.S. Supreme Court say was protected in the Greater New Orleans Broadcasting Association, Inc. v. United States case?

93) Which of the following lists, in descending priority, of sources considered by most courts in settling questions of international law?

94) Information which comes to the knowledge of an agent is:

95) A professional corporation is one that:

96) What makes a publicly held corporation different from a public corporation?

97) A “closely held corporation” is a corporation that is owned by:

98) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.

99) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?

100) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States' second largest trading partner.

BUS 475 Final Exam 6

Business / Economics

9/13/12

Asked: 9/13/12 7:22 AM
Opening Offer: $30.00
Due Date: 12/31/69

1) As Plant Controller, you are trying to determine which costs over which you have the most control on a day to day basis. Your goal is to achieve better profitability. The Plant Operations Manager suggests that overhead is the easiest area to directly reduce costs. Which of the following items would be classified as manufacturing overhead?

 

2) Balance sheet accounts are considered to be______.

 

3) A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $80; Second purchase $95; Third purchase $85. If the company sold two units for a total of $240 and used FIFO costing, the gross profit for the period would be _____.

 

4) The major reporting standard for management accounts is __________.

 

5) The standards and rules that are recognized as a general guide for financial reporting are called _______.

 

6) Managerial accounting __________.

 

7) Hess, Inc. sells a single product with a contribution margin of $12 per unit and fixed costs of $74,400 and sales for the current year of $100,000. How much is Hess’s break even point?

 

8) These are selected account balances on December 31, 2008. 

What is the net amount of property, plant, and equipment that will appear on the balance sheet?

 

9) Which one of the following is a product cost?

 

10) 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?

 

11) The income statement and balance sheet columns of Pine Company's worksheet reflects the following totals: 

Income Statement                 Balance Sheet

Dr.                  Cr                    .Dr                  .Cr.

Totals

$58,000           $48,000           $34,000            $44,000

The net income (or loss) for the period is __________.

 

12) Multinational corporations __________.

 

13) What exists when budgeted costs exceed actual results?

 

14) The primary purpose of the statement of cash flows is to __________.

 

15) A logical starting point from which the study of international trade begins is __________.

 

16) Resources are __________.

 

17) Which of the following statements about GDP is correct?

 

18) One characteristic of an oligopoly market structure is:

 

19) If a binding price ceiling were imposed in the computer market, __________.

 

20) The general term for market structures that fall somewhere in-between monopoly and perfect competition is __________.

 

21) A rational decision maker __________.

 

22) The political business cycle refers to __________.

 

23) Real GDP __________.

 

24) The part of the balance of payments account that lists all long-term flows of payments is called the:

 

25) In general, the longest lag for __________.

 

26) The balance of payment account is made up of:

 

27) Most economists use the aggregate demand and aggregate supply model primarily to analyze _______.

 

28) An organization that is managed aggressively and has growth and high profits as primary objectives may be considered a(n):

 

29) Which of these describes a vision, as it pertains to leadership?

 

30) As related to managing of human resources, diversity refers to:

 

31) Which of the following best describes a mental image of a possible and desirable future state of the organization?

 

32) A leader is:

 

33) Teams that operate separately from the regular work structure and exist temporarily are known as:

 

34) Building a dynamic organization is another way of describing which function of management?

 

35) The term used to refer to all kinds of differences including religious affiliation, age, disability status, economic class and lifestyle in addition to gender, race, ethnicity and nationality is:

 

36) The pursuit of lucrative opportunities by enterprising individuals is called:

 

37) The best way for an employer to find out if a potential employee can do a job is by __________.

 

38) Having individuals actually do the job they are applying for as a test to see if they can do it is _______.

 

39) Your roommate is interested in starting a business and everybody has been giving him different information about being an entrepreneur. Since you have been studying about entrepreneurship and new ventures, which of these would you tell him is true?

 

40) Managers will utilize __________ skills with increasing frequency as they rise within an organization.

 

41) To be competitive in a global economy, Europeans must increase their level of:

 

42) Twelve randomly-chosen students were asked how many times they had missed class during a certain semester, with this result: 2, 1, 5, 1, 1, 3, 4, 3, 1, 1, 5, 18. 
For this sample, which measure of central tendency is least representative of the “typical” student?

 

43) From its 32 regions, the Federal Aviation Administration selects 5 regions, and then randomly audits 20 departing commercial flights in each region for compliance with legal fuel and weight requirements. This is __________.

 

44) Dullco Manufacturing claims that its alkaline batteries last forty hours on average in a certain type of portable CD player. Tests on a random sample of 18 batteries showed a mean battery life of 37.8 hours with a standard deviation of 5.4 hours. 
In determining the
 p-value for reporting the study's findings, which of the following is true?

 

45) A financial institution wishes to estimate the mean balances owed by its credit card customers. The population standard deviation is estimated to be $300. If a 98 percent confidence interval is used and an interval of ±$75 is desired, how many cardholders should be sampled?

 

46) A poll showed that 48 out of 120 randomly chosen graduates of California medical schools last year intended to specialize in family practice. What is the width of a 90% confidence interval for the proportion that plan to specialize in family practice?

 

47) Use the following table to answer question: 
P(MA) is approximately _____.

 

48) Which one of the following statements concerning production and staffing plans is best?

 

49) Suppose the estimated quadratic model Yt = 500 + 20 t - t2 is the best-fitting trend of sales of XYZ Inc. using data for the past twenty years (t = 1, 2,.., 20). 
Which statement is
 incorrect?

 

50) You are faced with a linear programming objective function of: 
 Max P = $20X + $30Y
 
and constraints of:
 
 3X + (Constraint A)
 
 5X – (Constraint B)
 
You discover that the shadow price for Constraint A is 7.5 and the shadow price for Constraint B is 0. Which of these statements is TRUE?

 

51) Which one of the following statements concerning production and staffing plans is best?

 

52) Queuing models use an A/B/C notation. What do these variables represent?

 

53) The Global, Web-Based Platform enables individuals to do which of the following?

 

54) Networks enable which of the following applications?

 

55) Which of the following is NOT an advantage of the buy option for acquiring IS applications?

 

56) Zappos built the majority of its information systems using which of the following?

 

57) When customers access a Web site and make purchases, they generate __________.

 

58) International Game Technology’s new ERP system produced all of the following benefits except:

 

59) A company wants to use data from past promotional mailings to identify people who would likely respond favorably to future mailings. This company would most likely use _____.

 

60) Which of the following statements about information systems is not correct?

 

61) Computer support is greatest for which of the following problems?

 

62) Competitive advantage for an organization manifests as all of the following except:

 

63) Mortgage bonds:

 

64) Which of the following represents an attempt to measure the earnings of the firm’s operations over a given time period?

 

65) You hold a portfolio with the following securities: 

                        Percent

   Security            of Portfolio                   Beta     Return

X Corporation      20%                             1.35       14%

Y Corporation      35%                             0.95       10%

Z Corporation      45%                             0.75       8%

 

Compute the expected return and beta for the portfolio.

 

66) An increase in future value can be caused by an increase in the __________.

 

67) What is the yield to maturity of a nine-year bond that pays a coupon rate of 20% per year, has a $1,000 par value, and is currently priced at $1,407? Round your answer to the nearest whole percent and assume annual coupon payments.

 

68) Your company is considering an investment in a project which would require an initial outlay of $300,000 and produce expected cash flows in Years 1 through 5 of $87,385 per year. You have determined that the current after-tax cost of the firm’s capital (required rate of return) for each source of financing is as follows: 

Long-term debt currently makes up 20% of the capital structure, preferred stock 10%, and common stock 70%. What is the net present value of this project?

 

69) Bondholders have a priority claim on assets ahead of:

 

70) A stock with a beta greater than 1.0 has returns that are _____ volatile than the market, and a stock with a beta of less than 1.0 exhibits returns which are _____ volatile than those of the market portfolio.

 

71) The common stockholders are most concerned with:

 

72) Tri State Pickle Company preferred stock pays a perpetual annual dividend of 2 1/2% of its par value. Par value of TSP preferred stock is $100 per share. If investors’ required rate of return on this stock is 15%, what is the value of per share?

 

73) A machine costs $1,000, has a three-year life, and has an estimated salvage value of $100. It will generate after-tax annual cash flows (ACF) of $600 a year, starting next year. If your required rate of return for the project is 10%, what is the NPV of this investment? (Round your answerwer to the nearest $10.)

 

74) Which of the following best represents operating income?

 

75) Given the following annual net cash flows, determine the IRR to the nearest whole percent of a project with an initial outlay of $1,520. 

 

76) Coca-Cola is taking advantage of the new willingness of Chinese leaders to engage in international trade by marketing its soft drinks in China. What type of opportunity is Coke pursuing?

 

77) When one considers the strategy decisions organized by the four Ps, branding is related to packaging as:

 

78) The statement, "Of course people will buy our product--each of its features is better than the competition," most closely reflects which consumer behavior concept?

 

79) Analysis of demographic dimensions:

 

80) Regarding organizational buying, the people who have the power to select or approve the supplier--especially for larger purchases--are called:

 

81) "Positioning":

 

82) The managerial process of developing and maintaining a match between the resources of an organization and its market opportunities is called:

 

83) The "four Ps" of a marketing mix are:

 

84) The basic objective of the U.S. market-directed economic system is to:

 

85) Comparing GDP for foreign countries can help a marketing manager evaluate potential markets if the manager remembers that:

 

86) An Australian wine producer, facing declining sales at home, set up a new channel of distribution to sell wine in the United States. This seems to be an effort at:

 

87) Which of the following is a business or organizational customer?

 

88) Probable cause is most directly associated with which step of the criminal process?

 

89) Justin was hired in February of 2004 as a salesperson. There is no written employment contract, and Justin is paid on a commission basis. Justin’s manager has said to Justin on several occasions that if Justin continues to meet his sales quotas, that the company “will keep him around for a long time.” Justin has always met his sales quotas, but is told one day that they have decided to replace him because he does not project the image that the company wants. If Justin is an at-will employee, which of the following is true?

 

90) In a criminal proceeding, what is the difference between an indictment and an information?

 

91) Under Section 2 of the Sherman Act, rather than making a presumption whether monopoly power exists, the courts will examine all the facts and circumstances to determine whether monopoly power exists when the defendant holds between _____ percent and _____ percent of the relevant market:

 

92) Which of the following is true about the Sherman Act?

 

93) Which of the following is correct with regard to the relationship between law and ethics?

 

94) What is the major convention that provides international protection to patents?

 

95) For which of the following kinds of intellectual property is a filing or registration required in order to receive protection?

 

96) The Houston-based energy company that filed for Chapter 11 bankruptcy and whose business conduct is one of the grossest examples of corporate greed and fraud in America was:

 

97) Which of the following is true about trademark registration?

 

98) Although the U.S. has had a longstanding agreement with _____ after the passage of NAFTA, _____ became the United States' second largest trading partner.

 

99) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?

 

100) One study found that manufacturing labor costs about _____ an hour in China, compared to _____ dollars in the United States.

ACC 544 Final Exam

Business / Economics

9/11/12

Asked: 9/11/12 5:42 PM
Opening Offer: $25.00
Due Date: 12/30/12

1) Which is NOT one of the AICPA's Code of Professional Conduct principles?

   A.   The public interest

  B.   Integrity

  C.   Quality control

  D.   Scope and nature of services

 

2) The ethical philosophy that considers the consequences of similar persons acting under similar circumstances is called

   A.   utilitarian principle.

  B.   imperative principle.

  C.   categorical imperative.

  D.   generalization argument.

 

3) The fundamental issues in independence require that the auditor avoid

  A.   financial connections with the client and financial connections with the client's competitors.

 B.   acting as management and representing the shareholder’s interests.

 C.   responsibility for the client's internal control and subordinating judgment concerning audit issues.

 D.   financial connections with the firm and acting as management.

 

4) Auditors have greater liability under the Securities Act of 1933. Which is the reason that this greater liability exists?

   A.   The auditor is liable for treble damages under the Securities Act of 1933.

  B.   The plaintiff does not have to prove that the financial statements were misstated.

  C.   The plaintiff does not have to prove that they relied on the financial statements.

  D.   The plaintiff does not have to prove that there were damages.

 

5) The legal doctrine that states that a successful plaintiff may recover the full amount of damages from any defendant that has the ability to pay is called

A)        Joint and several liability.

B)        Proportionate liability.

C)        Complete liability.

D)        Total liability.

 

6) The SEC regulation that governs disclosures in annual reports other than financial statements is the

   A.   Securities Act of 1933.

  B.   Securities Exchange Act of 1934.

  C.   Regulation S-X.

  D.   Regulation S-K.

 

7) Inspection of tangible assets provides evidence for which assertion?

  A.   Existence and occurrence

  B.   Completeness

  C.   Rights and obligations

  D.   Presentation and disclosure

 

8) The risk that the auditor may provide an inappropriate opinion based on their review of materially misstated financial statements is referred to as

   A.   audit risk.

  B.   detection risk.

  C.   information risk.

  D.   business risk.

 

9) Auditors perform the steps in which order?

 A.   Determine audit risk; assess control risk; determine detection risk; and set materiality.

 B.   Set materiality; determine audit risk; assess control risk; and determine detection risk.

 C.   Set materiality; assess control risk; determine detection risk; and determine audit risk.

 D.   Determine audit risk; set materiality; assess control risk; and determine detection risk.

 

10) An internal control questionnaire (ICQ) contains the question: "Does a single individual receive and list ca to sales and general ledgers?" What action must an auditor take if the manager of accounting responds yes to the

  A.   No action is required because yes responses on an ICQ indicate the presence of good control.

  B.   Statistically sample the response along with all other yes responses to verify their accuracy.

  C.   Treat it as a potential control weakness and perform appropriate testing.

  D.   Include it with other reportable findings in the next audit report.

 

11) In addition to gaining an understanding of the internal controls, an external auditor, at minimum, is expect

 A.   evaluate the internal auditors' work as an important part of the accounting system element of the inter

 B.   observe client employees to determine the extent of their compliance with quality control standards.

 C.   trace a few transactions through the control process to obtain evidence that the controls have been pla

 D.   study organization charts to obtain an understanding of the informal lines of communication.

 

12) Which method provides the auditor with the best visual grasp of a system and a means for analyzing complex operations?

  A.   A flowcharting approach

  B.   A matrix approach

  C.   A questionnaire approach

  D.   A detailed narrative approach

  

13) Which of the accounts is NOT included in the revenue and collection cycle?

  A.   Cash in bank

  B.   Raw materials

  C.   Accounts receivable

  D.   Bad debt expense

 

14) The most reliable evidence comes from

  A.   a positive confirmation.

  B.   a blank confirmation.

  C.   a negative confirmation.

  D.   examining a sales invoice.

 

15) Custody is transferred from the warehouse to the shipping department upon authorization of the

  A.   shipping order.

  B.   purchase order.

  C.   customer order.

  D.   invoice.

 

16) An enlightened management may decrease the probability of fraud in the company best by

 A.   restricting authority for profit objective determination to top management.

 B.   stressing negative observations on their work to increase performance.

 C.   measuring performance and awarding bonuses on the basis of short-term operating results.

 D.   establishing work teams that share responsibilities, performance, and bonuses based on collective effor

 

17) A proof of cash is normally used

  A.   for all engagements.

  B.   when control risk for cash is low.

  C.   to test the transactions process when controls over cash are weak.

  D.   when lapping is suspected.

 

18) Which is an appropriate audit program step for the review of canceled checks for authorized signatures?

 A.   Compare the check date with the first cancellation date.

 B.   Examine a representative sample of signed checks, and determine that the signatures are authorized in the corporate signature book.

 C.   Determine that all checks are to be signed by an individual authorized by the board.

 D.   Confirm the signatures from a sample of checks directly with the bank.

 

19) The production authorization starts with a

  A.   purchase order.

  B.   sales forecast.

  C.   production plan.

  D.   bill of materials.

 

20) Which is NOT recognized by GAAP as appropriate for determining inventory cost?

  A.   FIFO

  B.   Weighted average

  C.   LIFO

  D.   Standard costs

 

21) Inventory must be recorded when

  A.   the company has title to it.

  B.   the related revenue is recognized.

  C.   it is received.

  D.   it is shipped from the vendor.

  

22) Canceling invoices with a paid stamp after payment is a control that relates to which assertion?

  A.   Existence or occurrence

  B.   Rights and obligations

  C.   Completeness

  D.   Valuation or allocations

 

23) Which is NOT a step in the search for unrecorded liabilities?

  A.   Examine the open purchase order file.

  B.   Examine the unmatched receiving reports.

  C.   Examine disbursements for the period immediately before the end of the period.

  D.   All of these are steps in the search.

 

24) Which control question relates to the existence and occurrence objective in purchasing and accounts payable?

 A.   Are the purchase order forms prenumbered and is the numerical sequence checked for missing documents?

 B.   Does the chart of accounts and accounting manual provide instructions for classifying debit entries?

 C.   Does the accounting department check invoices for mathematical accuracy?

 D.   Are receiving reports prepared for each item received?

 

 25) The audit objective that all transactions and accounts that should be presented in the financial statements are included is related to which assertion?

  A.   Existence or occurrence

  B.   Presentation and disclosure

  C.   Rights and obligations

  D.   Completeness

 

26) Which best describes the main reason independent auditors report on management's financial statements?

 A.   A management fraud may exist, and it is likely to be detected by independent auditors.

 B.   The management that prepares the statements may have a poorly designed system of internal control.

 C.   The management that prepares the statements and ther persons who use the statements may have conflicting interests.

 D.   Misstated account balances may be corrected as the result of the independent audit work.

 

27) The audit objective that all footnotes have been included in the financial statements is related most closely to which assertation?

  A.   Existence or occurrence

  B.   Presentation and disclosure

  C.   Rights and obligations

  D.   Completeness

ACC 280 final exam

Business / Economics

9/9/12

Asked: 9/9/12 4:21 PM
Opening Offer: $25.00
Due Date: 12/31/69

1) The accounting process is correctly sequenced as

A.  identification, communication, recording

B.  recording, communication, identification

C.  identification, recording, communication

D.  communication, recording, identification

   

2) Bookkeeping differs from accounting in that bookkeeping primarily involves which part of the accounting process?

