BUSI 320 FINAL QUESTIONS WITH ACCURATE ANSWERS
(T/F) An increase in sales and/or profits means there is also an increase in cash on
the balance sheet. correct answer True
(T/F) any action taken by the financial manger that increases risk will also increase
the required return. correct answer True
(T/F) As the contribution margin rises, the breakeven point goes down. correct
answer True
(T/F) Floatation costs reduce the net proceeds from the sale of a bond whether
sold at a premium, at a discount, or at its par value. correct answer True
(T/F) If a firm has unlimited funds to invest, all the mutually exclusive projects
that meet its minimum investment criteria can be implemented. correct answer
False
(T/F) If a firm is subject to capital rationing, it is able to accept all independent
projects that provide an acceptable return. correct answer False
(T/F) If Product Corporation has beginning inventory of 100 units, projected sales
of 400 units, and desired ending inventory of 200 units, production must be
planned for 300 units. correct answer False
(T/F) In a practical sense, the longer the term of a bond, the greater the default
risk associated with the bond. correct answer True
, (T/F) In paying off a mortgage loan, the amount of the periodic payment that goes
toward the reduction of principal increases over the life of the mortgage. correct
answer True
(T/F) Maximizing the Shareholder's wealth is the goal of financial management.
correct answer True
(T/F) Preferred stock is a special form of stock having a fixed periodic dividend
that must be paid prior to payment of any interest to outstanding bonds. correct
answer False
(T/F) The APR is generally lower than the stated rate by the bank. correct answer
False
(T/F) The more certain the return from an asset, the less variability and therefore
the less risk. correct answer True
(T/F) The payback period is generally viewed as an unsophisticated capital
budgeting technique, because it does not explicitly consider the time value of
money by discounting cash flows to find the present value. correct answer True
A "normal" term structure of interest rates would depict
a. short