A.  Identification

B.  Communication

C.  Recording

D.  Analysis

 

3) Generally accepted accounting principles are

A.  income tax regulations of the Internal Revenue Service

B.  standards that indicate how to report economic events

C.  theories that are based on physical laws of the universe

D.  principles that have been proven correct by academic researchers

   

4) The private sector organization involved in developing accounting principles is the

A.  Feasible Accounting Standards Body

B.  Financial Accounting Studies Board

C.  Financial Accounting Standards Board

D.  Financial Auditors' Standards Body

 

5) GAAP stands for

A.  Generally Accepted Auditing Procedures

B.  Generally Accepted Accounting Principles

C.  Generally Accepted Auditing Principles

D.  Generally Accepted Accounting Procedures

   

6) The four primary financial statements are

A.  the general ledger, the working trial balance, the general journal and the balance sheet

B.  the balance sheet, the working trial balance, the income statement and the statement of cash flows

C.  the cash account, the statement of stockholder’s equity, the year-end worksheet, and the balance sheet

D.  the balance sheet, the income statement, the statement of stockholder’s equity and the statement of cash flows

   

7) Which of the following financial statements is a point in time report?

A.  Balance sheet

B.  Income statement

C.  Statement of stockholder's equity

D.  Statement of cash flows

 

8) In recording an accounting transaction in a double-entry system,

A.  the number of debit accounts must equal the number of credit accounts

B.  there must always be entries made on both sides of the accounting equation

C.  the amount of the debits must equal the amount of the credits

D.  there must only be two accounts affected by any transaction

 

9) An account will have a credit balance if the

A.  credits exceed the debits

B.  first transaction entered was a credit

C.  debits exceed the credits

D.  last transaction entered was a credit

 

10) Which of the following statements is true?

A.  Debits increase assets and increase liabilities.

B.  Credits decrease assets and decrease liabilities.

C.  Credits decrease assets and increase liabilities.

D.  Debits decrease liabilities and decrease assets.

 

11) On June 1, 2008, Leno Inc. buys a copier machine for its business and finances this purchase with cash and a note. When journalizing this transaction, the company's accountant will

A.  use two journal entries

B.  make a compound entry

C.  make a simple entry

D.  list the credit entries first, which is proper form for this type of transaction acc 280 final exam

   

12) Posting of journal entries should be done in

A.  account number order

B.  alphabetical order

C.  chronological order

D.  dollar amount order

 

13) Bank errors

A.  occur because of time lags

B.  must be corrected by debits

C.  are infrequent in occurrence

D.  are corrected by making an adjusting entry on the depositor's books

   

14) A $2,000 advance payment for a 1-year insurance is recorded as

A.  Insurance expense $2,000              Cash $2,000

B.  Cash $2,000                                  Insurance expense $2,000

C.  Prepaid insurance $2,000              Cash $2,000

D.  Prepaid insurance $2,000              Insurance expense $2,000

   

15) Carson company purchased a 2-year insurance policy for $4,800 on January 1, 2010. The $4,800 was debited to the Prepaid Insurance account. What adjustment should be made to record expired insurance January 31, 2010?

A.  Debit insurance expense and credit prepaid insurance for $2,400.

 B.  Debit prepaid insurance and credit insurance expense for $200.

C.  Debit prepaid insurance and credit insurance expense for $400.

D.  Debit insurance expense and credit prepaid insurance for $200.

           

16) Can financial statements be prepared directly from the adjusted trial balance?

A.  No, they cannot. The general ledger must be used.

B.  Yes, adjusting entries have been recorded in the general journal and posted to the ledger accounts.

C.  No, the adjusted trial balance merely proves the equality of the total debit and total credit balances in the ledger after adjustments are posted. It has no other purpose.

D.  Yes, they can because that is the only reason that an adjusted trial balance is prepared.

 

17) The information for preparing a trial balance on a worksheet is obtained from

A.  financial statements

B.  general ledger accounts

C.  general journal entries

D.  business documents acc280 final exam

 

18) If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has

A.  earned net income for the period

B.  an error because debits do not equal credits

C.  suffered a net loss for the period

D.  to make an adjusting entry

 

19) After all of the account balances have been extended to the income statement columns of the work sheet, the totals of the debit and credit columns are $50,000 and $40,000, respectively. What is the amount of net income or net loss for the period?

A.  $10,000 net income

 B.  $10,000 net loss

C.  $50,000 net income

D.  $90,000 net income

 

20) The income summary account

A.  is a permanent account

B.  appears on the balance sheet

C.  appears on the income statement

D.  is a temporary account

 

21) Which of the following is an income statement account?

A.  Revenue

B.  Salaries payable

C.  Cash

D.  Accounts payable

   

22) Which of the following is a balance sheet account?

A.  Sales revenue

B.  Salaries payable

C.  Salaries expense

D.  Service revenue

 

23) In order to close the dividends account, the

A.  income summary account should be debited

B.  income summary account should be credited

C.  retained earnings account should be credited

D.  retained earnings account should be debited

 

24) In preparing closing entries,

A.  each revenue account will be credited

B.  each expense account will be credited

C.  the retained earnings account will be debited if there is net income for the period

D.  the dividends account will be debited

 

25) Profit margin is a measure of

A.  liquidity

B.  profitability

C.  solvency

D.  risk

 

26) Working capital is

A.  net income divided by sales

B.  current assets minus current liabilities

C.  current assets divided by current liabilities

D.  total debt divided by total assets

 

27) Internal control is defined, in part, as a plan that safeguards

A.  all balance sheet accounts

B.  assets

C.  liabilities

D.  capital stock

 

28) Having one person post entries to accounts receivable subsidiary ledger and a different person post to the Accounts Receivable Control account in the general ledger is an example of

A.  inadequate internal control

B.  duplication of effort

C.  external verification

D.  segregation of duties

 

29) Certified Public Accounting firms that audit public companies are reviewed by

A.  The Securities and Exchange Commission

B.  The American Institute of Certified Public Auditors

C.  The Public Company Accounting Oversight Board

D.  The Financial Auditing Standards Board

 

30) The entity responsible for setting International Accounting Standards is

A.  The Financial Accounting Standards Board

B.  The International Monetary Fund

C.  The International Accounting Standards Board

D.  The Financial Accounting Foundation

FIN 534 quiz 4 Week 5

Business / Economics

8/29/12

Asked: 8/29/12 12:58 PM
Opening Offer: $25.00
Due Date: 12/30/12

FIN 534 Quiz 4

 Question 1

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?

 

1)      The required returns on all stocks have fallen, but the decline has been greater for stocks with lower betas.

2)      The required returns on all stocks have fallen, but the fall has been greater for stocks with higher betas

3)      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

4)      Required returns have increased for stocks with betas greater than 1.0 but have declined for stocks with betas less than 1.0

5)      The required returns on all stocks have fallen by the same amount

 

 

Question 2

Assume that the risk-free rate is 5%. Which of the following statements is CORRECT?

 

1) If a stock has a negative beta, its required return under the CAPM would be less than 5%.

2) If a stock's beta doubled, its required return under the CAPM would also double.

3) If a stock's beta doubled, its required return under the CAPM would more than double.

4) If a stock's beta were 1.0, its required return under the CAPM would be 5%.

5) If a stock's beta were less than 1.0, its required return under the CAPM would be less than 5%.

 

 

Question 3

Which of the following statements is most correct?

 

a. If you add enough randomly selected stocks to a portfolio, you can completely eliminate all the market risk from the portfolio.

b. If you form a large portfolio of stocks each with a beta greater than 1.0, this portfolio will have more market risk than a single stock with a beta = 0.8.

c. Company-specific (or unsystematic) risk can be reduced by forming a large portfolio, but normally even highly-diversified portfolios are subject to market (or systematic) risk.

d. All of the statements above are correct.

e. Statements b and c are correct.

 

Question 4

A highly risk-averse investor is considering adding one additional stock to a 3-stock portfolio, to form a 4-stock portfolio. The three stocks currently held all have b = 1.0, and they are perfectly positively correlated with the market. Potential new Stocks A and B both have expected returns of 15%, are in equilibrium, and are equally correlated with the market, with r = 0.75. However, Stock A's standard deviation of returns is 12% versus 8% for Stock B. Which stock should this investor add to his or her portfolio, or does the choice not matter?

 

1) Either A or B, i.e., the investor should be indifferent between the two

2) Stock A

3) Stock B

4) Neither A nor B, as neither has a return sufficient to compensate for risk

5) Add A, since its beta must be lower

 

 

Question 5

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?

 

If you invest $50,000 in Stock X and $50,000 in Stock Y, your 2-stock portfolio will have a beta significantly lower than 1.0, provided the returns on the two stocks are not perfectly correlated.

 Stock Y's return during the coming year will be higher than Stock X's return.

 If expected inflation increases but the market risk premium is unchanged, the required returns on the two stocks will 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 6

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?

 

a. 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.

 b. The required return on all stocks will remain unchanged.

c. The required return will fall for all stocks, but it will fall more for stocks with higher betas.

d. The required return for all stocks will fall by the same amount.

e. The required return will fall for all stocks, but it will fall less for stocks with higher betas

 

Question 7

Stock A's beta is 1.5 and Stock B's beta is 0.5.  Which of the following statements must be true, assuming the CAPM is correct.

 

1) Stock A's beta is 1.5 and Stock B's beta is 0.5.  Which of the following statements must be true, assuming the CAPM is correct.

2) In equilibrium, the expected return on Stock B will be greater than that on Stock A

3) When held in isolation, Stock A has more risk than Stock B

4) Stock B would be a more desirable addition to a portfolio than A

5) In equilibrium, the expected return on Stock A will be greater than that on B

 

 

 Question 8

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 has a $50,000 portfolio with a beta of 0.8, an expected return of 9.2%, and her standard deviation is also 25%. The correlation coefficient, r, between Bob's and Becky's portfolios is zero. Bob and Becky are engaged to be married. Which of the following best describes their combined $100,000 portfolio?

 

a. 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%.

 b. 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%.

c. 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%.

d. The combined portfolio's standard deviation will be greater than the simple average of the two

 portfolios' standard deviations, 25%.

e. The combined portfolio's standard deviation will be equal to a simple average of the two portfolios' standard deviations, 25%.

 

 

Question 9

 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.)

 

a. When held in isolation, Stock A has more risk than Stock B.

 b. Stock B must be a more desirable addition to a portfolio than A.

c. Stock A must be a more desirable addition to a portfolio than B.

d. The expected return on Stock A should be greater than that on B.

e. The expected return on Stock B should be greater than that on A.

 

 

Question 10

For a portfolio of 40 randomly selected stocks, which of the following is most likely to be true?

 

a. The riskiness of the portfolio is greater than the riskiness of each of the stocks if each was held in

isolation.

 b. The riskiness of the portfolio is the same as the riskiness of each stock if it was held in isolation.

c. The beta of the portfolio is less than the average of the betas of the individual stocks.

d. The beta of the portfolio is equal to the average of the betas of the individual stocks.

e. The beta of the portfolio is larger than the average of the betas of the individual stocks.

 

 

Question 11

 Which of the following statements is CORRECT?

Bob has a $50,000 stock portfolio with a beta of 1.2, an expected return of 10.8 percent, and a standard deviation of 25 percent.  Melissa has a $50,000 portfolio with a beta of 0.8, and expected return of 9.2 percent, and a standard deviation of 25 percent.  The correlation coefficient, r, between Bob’s and Melissa’s portfolio is 0.   Which of the following best describes their combined $100,000 portfolio?

 

1 The combined portfolios expected return is a simple average of the expected returns of the two individual portfolios (10%).

2 The combined portfolio’s beta is a simple average of the betas of the two individual portfolios (1.0).

3 The combined portfolios’ standard deviation is less than a simple average of the two portfolios’ standard deviations (25%), even though there is no correlation between the returns of the two portfolios.

4 Statements a and b are correct.

5 All of the statements above are correct.

Question 12

 You have the following data on three stocks:

 

                                Stock                Standard Deviation                 Beta

                                   A                               20%                             0.59

                                   B                               10%                             0.61

                                   C                               12%                             1.29

 

If you are a strict risk minimizer, you would choose Stock ____ if it is to be held in isolation and Stock ____ if it is to be held as part of a well-diversified portfolio.

 

a. A; A.

 b. A; B.

c. B; A.

d. C; A.

e. C; B.

 

 

 Question 13

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?

 

a. Portfolio P's expected return is greater than the expected return on Stock B.

 b. Portfolio P's expected return is equal to the expected return on Stock A.

c. Portfolio P's expected return is less than the expected return on Stock B.

d. Portfolio P's expected return is equal to the expected return on Stock B.

e. Portfolio P's expected return is greater than the expected return on Stock C.

 

 

 Question 14

 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?

 

a. Variance; correlation coefficient.

 b. Standard deviation; correlation coefficient.

c. Beta; variance.

d. Coefficient of variation; beta.

e. Beta; beta.

 

 

 Question 15

Which of the following statements is CORRECT?

 

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 16

If in the opinion of a given investor a stock’s expected return exceeds its required return, this suggests that the investor thinks

 

a.         the stock is experiencing supernormal growth.

b.         the stock should be sold.

c.         the stock is a good buy.

d.         management is probably not trying to maximize the price per share.

e.         dividends are not likely to be declared.

 

 

Question 17

 The preemptive right is important to shareholders because it

 

a. Allows management to sell additional shares below the current market price.

b. Protects the current shareholders against dilution of ownership interests.

c. Is included in every corporate charter.

d. The preemptive right is not important to shareholders.

 

 

Question 18

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                                                 $25                  $25

Expected dividend yield                   5%                   3%

Required return                               12%                 10%

a. Stock Y pays a higher dividend per share than Stock X.

b. Stock X pays a higher dividend per share than Stock Y.

c. One year from now, Stock X should have the higher price.

d. Stock Y has a lower expected growth rate than Stock X.

e. Stock Y has the higher expected capital gains yield.

 

 Question 19

Companies can issue different classes of common stock. Which of the following statements concerning stock classes is CORRECT?

 

 1) All common stocks fall into one of three classes: A, B, and C.

2)  All common stocks, regardless of class, must have the same voting rights.

3)  All firms have several classes of common stock.

4)  All common stock, regardless of class, must pay the same dividend.

5)  Some class or classes of common stock are entitled to more votes per share than other classes

 

 

 Question 20

The required returns of Stocks X and Y are rX = 10% and rY = 12%.  Which of the following statements is CORRECT?

 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.

 

 

 

 Question 21

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%

 

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.

 

 

 Question 22

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%

 

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.

 

 Question 23

Which of the following statements is CORRECT?

 

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.

 

 Question 24

Stocks A and B have the same price and are in equilibrium, but Stock A has the higher required rate of return. Which of the following statements is CORRECT?

 

1)  Stock B must have a higher dividend yield than Stock A.

2) If Stock A has a lower dividend yield than Stock B, its expected capital gains yield must be higher than Stock B’s.

3)  Stock A must have both a higher dividend yield and a higher capital gains yield than Stock B.

4) If Stock A has a higher dividend yield than Stock B, its expected capital gains yield must be lower than Stock B’s.

5) Stock A must have a higher dividend yield than Stock B.

 

 

 Question 25

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%

 

If Stock A has a lower dividend yield than Stock B, its expected capital gains yield must be higher than Stock B’s.

Stock B must have a higher dividend yield than Stock A.

Stock A must have a higher dividend yield than Stock B.

If Stock A has a higher dividend yield than Stock B, its expected capital gains yield must be lower than Stock B’s.

Stock A must have both a higher dividend yield and a higher capital gains yield than Stock B.

 

 

 Question 26

An increase in a firm’s expected growth rate would cause its required rate of return to

 

increase.

decrease.

fluctuate less than before.

fluctuate more than before.

possibly increase, possibly decrease, or possibly remain constant.

 

 

 

 

Question 27

If markets are in equilibrium, which of the following conditions will exist?

 

A) Each stock's expected return should equal its realized return as seen by the marginal investor.

B) Each stock's expected return should equal its required return as seen by the marginal investor.

C) All stocks should have the same expected return as seen by the marginal investor.

D) The expected and required returns on stocks and bonds should be equal.

E) All stocks should have the same realized return during the coming year.

 

 

 Question 28

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?

 

1) The two stocks must have the same dividend per share.

2) If one stock has a higher dividend yield, it must also have a lower dividend growth rate.

3) If one stock has a higher dividend yield, it must also have a higher dividend growth rate.

4) The two stocks must have the same dividend growth rate.

5) The two stocks must have the same dividend yield.

 

 

 Question 29

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

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.

 

 

 Question 30

Which of the following statements is CORRECT, assuming stocks are in equilibrium?

 

 1) The dividend yield on a constant growth stock must equal its expected total return minus its expected capital gains yield.

2) 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.

3) A stock’s dividend yield can never exceed its expected growth rate.

4) 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.

5) Other things held constant, the higher a company’s beta coefficient, the lower its required rate of return.

Question 5 Design an application in..

Computers and Technology

8/26/12

Asked: 8/26/12 4:29 PM
Opening Offer: $10.00
Due Date: 12/31/69

Question 5

Design an application in which you declare an array of five numbers and store five values in the array. Write a try block in which you loop to display each successive element of the array, increasing a subscript by one on each pass through the loop. Assume you are working with a language that automatically creates an ArrayIndexOutOfBoundsException when a subscript is not correct for an array. Create a catch block that catches the exception if it is generated and displays the message, "Now you've gone too far."

Question 4 Design a class named

Computers and Technology

8/26/12

Asked: 8/26/12 4:25 PM
Opening Offer: $12.00
Due Date: 12/31/69

Question 4

Design a class named

CustomerRecord that holds a customer number, name, and address. Include methods to set the values for each data field and output the values for each data field. Create the class diagram and write the pseudocode that defines the class.

Question 3 Design a program that allo..

Computers and Technology

8/26/12

Asked: 8/26/12 4:23 PM
Opening Offer: $10.00
Due Date: 12/31/69

Question 3

Design a program that allows a user to enter 10 numbers, then displays them in the reverse order of their entry. You must use an Array as your data structure.

Question 2 What screen output does..

Computers and Technology

8/26/12

Asked: 8/26/12 4:22 PM
Opening Offer: $10.00
Due Date: 12/31/69

Question 2

What screen output does the following code segment produce?

p = 2

q = 4

while p < q

Output "Adios"

r = 1

while r < q

output "Adios"

r = r + 1

endwhile

p = p + 1

endwhile

What is the screen output of the follo..

Computers and Technology

8/26/12

Asked: 8/26/12 4:20 PM
Opening Offer: $10.00
Due Date: 12/31/69

Question 1

What is the screen output of the following code segment? Explain the reasoning behind your answer.

Test1 = 70

Test2 = 98

Test3 = 84

NumberOfTests = 3

Average = (Test1 + Test2 + Test3) / NumberOfTests

IF Average >= 90 THEN

Output "Great job"

Output "Your average is: ", Average

ELSE

IF Average >= 80 or Average <=89 THEN

Output "Nice work"

Output "Your average is: ", Average

ELSE

Output "You will better next time!"

ENDIF

Exersis 1 - Short Answer

Computers and Technology

8/26/12

Asked: 8/26/12 4:17 PM
Opening Offer: $15.00
Due Date: 12/31/69

Exersis 1 - Short Answer

1. What is an advantage of using an integrated development environment?

2. What operator has the lowest precedence?

3. In pseudocode, a(n) ____ statement is used to clearly show where the selection structure ends.

4. A structure that includes separate actions when an expression is true and when it is false is called a(n) ____ structure.

5. In a flowchart or in pseudocode, you can use the symbol that mathematicians use to mean "not equal," ____.

6. Programmers must be careful to use the correct ____ in the statement that controls a loop.

7. Programmers use the term "____" to describe programs that are well designed and easy to understand and maintain.

8. A(n) ____ is a series or list of variables in computer memory, all of which have the same name and data type but are differentiated with special numbers called subscripts.

9. Every array has a(n) ____ size.

10. Users enter incorrect data frequently; a good program should be able to handle the mistake and not allow the ____ to be out of bounds.

11. Modularization provides ____.

12. Programmers say that variables and constants declared within a method are ____ only after declaration within that method.

13. ____ variables and constants are those that are known to an entire class.

14. Programmers refer to hidden implementation details as existing in a ____.

15. A methodÂ's name and parameter list constitute the methodÂ's ____.

16. You can indicate that a method parameter must be an array by placing ____ after the data type in the methodÂ's parameter list.

17. An ____ is the adjective that defines the type of access that outside classes will have to the attribute or method.

18. A(n) ____ is a method that establishes an object, reserving enough memory space for it and providing its name.

19. In some programming languages, such as C#, Visual Basic, and Java, every class you create is a child of one ultimate base class, often called the ____ class.

20. A(n) ____ constructor is one that requires no arguments.

21. A subclass constructor can pass ____ or parameters to its parent constructor.

22. The object-oriented techniques to manage errors such as dividing a value by 0 comprise the group of methods known as ____.

23. Methods are flexible partly because they are ____.

24. The memory location known as the ____ is where the computer stores the list of method locations to which the system must return.

25. When appropriate, specialized ____ classes provide an elegant way for you to handle error situations.

Programming Essential

Computers and Technology

8/25/12

Asked: 8/25/12 9:01 PM
Opening Offer: $30.00
Due Date: 12/31/69

Exersis 1 - Short Answer

1. What is an advantage of using an integrated development environment?

2. What operator has the lowest precedence?

3. In pseudocode, a(n) ____ statement is used to clearly show where the selection structure ends.

4. A structure that includes separate actions when an expression is true and when it is false is called a(n) ____ structure.

5. In a flowchart or in pseudocode, you can use the symbol that mathematicians use to mean "not equal," ____.

6. Programmers must be careful to use the correct ____ in the statement that controls a loop.

7. Programmers use the term "____" to describe programs that are well designed and easy to understand and maintain.

8. A(n) ____ is a series or list of variables in computer memory, all of which have the same name and data type but are differentiated with special numbers called subscripts.

9. Every array has a(n) ____ size.

10. Users enter incorrect data frequently; a good program should be able to handle the mistake and not allow the ____ to be out of bounds.

11. Modularization provides ____.

12. Programmers say that variables and constants declared within a method are ____ only after declaration within that method.

13. ____ variables and constants are those that are known to an entire class.

14. Programmers refer to hidden implementation details as existing in a ____.

15. A methodÂ's name and parameter list constitute the methodÂ's ____.

16. You can indicate that a method parameter must be an array by placing ____ after the data type in the methodÂ's parameter list.

17. An ____ is the adjective that defines the type of access that outside classes will have to the attribute or method.

18. A(n) ____ is a method that establishes an object, reserving enough memory space for it and providing its name.

19. In some programming languages, such as C#, Visual Basic, and Java, every class you create is a child of one ultimate base class, often called the ____ class.

20. A(n) ____ constructor is one that requires no arguments.

21. A subclass constructor can pass ____ or parameters to its parent constructor.

22. The object-oriented techniques to manage errors such as dividing a value by 0 comprise the group of methods known as ____.

23. Methods are flexible partly because they are ____.

24. The memory location known as the ____ is where the computer stores the list of method locations to which the system must return.

25. When appropriate, specialized ____ classes provide an elegant way for you to handle error situations.

 

Coding (5 questions, 10 points each, 50 points total)

Question 1

What is the screen output of the following code segment? Explain the reasoning behind your answer.

Test1 = 70

Test2 = 98

Test3 = 84

NumberOfTests = 3

Average = (Test1 + Test2 + Test3) / NumberOfTests

IF Average >= 90 THEN

Output "Great job"

Output "Your average is: ", Average

ELSE

IF Average >= 80 or Average <=89 THEN

Output "Nice work"

Output "Your average is: ", Average

ELSE

Output "You will better next time!"

ENDIF

 

Question 2

What screen output does the following code segment produce?

p = 2

q = 4

while p < q

Output "Adios"

r = 1

while r < q

output "Adios"

r = r + 1

endwhile

p = p + 1

endwhile

 

Question 3

Design a program that allows a user to enter 10 numbers, then displays them in the reverse order of their entry. You must use an Array as your data structure.

 

Question 4

Design a class named

CustomerRecord that holds a customer number, name, and address. Include methods to set the values for each data field and output the values for each data field. Create the class diagram and write the pseudocode that defines the class.

 

Question 5

Design an application in which you declare an array of five numbers and store five values in the array. Write a try block in which you loop to display each successive element of the array, increasing a subscript by one on each pass through the loop. Assume you are working with a language that automatically creates an ArrayIndexOutOfBoundsException when a subscript is not correct for an array. Create a catch block that catches the exception if it is generated and displays the message, "Now you've gone too far."

FIN 370 week 3

Business / Economics

8/23/12

Asked: 8/23/12 4:34 PM
Opening Offer: $25.00
Due Date: 12/31/69

FIN 370 week 3

- 4-6A (Ch. 4) (Cash budget)

- 5-1A. (Compound interest)

- 5-4A. (Present value)

- 5-5A. (Compound annuity)

- 5-6A. (Present value of an annuity)

FIN 370 week 3 5-6A. (Present value o..

Business / Economics

8/23/12

Asked: 8/23/12 4:31 PM
Opening Offer: $6.00
Due Date: 12/31/69

5-6A. (Present value of an annuity) What is the present value of the following annuities?

a. $2,500 a year for 10 years discounted back to the present at 7 percent

b. $70 a year for 3 years discounted back to the present at 3 percent

c. $280 a year for 7 years discounted back to the present at 6 percent

d. $500 a year for 10 years discounted back to the present at 10 percent

FIN 370 week 3 5-5A. (Compound annuity)

Business / Economics

8/23/12

Asked: 8/23/12 4:30 PM
Opening Offer: $6.00
Due Date: 12/31/69

5-5A. (Compound annuity) What is the accumulated sum of each of the following streams of payments?

a. $500 a year for 10 years compounded annually at 5 percent

b. $100 a year for 5 years compounded annually at 10 percent

c. $35 a year for 7 years compounded annually at 7 percent

d. $25 a year for 3 years compounded annually at 2 percent

FIN 370 week 3 5-4A. (Present value)

Business / Economics

8/23/12

Asked: 8/23/12 4:28 PM
Opening Offer: $6.00
Due Date: 12/31/69

5-4A. (Present value) What is the present value of the following future amounts?

a. $800 to be received 10 years from now discounted back to the present at 10 percent

b. $300 to be received 5 years from now discounted back to the present at 5 percent

c. $1,000 to be received 8 years from now discounted back to the present at 3 percent

d. $1,000 to be received 8 years from now discounted back to the present at 20 percent

FIN 370 week 3 5-1A. (Compound inter..

Business / Economics

8/23/12

Asked: 8/23/12 4:24 PM
Opening Offer: $6.00
Due Date: 12/31/69

5-1A. (Compound interest) To what amount will the following investments accumulate?

a. $5,000 invested for 10 years at 10 percent compounded annually

b. $8,000 invested for 7 years at 8 percent compounded annually

c. $775 invested for 12 years at 12 percent compounded annually

d. $21,000 invested for 5 years at 5 percent compounded annually

FIN 370 week 3 4-6A (Ch. 4) (Cash b..

Business / Economics

8/23/12

Asked: 8/23/12 4:21 PM
Opening Offer: $6.00
Due Date: 12/31/69

4-6A (Ch. 4) (Cash budget) The Sharpe Corporation's projected sales for the first eight months of 2004 are as follows:

January $ 90,000 May $300,000

February 120,000 June 270,000

March 135,000 July 225,000

April 240,000 August 150,000

Of Sharpe's sales, 10 percent is for cash, another 60 percent is collected in the month following sale, and 30 percent is collected in the second month following sale. November and December sales for 2003 were $220,000 and $175,000, respectively.

Sharpe purchases its raw materials two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery. For example, purchases for April sales are made in February and payment is made in March. In addition, Sharpe pays $10,000 per month for rent and $20,000 each month for other expenditures.

Tax prepayments of $22,500 are made each quarter, beginning in March. The company's cash balance at December 31, 2003, was $22,000; a minimum balance of $15,000 must be maintained at all times.

a. Prepare a cash budget for Crux covering the first seven months of 2004.

b. Crux has $200,000 in notes payable due in July that must be repaid or renegotiated for an extension. Will the firm have ample cash to repay the notes?

RES 341 week 2-3-4-5

Mathematics

8/21/12

Asked: 8/21/12 8:05 PM
Opening Offer: $20.00
Due Date: 12/31/69

RES/341 Week 2 Research Terminology Matching Assignment

 

RES341 week 3- Statistical Symbols and Definitions Matching

 

RES341 week 4 - Chapter 5 E Exercises 5.62 and 5.70

 

RES 341 Week 5

RES 341 Week 5

Mathematics

8/21/12

Asked: 8/21/12 7:32 PM
Opening Offer: $10.00
Due Date: 12/31/69

1. In an article in the Journal of Management, Morris, Avila and Allen studied innovation by surveying firms to find the number of new products introduced by the firms. A random sample of 100 California based firms are selected. Each firm is asked to report the number of new products introduced last year. The survey found that on average these firms introduced 5.68 products with a standard deviation of 8.70. Compute a 98% confidence interval for the new products introduced last year.

2. The score on the entrance test for a well known law school has a mean score of 200 points and a standard deviation of 50 points. At value should the lowest passing score be set if the school wishes only 2.5% of those taking the entrance test to pass?

3. A tire manufacturer wishes to investigate the thread life of its tires. A sample of 10 tires driven 50,000 miles revealed a sample mean of 0.32 inches of thread remaining with a standard deviation of 0.09 inches. Construct a 95% confidence interval for the population mean.

RES341 week 4 - Chapter 5 E Exercises..

Mathematics

8/21/12

Asked: 8/21/12 7:31 PM
Opening Offer: $7.00
Due Date: 12/31/69

5.62 A certain airplane has two independent alternators to provide electrical power. The probability that a given alternator will fail on a 1-hour flight is .02. What is the probability that

(a) both will fail?

(b) Neither will fail?

(c) One or the other will fail? Show all steps carefully.

 

5.70 The probability is 1 in 4,000,000 that a single auto trip in the United States will result in a fatality. Over a lifetime, an average U.S. driver takes 50,000 trips.

(a) What is the probability of a fatal accident over a lifetime? Explain your reasoning carefully. Hint: Assume independent events. Why might the assumption of independence be violated?

(b) Why might a driver be tempted not to use a seat belt "just on this trip"?

RES341 week 3- Statistical Symbols and..

Mathematics

8/21/12

Asked: 8/21/12 7:29 PM
Opening Offer: $7.00
Due Date: 12/31/69

Match the letter of the definition on the right to the appropriate symbol on the left.

Symbols Definitions

S (Uppercase Sigma) a. Null hypothesis

m (Mu) b. Summation

s (Lowercase Sigma) c. Factorial

p (Pi) d. Nonparametric hypothesis test

e (Epsilon) e. Population standard deviation

c2 (Chi Square) f. Alternate hypothesis

! g. Maximum allowable error

H0 h. Population mean

H1 i. Probability of success in a binomial trial

Match the letter of the term on the right to the definition of that term on the left.

Definitions Terms

The average of the squared deviation scores from a distribution mean. a. Reliability

Midpoint in the distribution of numbers. b. Mode

It has to do with the accuracy and precision of a measurement procedure. c. Generalization

Examines if an observed causal relationship generalizes across persons,

settings, and times. d. Variance

The difference between the largest and smallest score in a distribution. e. Median

The arithmetic average. f. External validity

Refers to the extent to which a test measures what we actually wish to measure.

g. Mean

The most frequently occurring value in a set of numbers. h. Internal validity

The conclusion from research conducted on a sample population to the

population as a whole. i. Range

Examines whether the conclusion that we draw about a demonstrated experimental

relationship truly implies cause. j. Standard deviation

Determines how far away the data values are from the average. k. Validity

RES/341 Week 2 Research Terminology..

Mathematics

8/21/12

Asked: 8/21/12 7:28 PM
Opening Offer: $6.00
Due Date: 12/31/69

A research study which includes repeated observations over a period of time. ____

A type of research that uses focus groups or small studies to get a "feel" for the problem. ____

It means in name only, data that consist of observations that can only be classified and counted by category and have no inherent order. For example: The colors chosen by car buyers at a dealership. ____

Using basic research methods, the outcome of the research is applied to a business problem. ____ A measurement scale that has no meaningful absolute zero point. For example: The scheduled arrival times (2:00pm, 2:30pm, and 3:00pm) of delivery trucks at a loading dock. ____ Often used in marketing and sales, this type of research always asks "who, what, when, where, and how" in research questions. ____

A measurement that uses absolute values. Height, weight, distance, and money are all examples. ____ Numbers assigned to objects representative of the rank order when the distance between each of the measures cannot be determined scientifically. For example, a measure that indicates how a person "feels" on an issue. ____ Research conducted where one unit is held steady, while the experiment is conducted on the other unit. This is to test whether the experiment itself is the reason for change in the experimental unit. ____ The clinical or scientific method of research. This type of research is often done in laboratories or in controlled circumstances. ____ A research question stated in terms of specific testing or measurement criteria. These terms must have empirical referents (this means that we must be able to count or measure them in some way). The object to be defined can be a physical one (a machine tool), or it can be an abstract one (achievement motivation). ____ A research study which uses data collected at a single point in time. This gives a snapshot of what is occurring somewhere at a given time. ____

MAT 540 Strayer University

Mathematics

8/20/12

Asked: 8/20/12 6:02 PM
Opening Offer: $100.00
Due Date: 12/31/69

MAT 540 Strayer University

Quantitative Methods – MAT 540

MAT 540 Quiz 1

MAT 540 Quiz 2

MAT 540 Quiz 3

MAT 540 Quiz 4

MAT 540 Quiz 5

MAT 540 Midterm Quiz

MAT 540 Final Quiz

FIN534 COMPLETE COURSE (ALL CHAPTERS+A..

Business / Economics

8/20/12

Asked: 8/20/12 6:07 AM
Opening Offer: $150.00
Due Date: 12/31/69

FIN 534 ALL Chapters & Quizzes

- FIN 534 – Homework Chapter 1-17

- FIN 534 Quiz 1-10

- solutions with steps

Bcom 275 Final Exam 2

Computers and Technology

8/7/12

Asked: 8/7/12 2:37 PM
Opening Offer: $25.00
Due Date: 12/31/69

1) The term channel in communication means

A. the medium through which a message travels from sender to receiver

B. the context of the communication

C. the volume at which a message is received

D. the process of changing thoughts into symbols

2) In which of the following communication activities do people spend the greatest percent of their day?

A. Listening

B. Writing

C. Reading

D. Speaking

3) A receiver's response to a sender's message is called

A. encoding

B. decoding

C. feedback

D. channel

4) With this type of response, you analyze or teach the sender about the cause of his or her concern.

A. Evaluating

B. Interpreting

C. Paraphrasing

D. Questioning

5) This happens when you receive, construct meaning from, and respond to the sender's message.

A. Responding

B. Attending

C. Listening

D. Hearing

6) When the receiver uses this response style, he clarifies or seeks more information.

A. Evaluating

B. Supporting

C. Paraphrasing

D. Questioning

7) Which of the following are the most common types of doubts people may have about a source?

A. Status and academic degree

B. Expertise and accuracy

C. Occupation and employer

D. Prominence in the field of study and experience

8) Which of the following is the most reliable source of information?

A. Wikipedia®

B. A blog

C. A book recommended by your instructor

D. Britannica Online®

9) Consider the following exchange: "How do I know God exists? How do you know he doesn't?" Which fallacy does the second statement illustrate?

A. Perfectionist fallacy

B. Slippery slope

C. Misplacing the burden of proof

D. Inconsistency ad hominem

10) Stating someone has negative features and his claim is invalid is an example of which fallacy?

A. Genetic fallacy

B. False dilemma

C. Straw man

D. Ad hominem

11) Consider the following statement: "So what if the Senator accepted a little kickback money—most politicians are corrupt after all." This is an example of which fallacy?

A. Argument from envy

B. Argument from tradition

C. Straw man

D. Argument from common practice

12) Consider the following statement: "Studies confirm what everyone already knows: Smaller class sizes make better learners." This is an example of which fallacy?

A. Argument from common practice

B. Begging the question

C. Slippery slope

D. Misplacing the burden of proof

13) Audience analysis should occur at what point in the creation of a message?

A. Once feedback is received

B. Before the message is sent

C. After selecting the channel

D. Before the message is created

14) Behavior descriptions should meet which of the following criteria?

A. Present inferences about another's motives.

B. Focus on more than one behavior.

C. Describe only observable behaviors.

D. Include terms such as "never, always, or constantly."

15) An effective message should be

A. audience-centered

B. topic-based

C. channel-focused

D. time-centered

16) Which informal communication channel involves its own abbreviations to accommodate the limited number of characters available in any given message

A. Text message

B. E-mail

C. Handwritten letters

D. Voicemail message

17) Sound and light waves are an example of which part of the communication model?

A. Noise

B. Encoding

C. Decoding

D. Channel

18) In this channel of communication, messages are carried by sound and light waves.

A. Hard copy memos

B. Teleconference

C. Face-to-face

D. Voicemail

19) A framework for putting all of your information together in a logical sequence is called

A. a central idea

B. a thesis

C. an outline

D. an introduction

20) Which verbal support breaks down complex processes or concepts into their component parts to ensure understanding?

A. Comparisons

B. Analyses

C. Definitions

D. Descriptions

21) What type of language is used when communicating with classmates, coworkers, family, and friends?

A. Official

B. Informal

C. Ceremonial

D. Formal

22) The connotation of words such as skinny or thin focuses on the

A. emotional meaning

B. denotative meaning

C. contextual meaning

D. actual meaning

23) If you try to persuade your classmates to donate canned goods for the hungry in your community, your topic is one of

A. policy

B. fact

C. pathos

D. value

24) Persuasive topics that attempt to show an audience that something is good, bad, right, or wrong are topics of

A. value

B. policy

C. fact

D. cause-effect

25) If you use only a few examples to represent the whole of the conclusion, you are committing this logical fallacy.

A. Faulty causation

B. Hasty generalization

C. Either/or thinking

D. Slippery slope

26) What logical fallacy can occur when a speaker focuses on similarities and ignores significant differences?

A. Either/or thinking

B. Slippery slope

C. Hasty generalization

D. Faulty comparison

27) When you display ethos in your persuasive presentation, you have

A. credibility

B. logic

C. emotion

D. evidence

28) Developing cross-cultural competence includes which of the following?

A. Overcoming personal biases

B. Walking on eggs

C. Using hot button words

D. Separating culture from communication

29) An attempt to characterize causes of events to either personalities or external situations is called

A. projection

B. halo effect

C. attribution error

D. selective attention

30) Groups that value higher power distance believe relationships are

A. hierarchical

B. informal

C. individualist

D. relationship oriented

31) What is the belief that laws are justified if they prevent a person from harming him- or herself known as?

A. Harm principle

B. Legal moralism

C. Offense principle

D. Legal paternalism

32) What is the belief that correct moral principles are those accepted by the correct religion known as?

A. Virtue ethics

B. Religious absolutism

C. Religious relativism

D. Moral relativism

33) The practice of using a case that has already been decided as a guide when deciding new cases is referred to as

A. legal morality

B. legal paternalism

C. causation principle

D. appeal to precedent

MGT 307 Final Exam

Business / Economics

8/7/12

Asked: 8/7/12 8:49 AM
Opening Offer: $27.00
Due Date: 12/31/69

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

FIN 534 ENTIRE CLASS ALL CHAPTERS + AL..

Business / Economics

8/4/12

Asked: 8/4/12 3:24 AM
Opening Offer: $130.00
Due Date: 12/31/69

FIN 534 ENTIRE CLASS ALL CHAPTERS + ALL QUIZZES GUARANTEED A+

QNT 351 Final Exam

Business / Economics

7/31/12

Asked: 7/31/12 1:53 PM
Opening Offer: $27.00
Due Date: 12/31/69

1) The main purpose of descriptive statistics is to

A. summarize data in a useful and informative manner

B. make inferences about a population

C. determine if the data adequately represents the population

D. gather or collect data

2) The general process of gathering, organizing, summarizing, analyzing, and interpreting data is called

A. statistics

B. descriptive statistics

C. inferential statistics

D. levels of measurement

3) The performance of personal and business investments is measured as a percentage, return on investment. What type of variable is return on investment?

A. Qualitative

B. Continuous

C. Attribute

D. Discrete

4) What type of variable is the number of robberies reported in your city?

A. Attribute

B. Continuous

C. Discrete

D. Qualitative

5) What level of measurement is the number of auto accidents reported in a given month?

A. Nominal

B. Ordinal

C. Interval

D. Ratio

6) The names of the positions in a corporation, such as chief operating officer or controller, are examples of what level of measurement?

A. Nominal

B. Ordinal

C. Interval

D. Ratio

7) Shoe sizes, such as 7B, 10D, and 12EEE, are examples of what level of measurement?

A. Nominal

B. Ordinal

C. Interval

D. Ratio

8) Monthly commissions of first-year insurance brokers are $1,270, $1,310, $1,680, $1,380, $1,410, $1,570, $1,180, and $1,420. These figures are referred to as

A. a histogram

B. raw data

C. frequency distribution

D. frequency polygon

9) A small sample of computer operators shows monthly incomes of $1,950, $1,775, $2,060, $1,840, $1,795, $1,890, $1,925, and $1,810. What are these ungrouped numbers called?

A. Histogram

B. Class limits

C. Class frequencies

D. Raw data

10) The sum of the deviations of each data value from this measure of central location will always be 0

A. Mode

B. Mean

C. Median

D. Standard deviation

11) For any data set, which measures of central location have only one value?

A. Mode and median

B. Mode and mean

C. Mode and standard deviation

D. Mean and median

12) A sample of single persons receiving social security payments revealed these monthly benefits: $826, $699, $1,087, $880, $839, and $965. How many observations are below the median?

A. 0

B. 1

C. 2

D. 3

13) A dot plot shows

A. the general shape of a distribution

B. the mean, median, and mode

C. the relationship between two variables

D. the interquartile range

14) The test scores for a class of 147 students are computed. What is the location of the test score associated with the third quartile?

A. 111

B. 37

C. 74

D. 75%

15) The National Center for Health Statistics reported that of every 883 deaths in recent years, 24 resulted from an automobile accident, 182 from cancer, and 333 from heart disease. Using the relative frequency approach, what is the probability that a particular death is due to an automobile accident?

A. 24/883 or 0.027

B. 539/883 or 0.610

C. 24/333 or 0.072

D. 182/883 or 0.206

16) If two events A and B are mutually exclusive, what does the special rule of addition state?

A. P(A or B) = P(A) + P(B)

B. P(A and B) = P(A) + P(B)

C. P(A and/or B) = P(A) + P(B)

D. P(A or B) = P(A) - P(B)

17) A listing of all possible outcomes of an experiment and their corresponding probability of occurrence is called a

A. random variable

B. probability distribution

C. subjective probability

D. frequency distribution

18) The shape of any uniform probability distribution is

A. negatively skewed

B. positively skewed

C. rectangular

D. bell shaped

19) The mean of any uniform probability distribution is

A. (b - a)/2

B. (a + b)/2

C. Σ x/ η

D. nπ

20) For the normal distribution, the mean plus and minus 1.96 standard deviations will include about what percent of the observations?

A. 50%

B. 99.7%

C. 95%

D. 68%

21) For a standard normal distribution, what is the probability that z is greater than 1.75?

A. 0.0401

B. 0.0459

C. 0.4599

D. 0.9599

22) A null hypothesis makes a claim about a

A. A null hypothesis makes a claim about a

B. sample statistic

C. sample mean

D. Type II error

23) What is the level of significance?

A. Probability of a Type II error

B. Probability of a Type I error

C. z-value of 1.96

D. Beta error

24) Suppose we test the difference between two proportions at the 0.05 level of significance. If the computed z is -1.07, what is our decision?

A. Reject the null hypothesis

B. Do not reject the null hypothesis

C. Take a larger sample

D. Reserve judgment

25) Which of the following conditions must be met to conduct a test for the difference in two sample means?

A. Data must be at least of interval scale

B. Populations must be normal

C. Variances in the two populations must be equal

D. Data must be at least of interval scale and populations must be normal

26) Which of the following statements about the two sample sizes is NOT true? Assume the population standard deviations are equal.

A. Sample A = 11; sample B = 13

B. Sample A = 12; sample B = 14

C. Sample A = 13; sample B = 13

D. Sample A = 10; sample B = 16

27) What is the chart called when the paired data (the dependent and independent variables) are plotted?

A. Scatter diagram

B. Bar chart

C. Pie chart

D. Histogram

28) What is the variable used to predict the value of another called?

A. Independent variable

B. Dependent variable

C. Correlation variable

D. Variable of determination

29) Twenty randomly selected statistics students were given 15 multiple-choice questions and 15 open-ended questions, all on the same material. The professor was interested in determining on which type of questions the students scored higher. This experiment is an example of

A. a one sample test of means

B. a two sample test of means

C. a paired t-test

D. a test of proportions

30) The measurements of weight of 100 units of a product manufactured by two parallel processes have same mean but the standard of process A is 15 while that of B is 7. What can you conclude?

A. The weight of units in process A are grouped closer than in process B

B. The weight of units in process B are grouped closer than in process A

C. Both processes are out of control

D. More data is needed to draw a conclusion

ACC 291 Final Exam

Business / Economics

7/31/12

Asked: 7/31/12 3:05 AM
Opening Offer: $27.00
Due Date: 12/31/69

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?

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?

3) Intangible assets

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

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

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

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

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

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

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

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%?

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?

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

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

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

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

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?

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?

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

20) The purchase of treasury stock

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?

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

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

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?

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?

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

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

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

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

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

ACC 349 FINAL EXAM set 3

Business / Economics

7/31/12

Asked: 7/31/12 3:03 AM
Opening Offer: $30.00
Due Date: 12/31/69

1) What is the best way to handle manufacturing overhead costs in order to get the most timely job cost information?

2) At the end of the year, manufacturing overhead has been overapplied. What occurred to create this situation?

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?

4) Which of the following would be accounted for using a job order cost system?

5) Which one of the following is NEVER part of recording the issuance of raw materials in a job order cost system?

6) What is unique about the flow of costs in a job order cost system?

7) Which one of the following costs would be included in manufacturing overhead of a lawn mower manufacturer?

8) What broad functions do the management of an organization perform?

9) Which of the following represents the correct order in which inventories are reported on a manufacturer's balance sheet?

10) In traditional costing systems, overhead is generally applied based on

11) An activity that has a direct cause-effect relationship with the resources consumed is a(n)

12) A well-designed activity-based costing system starts with

13) Which of the following factors would suggest a switch to activity-based costing?

14) All of the following statements are correct EXCEPT that

15) What sometimes makes implementation of activity-based costing difficult in service industries is

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?

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

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

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?

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?

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,

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?

23) Which statement describes a fixed cost?

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?

25) Variable costing

26) Which cost is NOT charged to the product under variable costing?

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

28) Which of the following is NOT considered an advantage of using standard costs?

29) The difference between a budget and a standard is that

30) If a company is concerned with the potential negative effects of establishing standards, they should

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
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?

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?

34) Manufacturing overhead costs are applied to work in process on the basis of

35) The overhead volume variance relates only to

36) If the standard hours allowed are less than the standard hours at normal capacity,

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?

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?

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?

40) In most cases, prices are set by the

41) A company must price its product to cover its costs and earn a reasonable profit in

42) The cost-plus pricing approach's major advantage is

ACC 349 FINAL EXAM set 2

Business / Economics

7/31/12

Asked: 7/31/12 3:01 AM
Opening Offer: $30.00
Due Date: 12/31/69

1) At the end of the year, manufacturing overhead has been overapplied. What occurred to create this situation?

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?

3) Why is factory overhead applied to products and jobs by manufacturing companies?

4) In a job order cost accounting system, the Work in Process account is

5) Which one of the following is an important feature of a job order cost system?

6) Which of the following represents the two basic types of cost accounting systems?

7) Which of the following represents the correct order in which inventories are reported on a manufacturer's balance sheet?

8) Which one of the following is indirect labor considered?

9) Which of the following is an element of manufacturing overhead?

10) Which of the following is NOT typical of traditional costing systems?

11) An activity that has a direct cause-effect relationship with the resources consumed is a(n)

12) A well-designed activity-based costing system starts with

13) What sometimes makes implementation of activity-based costing difficult in service industries is

14) Which of the following is a nonvalue-added activity?

15) Each of the following is a limitation of activity-based costing EXCEPT

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

17) Which of the following factors would suggest a switch to activity-based costing?

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

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?

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

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?

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?

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?

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?

25) Which cost is charged to the product under variable costing?

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

27) Which cost is NOT charged to the product under variable costing?

28) If standard costs are incorporated into the accounting system,

29) The difference between a budget and a standard is that

30) A standard cost is

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

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

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?

34) Which of the following statements is FALSE?

35) The overhead volume variance relates only to

36) If the standard hours allowed are less than the standard hours at normal capacity, the volume variance

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?

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?

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?

40) Prices are set by the competitive market when

41) In cost-plus pricing, the markup percentage is computed by dividing the desired ROI per unit by the

42) The cost-plus pricing approach's major advantage is

ACC 349 FINAL EXAM set 1

Business / Economics

7/31/12

Asked: 7/31/12 2:59 AM
Opening Offer: $30.00
Due Date: 12/31/69

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?

2) When a job is completed, what happens to the cost of the job?

3) Why is factory overhead applied to products and jobs by manufacturing companies?

4) Which of the following would be accounted for using a job order cost system?

5) Which one of the following is an important feature of a job order cost system?

6) In a job order cost accounting system, the Work in Process account is

7) Which of the following is an element of manufacturing overhead?

8) What broad functions do the management of an organization perform?

9) Which one of the following costs would be included in manufacturing overhead of a lawn mower manufacturer?

10) A well-designed activity-based costing system starts with

11) Which would be an appropriate cost driver for the ordering and receiving activity cost pool?

12) In traditional costing systems, overhead is generally applied based on

13) What sometimes makes implementation of activity-based costing difficult in service industries is

14) Which of the following factors would suggest a switch to activity-based costing?

15) All of the following statements are correct EXCEPT that

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

17) Which of the following factors would suggest a switch to activity-based costing?

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

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,

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?

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

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?

23) Which statement describes a fixed cost?

24) Which one of the following is required in order for an activity base to be useful in cost behavior analysis?

25) Which cost is NOT charged to the product under absorption costing?

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

27) Which cost is NOT charged to the product under variable costing?

28) Which of the following is NOT considered an advantage of using standard costs?

29) A standard cost is

30) If standard costs are incorporated into the accounting system,

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?

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

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?

34) The overhead controllable variance is calculated as the difference between actual overhead costs incurred and the budgeted

35) Which of the following statements is FALSE?

36) The overhead volume variance relates only to

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?

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?

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?

40) In cost-plus pricing, the target selling price is computed as

41) In most cases, prices are set by the

42) In cost-plus pricing, the markup percentage is computed by dividing the desired ROI per unit by the

ACC 422 Final Exam

Business / Economics

7/31/12

Asked: 7/31/12 2:55 AM
Opening Offer: $35.00
Due Date: 12/31/69

1) Which of the following is NOT considered cash for financial reporting purposes?

2) What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet?

3) Which of the following is considered cash?

4) If a company employs the gross method of recording accounts receivable from customers, then sales discounts taken should be reported as

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

6) Which of the following methods of determining annual bad debt expense best achieves the matching concept?

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

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

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

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?

11) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?

12) All of the following costs should be charged against revenue in the period in which costs are incurred EXCEPT for

13) In no case can "market" in the lower-of-cost-or-market rule be more than

14) When the direct method is used to record inventory at market

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?

16) The retail inventory method is based on the assumption that the

17) A major advantage of the retail inventory method is that it

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

19) The cost of land typically includes the purchase price and all of the following costs EXCEPT

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

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

22) The period of time during which interest must be capitalized ends when

23) Which of the following assets do NOT qualify for capitalization of interest costs incurred during construction of the assets?

24) When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to

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

26) When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the

27) The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset and the exchange has commercial substance is usually recorded at

28) Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

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

30) Which of the following most accurately reflects the concept of depreciation as used in accounting?

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?

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?

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?

34) Costs incurred internally to create intangibles are

35) Factors considered in determining an intangible asset's useful life include all of the following EXCEPT

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

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?

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?

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?

40) The intangible asset goodwill may be

41) The reason goodwill is sometimes referred to as a master valuation account is because

42) Goodwill

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

44) Stock dividends distributable should be classified on the

45) Which of the following items is a current liability?

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?

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?

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?

49) A contingency can be accrued when

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:

51) Which of the following contingencies need NOT be disclosed in the financial statements or the notes thereto?

52) The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the

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

54) Bonds that pay no interest unless the issuing company is profitable are called

55) Minimum lease payments may include a

56) An essential element of a lease conveyance is that the

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

58) In the earlier years of a lease, from the lessee's perspective, the use of the

59) In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned income

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

ACC 422 Final Exam

Business / Economics

7/31/12

Asked: 7/31/12 2:52 AM
Opening Offer: $35.00
Due Date: 12/31/69

1) Which of the following is NOT considered cash for financial reporting purposes?

2) What is the preferable presentation of accounts receivable from officers, employees, or affiliated companies on a balance sheet?

3) Which of the following items should NOT be included in the Cash caption on the balance sheet?

4) Which of the following is a generally accepted method of determining the amount of the adjustment to bad debt expense?

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

6) Which of the following methods of determining bad debt expense does NOT properly match expense and revenue?

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

8) Belle Co. received merchandise on consignment. As of March 31, Belle had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 would be

9) The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inven¬tory results in

10) The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its

11) All of the following costs should be charged against revenue in the period in which costs are incurred EXCEPT for

12) Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?

13) In no case can "market" in the lower-of-cost-or-market rule be more than

14) 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?

15) When valuing raw materials inventory at lower-of-cost-or-market, what is the meaning of the term "market"?

16) The retail inventory method is based on the assumption that the

17) 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

18) When the conventional retail inventory method is used, markdowns are commonly ignored in the computation of the cost to retail ratio because

19) Which of the following is NOT a major characteristic of a plant asset?

20) 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

21) The debit for a sales tax properly levied and paid on the purchase of machinery preferably would be a charge to

22) The period of time during which interest must be capitalized ends when

23) Which of the following costs are capitalized for self-constructed assets?

24) When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to

25) When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the

26) When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds NOT needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be

27) Construction of a qualifying asset is started on April 1 and finished on December 1. The fraction used to multiply an expenditure made on April 1 to find weighted-average accumulated expenditures is

28) Which of the following most accurately reflects the concept of depreciation as used in accounting?

29) Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

30) The term "depreciable cost," or "depreciable base," as it is used in accounting, refers to

31) Lennon Company purchased a depreciable asset for $200,000. The estimated salvage value is $10,000, and the estimated useful life is 10,000 hours. Lennon used the asset for 1,100 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset?

32) 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?

33) Pine Company purchased a depreciable asset for $360,000. The estimated salvage value is $24,000, 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?

34) Under current accounting practice, intangible assets are classified as

35) Factors considered in determining an intangible asset's useful life include all of the following EXCEPT

36) Which of the following methods of amortization is normally used for intangible assets

37) 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?

38) Twilight Corporation acquired End-of-the-World Products on January 1, 2008 for $2,000,000, and recorded goodwill of $375,000 as a result of that purchase. At December 31, 2008, the End-of-the-World Products Division had a fair value of $1,700,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $1,450,000 at that time. What amount of loss on impairment of goodwill should Twilight record in 2008?

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?

40) Easton Company and Lofton Company were combined in a purchase transaction. Easton was able to acquire Lofton at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton. After revaluing noncurrent assets to zero, there was still some "negative goodwill." Proper accounting treatment by Easton is to report the amount as

41) Goodwill

42) The reason goodwill is sometimes referred to as a master valuation account is because

43) Which of the following items is a current liability?

44) 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

45) Stock dividends distributable should be classified on the

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?

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?

48) Wellman Company self insures its property for fire and storm damage. If the company were to obtain insurance on the property, it would cost them $1,000,000 per year. The company estimates that on average it will incur losses of $800,000 per year. During 2007, $350,000 worth of losses were sustained. How much total expense and/or loss should be recognized by Wellman Company for 2007?

49) A contingency can be accrued when

50) Which of the following contingencies need NOT be disclosed in the financial statements or the notes thereto?

51) 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:

52) 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

53) An example of an item which is NOT a liability is

54) Bonds for which the owners' names are NOT registered with the issuing corporation are called

55) Which of the following best describes current practice in accounting for leases?

56) Minimum lease payments may include a

57) Which of the following is a correct statement of one of the capitalization criteria?

58) In a lease that is appropriately recorded as a direct-financing lease by the lessor, unearned income

59) 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

60) The amount to be recorded as the cost of an asset under capital lease is equal to the

Bcom 275 Final Exam

Computers and Technology

7/30/12

Asked: 7/30/12 5:42 PM
Opening Offer: $27.00
Due Date: 12/31/69

1) In which of the following communication activities do people spend the greatest percent of their day?

A. Listening

B. Writing

C. Reading

D. Speaking

2) The message refers to which of the following?

A. The context of the communication

B. Ideas, thoughts, and feelings being communicated.

C. The medium that carries the information

D. The receiver's response to the sender

3) A receiver's response to a sender's message is called

A. encoding

B. decoding

C. feedback

D. channel

4) With this type of response, you analyze or teach the sender about the cause of his or her concern.

A. Evaluating

B. Interpreting

C. Paraphrasing

D. Questioning

5) This response style normally does not help unless the sender has asked for your advice.

A. Paraphrasing

B. Evaluating

C. Interpreting

D. Questioning

6) When the receiver uses this response style, he clarifies or seeks more information.

A. Evaluating

B. Supporting

C. Paraphrasing

D. Questioning

7) Consider the following exchange: "How do I know God exists? How do you know he doesn't?" Which fallacy does the second statement illustrate?

A. Perfectionist fallacy

B. Slippery slope

C. Misplacing the burden of proof

D. Inconsistency ad hominem

8) Which of the following is the most reliable source of information?

A. Wikipedia®

B. A blog

C. A book recommended by your instructor

D. Britannica Online®

9) Which of the following are the most common types of doubts people may have about a source?

A. Status and academic degree

B. Expertise and accuracy

C. Occupation and employer

D. Prominence in the field of study and experience

10) Consider the following statement: "So what if the Senator accepted a little kickback money—most politicians are corrupt after all." This is an example of which fallacy?

A. Argument from envy

B. Argument from tradition

C. Straw man

D. Argument from common practice

11) Consider the following statement: "Morgan, you're down to earth and I trust your judgment. That's why I know I can count on you to back me up at the meeting this afternoon." This is an example of which fallacy?

A. Apple polishing

B. Argument from pity

C. Slippery slope

D. Guilt trip

12) Consider the following statement: "Studies confirm what everyone already knows: Smaller class sizes make better learners." This is an example of which fallacy?

A. Argument from common practice

B. Begging the question

C. Slippery slope

D. Misplacing the burden of proof

13) Demographics include which of the following?

A. Ethnicity, gender, race

B. Attitudes, interests, values

C. Values, morals, opinions

D. Beliefs, feelings, likes

14) Measurable or observable characteristics of your audience are called

A. pseudographics

B. psychographics

C. statistics

D. demographics

15) Audience analysis should occur at what point in the creation of a message?

A. Once feedback is received

B. Before the message is sent

C. After selecting the channel

D. Before the message is created

16) In this channel of communication, messages are carried by sound and light waves.

A. Hard copy memos

B. Teleconference

C. Face-to-face

D. Voicemail

17) You want to discuss your performance review and possible raise with your boss. The most effective channel to do this would be

A. face-to-face

B. e-mail

C. team meeting

D. text message

18) Sound and light waves are an example of which part of the communication model?

A. Noise

B. Encoding

C. Decoding

D. Channel

19) A framework for putting all of your information together in a logical sequence is called

A. a central idea

B. a thesis

C. an outline

D. an introduction

20) When are nonverbal messages sent?

A. Before verbal messages

B. Only in combination with verbal messages

C. After verbal messages

D. Only when you want

21) What type of language is used when communicating with classmates, coworkers, family, and friends?

A. Formal

B. Informal

C. Ceremonial

D. Official

22) The connotation of words such as skinny or thin focuses on the

A. emotional meaning

B. denotative meaning

C. contextual meaning

D. actual meaning

23) Persuasive topics that attempt to show an audience that something is good, bad, right, or wrong are topics of

A. value

B. policy

C. fact

D. cause-effect

24) When you use an expression like raining cats and dogs, you are using

A. denotative language

B. connotative language

C. contextual language

D. figurative language

25) When you lead, instruct, challenge, or introduce your audience to act on or accept your solution, you are at which step of Monroe's Motivated Sequence?

A. Action or approval

B. Solution

C. Visualization

D. Attention

26) When you display ethos in your persuasive presentation, you have

A. evidence

B. emotion

C. credibility

D. logic

27) What logical fallacy can occur when a speaker focuses on similarities and ignores significant differences?

A. Faulty comparison

B. Hasty generalization

C. Either/or thinking

D. Slippery slope

28) A concept proposing that negative cultural assumptions about a group can create for its members a belief in those assumptions is called

A. a halo effect

B. a perceptual process

C. an attribution error

D. a stereotype threat

29) Groups that value higher power distance believe relationships are

A. hierarchical

B. informal

C. individualist

D. relationship oriented

30) Deliberately blaming individuals or groups for things they really did not do is called

A. stereotyping

B. discriminating

C. ethnocentrism

D. scapegoating

31) A value judgment requires this type of assessment.

A. Consistency

B. Monroe's Value Sequence

C. Worth or desirability

D. Normative

32) What is the belief that laws are justified if they prevent a person from harming him- or herself known as?

A. Harm principle

B. Legal moralism

C. Offense principle

D. Legal paternalism

33) What is the belief that correct moral principles are those accepted by the correct religion known as?

A. Virtue ethics

B. Religious absolutism

C. Religious relativism

D. Moral relativism

ACC 290 Final Exam

Business / Economics

7/20/12

Asked: 7/20/12 6:33 PM
Opening Offer: $27.00
Due Date: 12/31/69

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

MGT 230 Final Exam

Business / Economics

6/27/12

Asked: 6/27/12 10:40 AM
Opening Offer: $27.00
Due Date: 12/31/69

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

MGT330 Final Exam A+

Business / Economics

6/25/12

Asked: 6/25/12 6:25 AM
Opening Offer: $27.00
Due Date: 12/31/69

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

ACC 421 Final Exam

Business / Economics

6/24/12

Asked: 6/24/12 12:58 PM
Opening Offer: $28.00
Due Date: 12/31/69

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

LAW 531 Final Exam

Business / Economics

6/24/12

Asked: 6/24/12 9:35 AM
Opening Offer: $35.00
Due Date: 12/31/69

1) The concept of flexibility in the law is best illustrated by:

2) The school of jurisprudence that believes that free market forces should determine the outcome to lawsuits is:

3) Which of the following is true about litigating commercial disputes?

4) A ___________ is a court appointed party who conducts a private trial and renders a judgement.

5) ________ is a form of alternative dispute resolution that is often used when the parties involved do not want to face one another.

6) Which form of alternative dispute resolution occurs when the parties choose an impartial third party to hear and decide their dispute?

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?

8) What is the result of the "effects on interstate commerce" test?

9) If there is an area of interstate commerce that the federal government has not chosen to regulate, the states can:

10) The legal effect of the presence of a superceding event is that:

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?

12) The tort of palming off involves:

13) Based on the law of product liability, which of the following is correct?

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?

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:

16) Under federal rules regulating food and drugs, which of the following is true?

17) Which of the following statements best describes the procedures under the Clean Air Act?

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?

19) What is the most basic or common remedy available for breach of a contract?

20) The circumstances where an offer cannot be withdrawn under promissory estoppel is also known as:

21) Which of the following is correct regarding a counteroffer?

22) A contract for the sale of land:

23) What does the parol evidence rule do?

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:

25) Licensing of informational rights can best be described as:

26) Which of the following best describes how e-mail contracts are viewed under the law?

27) Under the Uniform Computer Information Transactions Act, tender of performance is:

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:

29) Which is true about the two kinds of discrimination that are actionable under Title VII?

30) Which of the following is true about sexual harassment in the workplace?

31) Minimum wage, hours of employment, and child labor are regulated by the:

32) Which of the following is true about the provisions of the Consolidated Omnibus Budget Reconciliation Act (COBRA) as they related to health insurance?

33) Which of the following statutes provides that it is legal for employees to organize a union?

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:

36) Which of the following would be classified as tangible personal property?

37) What was accomplished by the Visual Artists Rights Act?

38) Which of the following is true about misappropriation of 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;

40) How does an easement appurtenant differ from an easement in gross?

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:

42) Which of the following is true about a life estate?

43) What makes a publicly held corporation different from a public corporation?

44) Limited partners can lose their limited liability by Breaching the fiduciary duty to the limited partnership.:

45) If an LLC fails to follow formalities such as keeping minutes of meetings, then which of the following is true?

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.

47) The Sarbane-Oxley Act of 2002 was enacted in order to:

48) According to Sarbanes-Oxley, this person or people should sign the Federal income tax return of a corporation:

49) Which of the following is likely to be a breach of a corporate officer's/director's duty of care?

50) In what ways may officers and directors protect themselves from liability for actions taken as an officer or director?

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:

MKT 571 Final Exam

Business / Economics

6/22/12

Asked: 6/22/12 6:00 PM
Opening Offer: $27.00
Due Date: 12/31/69

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

MGT 521 Final Exam

Business / Economics

6/22/12

Asked: 6/22/12 1:45 AM
Opening Offer: $25.00
Due Date: 12/31/69

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 

PLEASE CLICK HERE FOR ANSWERS


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

MA 170 FINAL Exam

Mathematics

6/10/12

Asked: 6/10/12 10:20 PM
Opening Offer: $20.00
Due Date: 12/31/69

1. Evaluate the expression: 2•7!

2.Evaluate the expression: C(9,3)

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.

4. Evaluate: 3!

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?

6. Evaluate the expression: P(5,5)

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).

8.Fill in the missing value. Assume simple interest.

principal ________

interest rate 3%

time 1 year

simple interest $2,472.57

9. State whether the statements are true or false: AcA

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.

11. State whether the statements are true or false: ØcA

12. If A and B are independent events, P(A)=.4, and P(B)=.6 find P(A È B)

13.Determine whether the events A and B are independent

P(A)= .6, P(B)= .8, P(A Ç B)= .2

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).

15. If A and B are independent events, P(A)=.4, and P(B)=.6 find P(A Ç B)

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)

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)

18.A number from 15 to 26 is drawn at random.P(24)Express the probability as a percent. Round to the nearest percent.

19.Evaluate the expression: 5!-3!

20. Evaluate the expression: 9!

21. Fill in the missing value. Assume simple interest.

principal $400,007

interest rate 13%

time 2 years

simple interest ________

22.Using the combination formula complete the following:

How many combinations of two letters are possible from the letters U, A, and X?

23.Evaluate the expression: 3 · 5!

24.Evaluate the expression: 6!+4!

25.Fill in the missing value. Assume simple interest.

principal $87,698

interest rate ________

time 1 year

simple interest $6,138.86

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.

27.State whether the statements are true or false: {Ø}=Ø

28.Determine whether the events A and B are independent

P(A)=.3, P(B)=.6, P(A intersect B)=.18

29.Fill in the missing value. Assume simple interest.

principal $19,582

interest rate 4%

time ________

simple interest $2,349.84

30.Evaluate: 5!

FI515 Managerial Finance Week 6 exam

Business / Economics

6/10/12

Asked: 6/10/12 10:00 PM
Opening Offer: $12.00
Due Date: 12/31/69

1. (TCO D) A share of common stock just paid a dividend of $1.00. If the expected long-run growth rate for this stock is 5.4%, and if investors' required rate of return is 11.4%, what is the stock price?

$16.28
$16.70
$17.13
$17.57
$18.01

2. (TCO D) If D0 = $2.25, g (which is constant) = 3.5%, and P0 = $50, what is the stock's expected dividend yield for the coming year?

4.42%
4.66%
4.89%
5.13%
5.39%

3. (TCO D) Carter's preferred stock pays a dividend of $1.00 per quarter. If the price of the stock is $45.00, what is its nominal (not effective) annual rate of return?

8.03%
8.24%
8.45%
8.67%
8.89%

4. (TCO E) 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?

Increase the dividend payout ratio for the upcoming year.
Increase the percentage of debt in the target capital structure.
Increase the proposed capital budget.
Reduce the amount of short-term bank debt in order to increase the current ratio.
Reduce the percentage of debt in the target capital structure.

5. (TCO E) If a typical U.S. company correctly estimates its WACC at a given point in time and then uses that same cost of capital to evaluate all projects for the next 10 years, then the firm will most likely

become riskier over time, but its intrinsic value will be maximized.
become less risky over time, and this will maximize its intrinsic value.
accept too many low-risk projects and too few high-risk projects.
become more risky and also have an increasing WACC. Its intrinsic value will not be maximized.
continue as before, because there is no reason to expect its risk position or value to change over time as a result of its use of a single cost of capital.

6. (TCO D) Assume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $0.67; P0 = $27.50; and g = 8.00% (constant). What is the cost of common from retained earnings based on the DCF approach?

9.42%
9.91%
10.44%
10.96%
11.51%

7. (TCO F) Cornell Enterprises is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that a project's expected NPV can be negative, in which case it will be rejected.

WACC: 10.00%
Year 0 1 2 3
---------------------------------------------------------
Cash flows -$1,050 $450 $460 $470

$ 92.37
$ 96.99
$101.84
$106.93
$112.28

8. (TCO F) Simkins Renovations Inc. is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's IRR can be less than the WACC (and even negative), in which case it will be rejected.

Year 0 1 2 3 4
-------------------------------------------------------------------
Cash flows -$850 $300 $290 $280 $270

13.13%
14.44%
15.89%
17.48%
19.22%

9. (TCO F) Masulis Inc. is considering a project that has the following cash flow and WACC data. What is the project's discounted payback?

WACC: 10.00%
Year 0 1 2 3 4
------------------------------------------------------------------
Cash flows -$950 $525 $485 $445 $405

1.61 years
1.79 years
1.99 years
2.22 years
2.44 years

10. (TCO H) Temple Corp. is considering a new project whose data are shown below. The equipment that would be used has a three-year tax life, would be depreciated by the straight-line method over its three-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 three-year life. What is the project's NPV?

Risk-adjusted WACC 10.0%
Net investment cost (depreciable basis) $65,000
Straight-line deprec. rate 33.333%
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

ACC 423 Final Exam

Business / Economics

6/8/12

Asked: 6/8/12 6:28 PM
Opening Offer: $25.99
Due Date: 12/31/69

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

2) The conversion of preferred stock may be recorded by the

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

4) When a corporation issues its capital stock in payment for services, the least appropriate basis for recording the transaction is the

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

6) Which of the following represents the total number of shares that a corporation may issue under the terms of its charter?

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

8) How should a "gain" from the sale of treasury stock be reflected when using the cost method of recording treasury stock transactions?

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

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)?

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

12) When computing diluted earnings per share, convertible bonds are

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

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

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

16) An unrealized holding gain on a company's available-for-sale securities should be reflected in the current financial statements as

17) An unrealized holding loss on a company's available-for-sale securities should be reflected in the current financial statements as

18) A reclassification adjustment is reported in the

19) Investments in debt securities should be recorded on the date of acquisition at

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

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

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

23) Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the

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

25) A requirement for a security to be classified as held-to-maturity is

26) Debt securities that are accounted for at amortized cost, NOT fair value, are

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

28) The accounting for fair value hedges records the derivative at its

29) Gains or losses on cash flow hedges are

30) All of the following statements regarding accounting for derivatives are correct EXCEPT that

BUS 401 Final Exam

Business / Economics

6/8/12

Asked: 6/8/12 6:07 PM
Opening Offer: $10.00
Due Date: 12/31/69

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)

MKT 421 Final Exam THE NEW EXAM

Business / Economics

6/8/12

Asked: 6/8/12 6:04 PM
Opening Offer: $10.00
Due Date: 12/31/69

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.

MGT 521 Final Exam

Business / Economics

6/8/12

Asked: 6/8/12 5:41 PM
Opening Offer: $27.00
Due Date: 12/31/69

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 years1) 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

RES341 week 3- Statistical Symbols and..

Mathematics

6/4/12

Asked: 6/4/12 6:55 AM
Opening Offer: $5.99
Due Date: 12/31/69

RES341 week 3

Statistical Symbols and Definitions Matching

RES341 Week 5

Mathematics

6/4/12

Asked: 6/4/12 6:54 AM
Opening Offer: $7.99
Due Date: 12/31/69

1. In an article in the Journal of Management, Morris, Avila and Allen studied innovation by surveying firms to find the number of new products introduced by the firms. A random sample of 100 California based firms are selected. Each firm is asked to report the number of new products introduced last year. The survey found that on average these firms introduced 5.68 products with a standard deviation of 8.70. Compute a 98% confidence interval for the new products introduced last year.

 

2. The score on the entrance test for a well known law school has a mean score of 200 points and a standard deviation of 50 points. At value should the lowest passing score be set if the school wishes only 2.5% of those taking the entrance test to pass?

 

3. A tire manufacturer wishes to investigate the thread life of its tires. A sample of 10 tires driven 50,000 miles revealed a sample mean of 0.32 inches of thread remaining with a standard deviation of 0.09 inches. Construct a 95% confidence interval for the population mean.

RES 341 Week 2 Research Terminology..

Mathematics

6/4/12

Asked: 6/4/12 6:52 AM
Opening Offer: $5.00
Due Date: 12/31/69

Research Terminology Matching Assignment

correct 100% 

A research study which includes repeated observations over a period of time. ____

A type of research that uses focus groups or small studies to get a "feel" for the problem. ____ It means in name only, data that consist of observations that can only be classified and counted by category and have no inherent order. For example: The colors chosen by car buyers at a dealership. ____

Using basic research methods, the outcome of the research is applied to a business problem.

A measurement scale that has no meaningful absolute zero point. For example: The scheduled arrival times (2:00pm, 2:30pm, and 3:00pm) of delivery trucks at a loading dock.

Often used in marketing and sales, this type of research always asks "who, what, when, where, and how" in research questions.

A measurement that uses absolute values. Height, weight, distance, and money are all examples. ____

Numbers assigned to objects representative of the rank order when the distance between each of the measures cannot be determined scientifically. For example, a measure that indicates how a person "feels" on an issue. ____

Research conducted where one unit is held steady, while the experiment is conducted on the other unit. This is to test whether the experiment itself is the reason for change in the experimental unit. ____

The clinical or scientific method of research. This type of research is often done in laboratories or in controlled circumstances. ____

A research question stated in terms of specific testing or measurement criteria. These terms must have empirical referents (this means that we must be able to count or measure them in some way). The object to be defined can be a physical one (a machine tool), or it can be an abstract one (achievement motivation). ____

A research study which uses data collected at a single point in time. This gives a snapshot of what is occurring somewhere at a given time. ____

Chapter 5 E Exercises 5.62 and 5.70

Mathematics

6/4/12

Asked: 6/4/12 6:09 AM
Opening Offer: $6.99
Due Date: 12/31/69

STEP BY STEP    100% correct

5.62 A certain airplane has two independent alternators to provide electrical power. The probability that a given alternator will fail on a 1-hour flight is .02. What is the probability that (a) both will fail?

(b) Neither will fail?

(c) One or the other will fail? Show all steps carefully.

 

5.70 The probability is 1 in 4,000,000 that a single auto trip in the United States will result in a fatality. Over a lifetime, an average U.S. driver takes 50,000 trips.

(a) What is the probability of a fatal accident over a lifetime? Explain your reasoning carefully. Hint: Assume independent events. Why might the assumption of independence be violated?

(b) Why might a driver be tempted not to use a seat belt "just on this trip"?

RES341 week 2-3-4-5

Mathematics

6/4/12

Asked: 6/4/12 5:46 AM
Opening Offer: $15.00
Due Date: 12/31/69

RES341 week 2-3-4-5

step by step.
A+ GUARANTEED!  100% correct

FIN 534 quiz 10 week 11

Business / Economics

6/3/12

Asked: 6/3/12 6:31 PM
Opening Offer: $15.00
Due Date: 12/30/13

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 9 week 10

Business / Economics

6/3/12

Asked: 6/3/12 6:29 PM
Opening Offer: $15.00
Due Date: 12/31/69

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 8 week 9

Business / Economics

6/3/12

Asked: 6/3/12 6:27 PM
Opening Offer: $22.99
Due Date: 12/31/69

Question 1

Which of the following statements is correct?

Answer

One advantage of dividend reinvestment plans is that they enable investors to avoid paying taxes on the dividends they receive.

If a company has an established clientele of investors who prefer a high dividend payout, and if management wants to keep stockholders happy, it should not

follow the strict residual dividend policy.

If a firm follows a strict residual dividend policy, then, holding all else constant, its dividend payout ratio will tend to rise whenever the firm's investment opportunities improve.

If Congress eliminates taxes on capital gains but leaves the personal tax rate on dividends unchanged, this would motivate companies to increase their dividend payout ratios.

Despite its drawbacks, following the residual dividend policy will tend to stabilize actual cash dividends, and this will make it easier for firms to attract a clientele that prefers high dividends, such as retirees.

2 points

Question 2

In the real world, dividends

Answer

are usually more stable than earnings.

fluctuate more widely than earnings.

tend to be a lower percentage of earnings for mature firms.

are usually changed every year to reflect earnings changes, and these changes are randomly higher or lower, depending on whether earnings increased or decreased.

are usually set as a fixed percentage of earnings, e.g., at 40% of earnings, so if EPS = $2.00, then DPS will equal $0.80. Once the percentage is set, then dividend policy is on "automatic pilot" and the actual dividend depends strictly on earnings.

2 points

Question 3

Which of the following statements is correct?

Answer

Firms with a lot of good investment opportunities and a relatively small amount of cash tend to have above average payout ratios.

One advantage of the residual dividend policy is that it leads to a stable dividend payout, which investors like.

An increase in the stock price when a company decreases its dividend is consistent with signaling theory as postulated by MM.

If the "clientele effect" is correct, then for a company whose earnings fluctuate, a policy of paying a constant percentage of net income will probably maximize the stock price.

Stock repurchases make the most sense at times when a company believes its stock is undervalued.

2 points

Question 4

If a firm adheres strictly to the residual dividend policy, the issuance of new common stock would suggest that

Answer

the dividend payout ratio has remained constant.

the dividend payout ratio is increasing.

no dividends were paid during the year.

the dividend payout ratio is decreasing.

the dollar amount of investments has decreased.

2 points

Question 5

You own 100 shares of Troll Brothers' stock, which currently sells for $120 a share. The company is contemplating a 2-for-1 stock split. Which of the following best describes what your position will be after such a split takes place?

Answer

You will have 200 shares of stock, and the stock will trade at or near $120 a share.

You will have 200 shares of stock, and the stock will trade at or near $60 a share.

You will have 100 shares of stock, and the stock will trade at or near $60 a share.

You will have 50 shares of stock, and the stock will trade at or near $120 a share.

You will have 50 shares of stock, and the stock will trade at or near $60 a share.

2 points

Question 6

If a firm adheres strictly to the residual dividend policy, then if its optimal capital budget requires the use of all earnings for a given year (along with new debt according to the optimal debt/total assets ratio), then the firm should pay

Answer

no dividends except out of past retained earnings.

no dividends to common stockholders.

dividends only out of funds raised by the sale of new common stock.

dividends only out of funds raised by borrowing money (i.e., issue debt).

dividends only out of funds raised by selling off fixed assets.

2 points

Question 7

Which of the following statements is correct?

Answer

Under the tax laws as they existed in 2008, a dollar received for repurchased stock must be taxed at the same rate as a dollar received as dividends.

One nice feature of dividend reinvestment plans (DRIPs) is that they reduce the taxes investors would have to pay if they received cash dividends.

Empirical research indicates that, in general, companies send a negative signal to the marketplace when they announce an increase in the dividend, and as a result share prices fall when dividend increases are announced. The reason is that investors interpret the increase as a signal that the firm has relatively few good investment opportunities.

If a company wants to raise new equity capital rather steadily over time, a new stock dividend reinvestment plan would make sense. However, if the firm does not want or need new equity, then an open market purchase dividend reinvestment plan would probably make more sense.

Dividend reinvestment plans have not caught on in most industries, and today about 99% of all companies with DRIPs are utilities.

2 points

Question 8

Which of the following would be most likely to lead to a decrease in a firm's dividend payout ratio?

Answer

Its earnings become more stable.

Its access to the capital markets increases.

Its R&D efforts pay off, and it now has more high-return investment opportunities.

Its accounts receivable decrease due to a change in its credit policy.

Its stock price has increased over the last year by a greater percentage than the increase in the broad stock market averages.

2 points

Question 9

Firm M is a mature firm in a mature industry. Its annual net income and net cash flows are both consistently high and stable. However, M's growth prospects are quite limited, so its capital budget is small relative to its net income. Firm N is a relatively new firm in a new and growing industry. Its markets and products have not stabilized, so its annual operating income fluctuates considerably. However, N has substantial growth opportunities, and its capital budget is expected to be large relative to its net income for the foreseeable future. Which of the following statements is correct?

Answer

Firm M probably has a lower debt ratio than Firm N.

Firm M probably has a higher dividend payout ratio than Firm N.

If the corporate tax rate increases, the debt ratio of both firms is likely to decline.

The two firms are equally likely to pay high dividends.

Firm N is likely to have a clientele of shareholders who want to receive consistent, stable dividend income.

2 points

Question 10

Which of the following statements is correct?

Answer

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

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

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

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.

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

2 points

Question 11

Which of the following should not influence a firm's dividend policy decision?

Answer

The firm's ability to accelerate or delay investment projects.

A strong preference by most shareholders for current cash income versus capital gains.

Constraints imposed by the firm's bond indenture.

The fact that much of the firm's equipment has been leased rather than bought and owned.

The fact that Congress is considering changes in the tax law regarding the taxation of dividends versus capital gains.

2 points

Question 12

Which of the following statements is correct?

Answer

If a firm repurchases some of its stock in the open market, then shareholders who sell their stock for more than they paid for it will be subject to capital gains taxes.

An open-market dividend reinvestment plan will be most attractive to companies that need new equity and would otherwise have to issue additional shares of common stock through investment bankers.

Stock repurchases tend to reduce financial leverage.

If a company declares a 2-for-1 stock split, its stock price should roughly double.

One advantage of adopting the residual dividend policy is that this makes it easier for corporations to meet the requirements of Modigliani and Miller's dividend clientele theory.

2 points

Question 13

Which of the following statements is NOT correct?

Answer

Stock repurchases can be used by a firm as part of a plan to change its capital structure.

After a 3-for-1 stock split, a company's price per share should fall, but the number of shares outstanding will rise.

Investors can interpret a stock repurchase program as a signal that the firm's managers believe the stock is undervalued.

Companies can repurchase shares to distribute large inflows of cash, say from the sale of a division, to stockholders without paying cash dividends.

Stockholders pay no income tax on dividends if the dividends are used to purchase stock through a dividend reinvestment plan.

2 points

Question 14

Which of the following actions will best enable a company to raise additional equity capital?

Answer

Refund long-term debt with lower cost short-term debt.

Declare a stock split.

Begin an open-market purchase dividend reinvestment plan.

Initiate a stock repurchase program.

Begin a new-stock dividend reinvestment plan.

2 points

Question 15

Which of the following statements is correct?

Answer

The tax code encourages companies to pay dividends rather than retain earnings.

If a company uses the residual dividend model to determine its dividend payments, dividends payout will tend to increase whenever its profitable investment opportunities increase.

The stronger management thinks the clientele effect is, the more likely the firm is to adopt a strict version of the residual dividend model.

Large stock repurchases financed by debt tend to increase earnings per share, but they also increase the firm's financial risk.

A dollar paid out to repurchase stock is taxed at the same rate as a dollar paid out in dividends. Thus, both companies and investors are indifferent between distributing cash through dividends and stock repurchase programs.

2 points

Question 16

Based on the information below, what is Ezzel Enterprises' optimal capital structure?

Answer

Debt = 40%; Equity = 60%; EPS = $2.95; Stock price = $26.50.

Debt = 50%; Equity = 50%; EPS = $3.05; Stock price = $28.90.

Debt = 60%; Equity = 40%; EPS = $3.18; Stock price = $31.20.

Debt = 80%; Equity = 20%; EPS = $3.42; Stock price = $30.40.

Debt = 70%; Equity = 30%; EPS = $3.31; Stock price = $30.00.

2 points

Question 17

Which of the following events is likely to encourage a company to raise its target debt ratio, other things held constant?

Answer

An increase in the corporate tax rate.

An increase in the personal tax rate.

An increase in the company's operating leverage.

The Federal Reserve tightens interest rates in an effort to fight inflation.

The company's stock price hits a new high.

2 points

Question 18

If debt financing is used, which of the following is CORRECT?

Answer

The percentage change in net operating income will be greater than a given percentage change in net income.

The percentage change in net operating income will be equal to a given percentage change in net income.

The percentage change in net income relative to the percentage change in net operating income will depend on the interest rate charged on debt.

The percentage change in net income will be greater than the percentage change in net operating income.

The percentage change in sales will be greater than the percentage change in EBIT, which in turn will be greater than the percentage change in net income.

2 points

Question 19

Which of the following statements is CORRECT? As a firm increases the operating leverage used to produce a given quantity of output, this will

Answer

normally lead to an increase in its fixed assets turnover ratio.

normally lead to a decrease in its business risk.

normally lead to a decrease in the standard deviation of its expected EBIT.

normally lead to a decrease in the variability of its expected EPS.

normally lead to a reduction in its fixed assets turnover ratio.

2 points

Question 20

Business risk is affected by a firm's operations. Which of the following is NOT associated with (or does not contribute to) business risk?

Answer

Demand variability.

Sales price variability.

The extent to which operating costs are fixed.

The extent to which interest rates on the firm's debt fluctuate.

Input price variability.

2 points

Question 21

Firms U and L each have the same amount of assets, and both have a basic earning power ratio of 20%. Firm U is unleveraged, i.e., it is 100% equity financed, while Firm L is financed with 50% debt and 50% equity. Firm L's debt has a before-tax cost of 8%. Both firms have positive net income. Which of the following statements is CORRECT?

Answer

The two companies have the same times interest earned (TIE) ratio.

Firm L has a lower ROA than Firm U.

Firm L has a lower ROE than Firm U.

Firm L has the higher times interest earned (TIE) ratio.

Firm L has a higher EBIT than Firm U.

2 points

Question 22

Which of the following statements is CORRECT, holding other things constant?

Answer

Firms whose assets are relatively liquid tend to have relatively low bankruptcy costs, hence they tend to use relatively little debt.

An increase in the personal tax rate is likely to increase the debt ratio of the average corporation.

If changes in the bankruptcy code make bankruptcy less costly to corporations, then this would likely reduce the debt ratio of the average corporation.

An increase in the company's degree of operating leverage is likely to encourage a company to use more debt in its capital structure.

An increase in the corporate tax rate is likely to encourage a company to use more debt in its capital structure.

2 points

Question 23

Which of the following statements is CORRECT?

Answer

Since debt financing raises the firm's financial risk, increasing a company's debt ratio will always increase its WACC.

Since debt financing is cheaper than equity financing, raising a company's debt ratio will always reduce its WACC.

Increasing a company's debt ratio will typically reduce the marginal cost of both debt and equity financing. However, this action still may raise the company's WACC.

Increasing a company's debt ratio will typically increase the marginal cost of both debt and equity financing. However, this action still may lower the company's WACC.

Since a firm's beta coefficient it not affected by its use of financial leverage, leverage does not affect the cost of equity.

2 points

Question 24

Volga Publishing is considering a proposed increase in its debt ratio, which would also increase the company's interest expense. The plan would involve issuing new bonds and using the proceeds to buy back shares of its common stock. The company's CFO thinks the plan will not change total assets or operating income, but that it will increase earnings per share (EPS). Assuming the CFO's estimates are correct, which of the following statements is CORRECT?

Answer

Since the proposed plan increases Volga's financial risk, the company's stock price still might fall even if EPS increases.

If the plan reduces the WACC, the stock price is also likely to decline.

Since the plan is expected to increase EPS, this implies that net income is also expected to increase.

If the plan does increase the EPS, the stock price will automatically increase at the same rate.

Under the plan there will be more bonds outstanding, and that will increase their liquidity and thus lower the interest rate on the currently outstanding bonds.

2 points

Question 25

The firm's target capital structure should be consistent with which of the following statements?

Answer

Maximize the earnings per share (EPS).

Minimize the cost of debt (rd).

Obtain the highest possible bond rating.

Minimize the cost of equity (rs).

Minimize the weighted average cost of capital (WACC).

2 points

Question 26

Which of the following statements is CORRECT?

Answer

If corporate tax rates were decreased while other things were held constant, and if the Modigliani-Miller tax-adjusted tradeoff theory of capital structure were correct, this would tend to cause corporations to decrease their use of debt.

A change in the personal tax rate should not affect firms' capital structure decisions.

"Business risk" is differentiated from "financial risk" by the fact that financial risk reflects only the use of debt, while business risk reflects both the use of debt and such factors as sales variability, cost variability, and operating leverage.

The optimal capital structure is the one that simultaneously (1) maximizes the price of the firm's stock, (2) minimizes its WACC, and (3) maximizes its EPS.

If changes in the bankruptcy code make bankruptcy less costly to corporations, then this would likely reduce the debt ratio of the average corporation.

2 points

Question 27

Companies HD and LD have identical tax rates, total assets, and basic earning power ratios, and their basic earning power exceeds their before-tax cost of debt, rd. However, Company HD has a higher debt ratio and thus more interest expense than Company LD. Which of the following statements is CORRECT?

Answer

Company HD has a higher net income than Company LD.

Company HD has a lower ROA than Company LD.

Company HD has a lower ROE than Company LD.

The two companies have the same ROA.

The two companies have the same ROE.

2 points

Question 28

Which of the following statements is CORRECT?

Answer

As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS.

The optimal capital structure simultaneously maximizes EPS and minimizes the WACC.

The optimal capital structure minimizes the cost of equity, which is a necessary condition for maximizing the stock price.

The optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC.

The optimal capital structure simultaneously maximizes stock price and minimizes the WACC.

2 points

Question 29

Which of the following would increase the likelihood that a company would increase its debt ratio, other things held constant?

Answer

An increase in costs incurred when filing for bankruptcy.

An increase in the corporate tax rate.

An increase in the personal tax rate.

The Federal Reserve tightens interest rates in an effort to fight inflation.

The company's stock price hits a new low.

2 points

Question 30

Which of the following statements is CORRECT?

Answer

The capital structure that maximizes expected EPS also maximizes the price per share of common stock.

The capital structure that minimizes the interest rate on debt also maximizes the expected EPS.

The capital structure that minimizes the required return on equity also maximizes the stock price.

The capital structure that minimizes the WACC also maximizes the price per share of common stock.

The capital structure that gives the firm the best credit rating also maximizes the stock price.

FIN 534 quiz 7 week 8

Business / Economics

6/3/12

Asked: 6/3/12 6:24 PM
Opening Offer: $22.99
Due Date: 12/31/69

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

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?

Answer

$1,714,750

$1,805,000

$1,900,000

$2,000,000

$2,100,000

Based on the corporate valuation model, Bernile Inc.'s value of operations is $750 million. Its balance sheet shows $50 million of short-term investments that are unrelated to operations, $100 million of accounts payable, $100 million of notes payable, $200 million of long-term debt, $40 million of common stock (par plus paid-in-capital), and $160 million of retained earnings. What is the best estimate for the firm's value of equity, in millions?

Answer

$429

$451

$475

$500

$525

Zhdanov Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$10 million, but its FCF at t = 2 will be $20 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions?

Answer

$158

$167

$175

$184

$193

Which of the following does NOT always increase a company's market value?

Answer

Increasing the expected growth rate of sales.

Increasing the expected operating profitability (NOPAT/Sales).

Decreasing the capital requirements (Capital/Sales).

Decreasing the weighted average cost of capital.

Increasing the expected rate of return on invested capital.

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?

Answer

$24.90

$27.67

$30.43

$33.48

$36.82

Simonyan Inc. forecasts a free cash flow of $40 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5% thereafter. If the weighted average cost of capital is 10% and the cost of equity is 15%, what is the horizon value, in millions at t = 3?

Answer

$840

$882

$926

$972

$1,021

Based on the corporate valuation model, Hunsader's value of operations is $300 million. The balance sheet shows $20 million of short-term investments that are unrelated to operations, $50 million of accounts payable, $90 million of notes payable, $30 million of long-term debt, $40 million of preferred stock, and $100 million of common equity. The company has 10 million shares of stock outstanding. What is the best estimate of the stock's price per share?

Answer

$13.72

$14.44

$15.20

$16.00

$16.80

A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?

Year: 1 2 3

Free cash flow: -$15 $10 $40

Answer

$315

$331

$348

$367

$386

Suppose Yon Sun Corporation's free cash flow during the just-ended year (t = 0) was $100 million, and FCF is expected to grow at a constant rate of 5% in the future. If the weighted average cost of capital is 15%, what is the firm's value of operations, in millions?

Answer

$948

$998

$1,050

$1,103

$1,158

Which of the following is NOT normally regarded as being a good reason to establish an ESOP?

Answer

To increase worker productivity.

To enable the firm to borrow at a below-market interest rate.

To make it easier to grant stock options to employees.

To help prevent a hostile takeover.

To help retain valued employees.

Which of the following is NOT normally regarded as being a barrier to hostile takeovers?

Answer

Abnormally high executive compensation.

Targeted share repurchases.

Shareholder rights provisions.

Restricted voting rights.

Poison pills.

FIN 534 quiz 6 week 7

Business / Economics

6/3/12

Asked: 6/3/12 6:21 PM
Opening Offer: $22.99
Due Date: 12/31/69

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.

FIN 534 quiz 5 Week 6

Business / Economics

6/3/12

Asked: 6/3/12 6:12 PM
Opening Offer: $22.99
Due Date: 12/31/69

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

6/3/12

Asked: 6/3/12 6:09 PM
Opening Offer: $22.99
Due Date: 12/31/69

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 3 Week 4

Business / Economics

6/3/12

Asked: 6/3/12 6:05 PM
Opening Offer: $22.00
Due Date: 12/31/69

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.

FIN 534 quiz 2 week 3

Business / Economics

6/3/12

Asked: 6/3/12 5:59 PM
Opening Offer: $18.99
Due Date: 12/31/69

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

6/3/12

Asked: 6/3/12 5:52 PM
Opening Offer: $15.99
Due Date: 12/31/69

Question 1
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

ECO 372 Final Exam

Business / Economics

5/17/12

Asked: 5/17/12 12:16 PM
Opening Offer: $25.00
Due Date: 12/31/69

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

ACC 349 FINAL EXAM (1)

Business / Economics

5/11/12

Asked: 5/11/12 5:34 AM
Opening Offer: $25.00
Due Date: 12/31/69

1) What is the best way to handle manufacturing overhead costs in order to get the most timely job cost information?

2) At the end of the year, manufacturing overhead has been overapplied. What occurred to create this situation?

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?

4) Which of the following would be accounted for using a job order cost system?

5) Which one of the following is NEVER part of recording the issuance of raw materials in a job order cost system?

6) What is unique about the flow of costs in a job order cost system?

7) Which one of the following costs would be included in manufacturing overhead of a lawn mower manufacturer?

8) What broad functions do the management of an organization perform?

9) Which of the following represents the correct order in which inventories are reported on a manufacturer's balance sheet?

10) In traditional costing systems, overhead is generally applied based on

11) An activity that has a direct cause-effect relationship with the resources consumed is a(n)

12) A well-designed activity-based costing system starts with

13) Which of the following factors would suggest a switch to activity-based costing?

14) All of the following statements are correct EXCEPT that

15) What sometimes makes implementation of activity-based costing difficult in service industries is

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?

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

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

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?

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?

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,

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?

23) Which statement describes a fixed cost?

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?

25) Variable costing

26) Which cost is NOT charged to the product under variable costing?

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

28) Which of the following is NOT considered an advantage of using standard costs?

29) The difference between a budget and a standard is that

30) If a company is concerned with the potential negative effects of establishing standards, they should

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
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?

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?

34) Manufacturing overhead costs are applied to work in process on the basis of

35) The overhead volume variance relates only to

36) If the standard hours allowed are less than the standard hours at normal capacity,

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?

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?

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?

40) In most cases, prices are set by the

41) A company must price its product to cover its costs and earn a reasonable profit in

42) The cost-plus pricing approach's major advantage is

ACC 349 FINAL EXAM (2)

Business / Economics

5/11/12

Asked: 5/11/12 5:30 AM
Opening Offer: $30.00
Due Date: 12/31/69

1) At the end of the year, manufacturing overhead has been overapplied. What occurred to create this situation?

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?

3) Why is factory overhead applied to products and jobs by manufacturing companies?

4) In a job order cost accounting system, the Work in Process account is

5) Which one of the following is an important feature of a job order cost system?

6) Which of the following represents the two basic types of cost accounting systems?

7) Which of the following represents the correct order in which inventories are reported on a manufacturer's balance sheet?

8) Which one of the following is indirect labor considered?

9) Which of the following is an element of manufacturing overhead?

10) Which of the following is NOT typical of traditional costing systems?

11) An activity that has a direct cause-effect relationship with the resources consumed is a(n)

12) A well-designed activity-based costing system starts with

13) What sometimes makes implementation of activity-based costing difficult in service industries is

14) Which of the following is a nonvalue-added activity?

15) Each of the following is a limitation of activity-based costing EXCEPT

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

17) Which of the following factors would suggest a switch to activity-based costing?

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

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?

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

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?

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?

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?

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?

25) Which cost is charged to the product under variable costing?

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

27) Which cost is NOT charged to the product under variable costing?

28) If standard costs are incorporated into the accounting system,

29) The difference between a budget and a standard is that

30) A standard cost is

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

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

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?

34) Which of the following statements is FALSE?

35) The overhead volume variance relates only to

36) If the standard hours allowed are less than the standard hours at normal capacity, the volume variance

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?

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?

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?

40) Prices are set by the competitive market when

41) In cost-plus pricing, the markup percentage is computed by dividing the desired ROI per unit by the

42) The cost-plus pricing approach's major advantage is

HRM 531 Final Exam

Business / Economics

5/9/12

Asked: 5/9/12 5:59 PM
Opening Offer: $25.00
Due Date: 12/31/69

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

LAW 421 Final Exam

Business / Economics

5/8/12

Asked: 5/8/12 4:23 AM
Opening Offer: $27.00
Due Date: 12/31/69

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

STR 581 Final Exam A+ GUARANTEED..

Business / Economics

5/7/12

Asked: 5/7/12 7:40 AM
Opening Offer: $35.00
Due Date: 12/30/12

1) 3M, Hewlett-Packard, Lego, and other companies use the ________ to manage the innovation process.

2) A ________ is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment.

3) A(n) ________ is any good, service, or idea that is perceived by someone as new.

4) 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.

5) ________ consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.

6) Most established companies focus on ________ when it comes to innovation.

7) ________ is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives.

8) ________ is the result of a concentrated effort by designers, engineers, and purchasing agents to reduce the product's overall costs.

9) In ________ marketing, the seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers.

10) Marketers usually identify niches by ________.

11) Which of the following is generally considered to be the last step in the marketing research process?

12) ________ is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.

13) 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 ________.

14) The marketing communications mix consists of six major modes of communications. Which of the following is NOT one of these modes?

15) Marketing communications can contribute to brand equity by establishing the brand in memory and to________ (in)a brand image.

16) ________ communicates a company's intended value positioning of its product or brand to the market.

17) To reach Generation Y, rock band Foo Fighters created a digital street team that sends targeted e-mail messages to members who "get the latest news, exclusive audio/video sneak previews, tons of chances to win great Foo Fighters prizes, and become part of the Foo Fighters Family." Which of the following techniques for reaching Generation Y are the Foo Fighters using?

18) New-to-the- world products are ________.

19) 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.

20) Price has operated as the major determinant of buyer choice among poorer nations, among poorer groups, and with ________ products.

21) 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 ________.

22) "Power prices" use price as a key strategic tool. These "power prices" have discovered the highly ________ effect of price on the bottom line.

23) 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 ________ or _________ from another company.

24) John Kotter's view argues that management focuses on coping with complexity, whereas leadership focuses on coping with _____.

25) Leadership is best defined as _____.

26) Which of the following is NOT included in the definition of conflict?

27) Negotiation can be defined as a process in which two or more parties exchange goods or services and attempt to agree upon _____.

28) _____ bargaining is negotiation that seeks to divide a "fixed pie."

29) Which of the following statements about leadership is true?

30) 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?

31) _____ can be used to increase the perception that employees are treated fairly.

32) Examples of off-the-job training include all of the following except _____.

33) Training employees how to be better listeners falls under which of the following training categories?

34) Which type of skill training has become increasingly important in organizations?

35) According to a recent survey, about ___ percent of employees working in the 1,000 largest U.S. corporations receive ethics training.

36) Organizational structure has six key elements. Which of the following is not one of these elements?

37) Which of the following is not a primary force for change in organizations?

38) The "realistic" personality from Holland's typology of personality and congruent occupations would be well suited for which of the following jobs?

39) What term is used for the tendency of an individual to attribute his own successes to internal factors while putting the blame for failures on external factors?

40) A task that is subdivided into many separate jobs is considered to have _____.

41) Under exponential smoothing, if we want our forecast to be responsive to recent demand, the value of alpha should be:

42) Which of the following would NOT be classified as a time-series technique?

43) According to David Maister, the most complex projects requiring innovation and creativity are called _________.

45) If the system contains a bottleneck, the _______ is the best place for control. If there is no bottleneck, the __________ is the best place for control.

46) "Hard" capital rationing refers to the rationing __________.

47) __________ says to look for opportunities to invest in positive-NPV projects in foreign markets or to develop derivatives or design arrangements that enable firms to cope better with the risks they face in their foreign operations.

48) __________ says to recognize the value of hidden options in a situation, such as the foreign exchange options in some derivative instruments.

49) Under capital rationing, given the choice among several equally attractive investments, the best tool to use is the __________.

50) An all-equity-financed firm would __________.

51) __________ says to seek out investments that offer the greatest expected risk-adjusted real return.

52) A checking account is __________.

53) Due to asymmetric information, the market fears that a firm issuing securities will do so when the stock is _________.

54) Which of the following statements is true?

55) Which of the following statements is true?

56) __________ says to recognize the value of options contained in derivatives.

57) __________ says to use derivatives to pay others to take risks.

58) The conversion price (for a convertible security) is usually adjusted __________.

59) The investment decision best addresses which of the following questions?

60) Dimensions of risk include __________.

61) According to the Principle of Risk-Return Trade-Off, investors require a higher return to compensate for __________.

62) You do a study and find out that, on average, stock prices for firms decrease 3% for every 5% decrease in inside ownership. You are watching the nightly business report and find out that Magic Tape's stock has announced that insiders have sold 10% of their holdings. You are concerned because you own 1,000 shares of Magic Tape and it had closed the day before unchanged at $30 per share. If markets are at least semi-strong form efficient, what would you expect?

63) Which of the following is not an advantage of going public?

64) Which of the following is not an advantage of going public?

65) Undertaker Corporation has a joint process that produces three products: P, G, and A. Each product may be sold at split-off or processed further and then sold. Joint processing costs for a year amount to $25,000. Other relevant data are as follows:
Product Sales Value at Split-off Processing Costs after Split-off Sales Value at Completion
P $62,000 $5,000 $88,000
G 12,500 6,500 19,000
A 9,400 5,000 12,000
Product G _____.

66) Baden Company manufactures a product with a unit variable cost of $50 and a unit sales price of $88. Fixed manufacturing costs were $240,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $70 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:

67) Transfer-pricing systems exist to _____.

68) Which one of the following managerial accounting approaches attempts to allocate manufacturing overhead in a more meaningful fashion?

69) The opportunity cost of an alternate course of action that is relevant to a make-or-buy decision is

70) Which of the following does not appear as a separate section on the cash budget?

71) Important factors considered by sales forecasters include all of the following except _____.

72) Effectiveness is indicated by _____.

73) Beginning cash balance plus total receipts

74) A cost which remains constant per unit at various levels of activity is a

75) A variable cost is a cost that

76) A company has total fixed costs of $120,000 and a contribution margin ratio of 20%. The total sales necessary to break even are

77) For an activity base to be useful in cost behavior analysis,

78) Identify which statement about "currently attainable standards" is NOT true.

79) Joint costs are incurred _____.

80) The last step in activity-based costing is to

81) In a process cost system,

82) The proprietorship form of business organization

83) Identify which one of the following statements is false.

84) 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?

85) _____ are sections of the balance sheet.

86) Although the U.S. has had a longstanding agreement with ___________, after the passage of NAFTA, _________ became the United States' second largest trading partner.

87) Diversity training programs are generally intended to provide a vehicle for _____.

88) Which country does the text describe as becoming the largest producer and consumer of many of the world's goods?

89) Which of the following is not one of the Caux Round Table Principles for International Business?

90) One study found that manufacturing labor costs about ___ an hour in China, compared to ____ dollars in the United States.

91) Which of the following is correct about litigating commercial disputes?

92) Which article of the United States Constitution deals with the judicial power of the federal government?

93) When an economist says that the demand for a product has increased, this means that:

94) When movie ticket prices increase, families tend to spend less time watching movies and more time at home watching videos instead. This best reflects:

95) The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel.

96) Which of the following is NOT a function of functional area information systems?

97) The Global, Web-Based Platform enables individuals to do which of the following?

98) Companies normally budget marketing research at ________ percent of company sales.

99) The assignment of numbers or symbols to a property of objects according to value or magnitude is called _____.

100) A ________ has been defined as being a coordinated collection of data, systems, tools, and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action.

FIN 534 quiz 10 week 11

Business / Economics

5/4/12

Asked: 5/4/12 5:08 PM
Opening Offer: $12.00
Due Date: 12/31/69

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 9 week 10

Business / Economics

5/4/12

Asked: 5/4/12 5:07 PM
Opening Offer: $12.00
Due Date: 12/31/69

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 8 week 9

Business / Economics

5/4/12

Asked: 5/4/12 5:04 PM
Opening Offer: $18.00
Due Date: 12/30/12

Question 1

Which of the following statements is correct?

Answer

One advantage of dividend reinvestment plans is that they enable investors to avoid paying taxes on the dividends they receive.

If a company has an established clientele of investors who prefer a high dividend payout, and if management wants to keep stockholders happy, it should not

follow the strict residual dividend policy.

If a firm follows a strict residual dividend policy, then, holding all else constant, its dividend payout ratio will tend to rise whenever the firm's investment opportunities improve.

If Congress eliminates taxes on capital gains but leaves the personal tax rate on dividends unchanged, this would motivate companies to increase their dividend payout ratios.

Despite its drawbacks, following the residual dividend policy will tend to stabilize actual cash dividends, and this will make it easier for firms to attract a clientele that prefers high dividends, such as retirees.

2 points

Question 2

In the real world, dividends

Answer

are usually more stable than earnings.

fluctuate more widely than earnings.

tend to be a lower percentage of earnings for mature firms.

are usually changed every year to reflect earnings changes, and these changes are randomly higher or lower, depending on whether earnings increased or decreased.

are usually set as a fixed percentage of earnings, e.g., at 40% of earnings, so if EPS = $2.00, then DPS will equal $0.80. Once the percentage is set, then dividend policy is on "automatic pilot" and the actual dividend depends strictly on earnings.

2 points

Question 3

Which of the following statements is correct?

Answer

Firms with a lot of good investment opportunities and a relatively small amount of cash tend to have above average payout ratios.

One advantage of the residual dividend policy is that it leads to a stable dividend payout, which investors like.

An increase in the stock price when a company decreases its dividend is consistent with signaling theory as postulated by MM.

If the "clientele effect" is correct, then for a company whose earnings fluctuate, a policy of paying a constant percentage of net income will probably maximize the stock price.

Stock repurchases make the most sense at times when a company believes its stock is undervalued.

2 points

Question 4

If a firm adheres strictly to the residual dividend policy, the issuance of new common stock would suggest that

Answer

the dividend payout ratio has remained constant.

the dividend payout ratio is increasing.

no dividends were paid during the year.

the dividend payout ratio is decreasing.

the dollar amount of investments has decreased.

2 points

Question 5

You own 100 shares of Troll Brothers' stock, which currently sells for $120 a share. The company is contemplating a 2-for-1 stock split. Which of the following best describes what your position will be after such a split takes place?

Answer

You will have 200 shares of stock, and the stock will trade at or near $120 a share.

You will have 200 shares of stock, and the stock will trade at or near $60 a share.

You will have 100 shares of stock, and the stock will trade at or near $60 a share.

You will have 50 shares of stock, and the stock will trade at or near $120 a share.

You will have 50 shares of stock, and the stock will trade at or near $60 a share.

2 points

Question 6

If a firm adheres strictly to the residual dividend policy, then if its optimal capital budget requires the use of all earnings for a given year (along with new debt according to the optimal debt/total assets ratio), then the firm should pay

Answer

no dividends except out of past retained earnings.

no dividends to common stockholders.

dividends only out of funds raised by the sale of new common stock.

dividends only out of funds raised by borrowing money (i.e., issue debt).

dividends only out of funds raised by selling off fixed assets.

2 points

Question 7

Which of the following statements is correct?

Answer

Under the tax laws as they existed in 2008, a dollar received for repurchased stock must be taxed at the same rate as a dollar received as dividends.

One nice feature of dividend reinvestment plans (DRIPs) is that they reduce the taxes investors would have to pay if they received cash dividends.

Empirical research indicates that, in general, companies send a negative signal to the marketplace when they announce an increase in the dividend, and as a result share prices fall when dividend increases are announced. The reason is that investors interpret the increase as a signal that the firm has relatively few good investment opportunities.

If a company wants to raise new equity capital rather steadily over time, a new stock dividend reinvestment plan would make sense. However, if the firm does not want or need new equity, then an open market purchase dividend reinvestment plan would probably make more sense.

Dividend reinvestment plans have not caught on in most industries, and today about 99% of all companies with DRIPs are utilities.

2 points

Question 8

Which of the following would be most likely to lead to a decrease in a firm's dividend payout ratio?

Answer

Its earnings become more stable.

Its access to the capital markets increases.

Its R&D efforts pay off, and it now has more high-return investment opportunities.

Its accounts receivable decrease due to a change in its credit policy.

Its stock price has increased over the last year by a greater percentage than the increase in the broad stock market averages.

2 points

Question 9

Firm M is a mature firm in a mature industry. Its annual net income and net cash flows are both consistently high and stable. However, M's growth prospects are quite limited, so its capital budget is small relative to its net income. Firm N is a relatively new firm in a new and growing industry. Its markets and products have not stabilized, so its annual operating income fluctuates considerably. However, N has substantial growth opportunities, and its capital budget is expected to be large relative to its net income for the foreseeable future. Which of the following statements is correct?

Answer

Firm M probably has a lower debt ratio than Firm N.

Firm M probably has a higher dividend payout ratio than Firm N.

If the corporate tax rate increases, the debt ratio of both firms is likely to decline.

The two firms are equally likely to pay high dividends.

Firm N is likely to have a clientele of shareholders who want to receive consistent, stable dividend income.

2 points

Question 10

Which of the following statements is correct?

Answer

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

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

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

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.

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

2 points

Question 11

Which of the following should not influence a firm's dividend policy decision?

Answer

The firm's ability to accelerate or delay investment projects.

A strong preference by most shareholders for current cash income versus capital gains.

Constraints imposed by the firm's bond indenture.

The fact that much of the firm's equipment has been leased rather than bought and owned.

The fact that Congress is considering changes in the tax law regarding the taxation of dividends versus capital gains.

2 points

Question 12

Which of the following statements is correct?

Answer

If a firm repurchases some of its stock in the open market, then shareholders who sell their stock for more than they paid for it will be subject to capital gains taxes.

An open-market dividend reinvestment plan will be most attractive to companies that need new equity and would otherwise have to issue additional shares of common stock through investment bankers.

Stock repurchases tend to reduce financial leverage.

If a company declares a 2-for-1 stock split, its stock price should roughly double.

One advantage of adopting the residual dividend policy is that this makes it easier for corporations to meet the requirements of Modigliani and Miller's dividend clientele theory.

2 points

Question 13

Which of the following statements is NOT correct?

Answer

Stock repurchases can be used by a firm as part of a plan to change its capital structure.

After a 3-for-1 stock split, a company's price per share should fall, but the number of shares outstanding will rise.

Investors can interpret a stock repurchase program as a signal that the firm's managers believe the stock is undervalued.

Companies can repurchase shares to distribute large inflows of cash, say from the sale of a division, to stockholders without paying cash dividends.

Stockholders pay no income tax on dividends if the dividends are used to purchase stock through a dividend reinvestment plan.

2 points

Question 14

Which of the following actions will best enable a company to raise additional equity capital?

Answer

Refund long-term debt with lower cost short-term debt.

Declare a stock split.

Begin an open-market purchase dividend reinvestment plan.

Initiate a stock repurchase program.

Begin a new-stock dividend reinvestment plan.

2 points

Question 15

Which of the following statements is correct?

Answer

The tax code encourages companies to pay dividends rather than retain earnings.

If a company uses the residual dividend model to determine its dividend payments, dividends payout will tend to increase whenever its profitable investment opportunities increase.

The stronger management thinks the clientele effect is, the more likely the firm is to adopt a strict version of the residual dividend model.

Large stock repurchases financed by debt tend to increase earnings per share, but they also increase the firm's financial risk.

A dollar paid out to repurchase stock is taxed at the same rate as a dollar paid out in dividends. Thus, both companies and investors are indifferent between distributing cash through dividends and stock repurchase programs.

2 points

Question 16

Based on the information below, what is Ezzel Enterprises' optimal capital structure?

Answer

Debt = 40%; Equity = 60%; EPS = $2.95; Stock price = $26.50.

Debt = 50%; Equity = 50%; EPS = $3.05; Stock price = $28.90.

Debt = 60%; Equity = 40%; EPS = $3.18; Stock price = $31.20.

Debt = 80%; Equity = 20%; EPS = $3.42; Stock price = $30.40.

Debt = 70%; Equity = 30%; EPS = $3.31; Stock price = $30.00.

2 points

Question 17

Which of the following events is likely to encourage a company to raise its target debt ratio, other things held constant?

Answer

An increase in the corporate tax rate.

An increase in the personal tax rate.

An increase in the company's operating leverage.

The Federal Reserve tightens interest rates in an effort to fight inflation.

The company's stock price hits a new high.

2 points

Question 18

If debt financing is used, which of the following is CORRECT?

Answer

The percentage change in net operating income will be greater than a given percentage change in net income.

The percentage change in net operating income will be equal to a given percentage change in net income.

The percentage change in net income relative to the percentage change in net operating income will depend on the interest rate charged on debt.

The percentage change in net income will be greater than the percentage change in net operating income.

The percentage change in sales will be greater than the percentage change in EBIT, which in turn will be greater than the percentage change in net income.

2 points

Question 19

Which of the following statements is CORRECT? As a firm increases the operating leverage used to produce a given quantity of output, this will

Answer

normally lead to an increase in its fixed assets turnover ratio.

normally lead to a decrease in its business risk.

normally lead to a decrease in the standard deviation of its expected EBIT.

normally lead to a decrease in the variability of its expected EPS.

normally lead to a reduction in its fixed assets turnover ratio.

2 points

Question 20

Business risk is affected by a firm's operations. Which of the following is NOT associated with (or does not contribute to) business risk?

Answer

Demand variability.

Sales price variability.

The extent to which operating costs are fixed.

The extent to which interest rates on the firm's debt fluctuate.

Input price variability.

2 points

Question 21

Firms U and L each have the same amount of assets, and both have a basic earning power ratio of 20%. Firm U is unleveraged, i.e., it is 100% equity financed, while Firm L is financed with 50% debt and 50% equity. Firm L's debt has a before-tax cost of 8%. Both firms have positive net income. Which of the following statements is CORRECT?

Answer

The two companies have the same times interest earned (TIE) ratio.

Firm L has a lower ROA than Firm U.

Firm L has a lower ROE than Firm U.

Firm L has the higher times interest earned (TIE) ratio.

Firm L has a higher EBIT than Firm U.

2 points

Question 22

Which of the following statements is CORRECT, holding other things constant?

Answer

Firms whose assets are relatively liquid tend to have relatively low bankruptcy costs, hence they tend to use relatively little debt.

An increase in the personal tax rate is likely to increase the debt ratio of the average corporation.

If changes in the bankruptcy code make bankruptcy less costly to corporations, then this would likely reduce the debt ratio of the average corporation.

An increase in the company's degree of operating leverage is likely to encourage a company to use more debt in its capital structure.

An increase in the corporate tax rate is likely to encourage a company to use more debt in its capital structure.

2 points

Question 23

Which of the following statements is CORRECT?

Answer

Since debt financing raises the firm's financial risk, increasing a company's debt ratio will always increase its WACC.

Since debt financing is cheaper than equity financing, raising a company's debt ratio will always reduce its WACC.

Increasing a company's debt ratio will typically reduce the marginal cost of both debt and equity financing. However, this action still may raise the company's WACC.

Increasing a company's debt ratio will typically increase the marginal cost of both debt and equity financing. However, this action still may lower the company's WACC.

Since a firm's beta coefficient it not affected by its use of financial leverage, leverage does not affect the cost of equity.

2 points

Question 24

Volga Publishing is considering a proposed increase in its debt ratio, which would also increase the company's interest expense. The plan would involve issuing new bonds and using the proceeds to buy back shares of its common stock. The company's CFO thinks the plan will not change total assets or operating income, but that it will increase earnings per share (EPS). Assuming the CFO's estimates are correct, which of the following statements is CORRECT?

Answer

Since the proposed plan increases Volga's financial risk, the company's stock price still might fall even if EPS increases.

If the plan reduces the WACC, the stock price is also likely to decline.

Since the plan is expected to increase EPS, this implies that net income is also expected to increase.

If the plan does increase the EPS, the stock price will automatically increase at the same rate.

Under the plan there will be more bonds outstanding, and that will increase their liquidity and thus lower the interest rate on the currently outstanding bonds.

2 points

Question 25

The firm's target capital structure should be consistent with which of the following statements?

Answer

Maximize the earnings per share (EPS).

Minimize the cost of debt (rd).

Obtain the highest possible bond rating.

Minimize the cost of equity (rs).

Minimize the weighted average cost of capital (WACC).

2 points

Question 26

Which of the following statements is CORRECT?

Answer

If corporate tax rates were decreased while other things were held constant, and if the Modigliani-Miller tax-adjusted tradeoff theory of capital structure were correct, this would tend to cause corporations to decrease their use of debt.

A change in the personal tax rate should not affect firms' capital structure decisions.

"Business risk" is differentiated from "financial risk" by the fact that financial risk reflects only the use of debt, while business risk reflects both the use of debt and such factors as sales variability, cost variability, and operating leverage.

The optimal capital structure is the one that simultaneously (1) maximizes the price of the firm's stock, (2) minimizes its WACC, and (3) maximizes its EPS.

If changes in the bankruptcy code make bankruptcy less costly to corporations, then this would likely reduce the debt ratio of the average corporation.

2 points

Question 27

Companies HD and LD have identical tax rates, total assets, and basic earning power ratios, and their basic earning power exceeds their before-tax cost of debt, rd. However, Company HD has a higher debt ratio and thus more interest expense than Company LD. Which of the following statements is CORRECT?

Answer

Company HD has a higher net income than Company LD.

Company HD has a lower ROA than Company LD.

Company HD has a lower ROE than Company LD.

The two companies have the same ROA.

The two companies have the same ROE.

2 points

Question 28

Which of the following statements is CORRECT?

Answer

As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS.

The optimal capital structure simultaneously maximizes EPS and minimizes the WACC.

The optimal capital structure minimizes the cost of equity, which is a necessary condition for maximizing the stock price.

The optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC.

The optimal capital structure simultaneously maximizes stock price and minimizes the WACC.

2 points

Question 29

Which of the following would increase the likelihood that a company would increase its debt ratio, other things held constant?

Answer

An increase in costs incurred when filing for bankruptcy.

An increase in the corporate tax rate.

An increase in the personal tax rate.

The Federal Reserve tightens interest rates in an effort to fight inflation.

The company's stock price hits a new low.

2 points

Question 30

Which of the following statements is CORRECT?

Answer

The capital structure that maximizes expected EPS also maximizes the price per share of common stock.

The capital structure that minimizes the interest rate on debt also maximizes the expected EPS.

The capital structure that minimizes the required return on equity also maximizes the stock price.

The capital structure that minimizes the WACC also maximizes the price per share of common stock.

The capital structure that gives the firm the best credit rating also maximizes the stock price.

FIN 534 quiz 7 week 8

Business / Economics

5/4/12

Asked: 5/4/12 4:58 PM
Opening Offer: $18.00
Due Date: 12/31/69

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

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?

Answer

$1,714,750

$1,805,000

$1,900,000

$2,000,000

$2,100,000

Based on the corporate valuation model, Bernile Inc.'s value of operations is $750 million. Its balance sheet shows $50 million of short-term investments that are unrelated to operations, $100 million of accounts payable, $100 million of notes payable, $200 million of long-term debt, $40 million of common stock (par plus paid-in-capital), and $160 million of retained earnings. What is the best estimate for the firm's value of equity, in millions?

Answer

$429

$451

$475

$500

$525

Zhdanov Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$10 million, but its FCF at t = 2 will be $20 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions?

Answer

$158

$167

$175

$184

$193

Which of the following does NOT always increase a company's market value?

Answer

Increasing the expected growth rate of sales.

Increasing the expected operating profitability (NOPAT/Sales).

Decreasing the capital requirements (Capital/Sales).

Decreasing the weighted average cost of capital.

Increasing the expected rate of return on invested capital.

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?

Answer

$24.90

$27.67

$30.43

$33.48

$36.82

Simonyan Inc. forecasts a free cash flow of $40 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5% thereafter. If the weighted average cost of capital is 10% and the cost of equity is 15%, what is the horizon value, in millions at t = 3?

Answer

$840

$882

$926

$972

$1,021

Based on the corporate valuation model, Hunsader's value of operations is $300 million. The balance sheet shows $20 million of short-term investments that are unrelated to operations, $50 million of accounts payable, $90 million of notes payable, $30 million of long-term debt, $40 million of preferred stock, and $100 million of common equity. The company has 10 million shares of stock outstanding. What is the best estimate of the stock's price per share?

Answer

$13.72

$14.44

$15.20

$16.00

$16.80

A company forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?

Year: 1 2 3

Free cash flow: -$15 $10 $40

Answer

$315

$331

$348

$367

$386

Suppose Yon Sun Corporation's free cash flow during the just-ended year (t = 0) was $100 million, and FCF is expected to grow at a constant rate of 5% in the future. If the weighted average cost of capital is 15%, what is the firm's value of operations, in millions?

Answer

$948

$998

$1,050

$1,103

$1,158

Which of the following is NOT normally regarded as being a good reason to establish an ESOP?

Answer

To increase worker productivity.

To enable the firm to borrow at a below-market interest rate.

To make it easier to grant stock options to employees.

To help prevent a hostile takeover.

To help retain valued employees.

Which of the following is NOT normally regarded as being a barrier to hostile takeovers?

Answer

Abnormally high executive compensation.

Targeted share repurchases.

Shareholder rights provisions.

Restricted voting rights.

Poison pills.

FIN 534 quiz 6 week 7

Business / Economics

5/4/12

Asked: 5/4/12 4:55 PM
Opening Offer: $18.00
Due Date: 12/31/69

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.

FIN 534 quiz 5 Week 6

Business / Economics

5/4/12

Asked: 5/4/12 4:51 PM
Opening Offer: $18.00
Due Date: 12/31/69

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

5/4/12

Asked: 5/4/12 4:48 PM
Opening Offer: $17.00
Due Date: 12/31/69

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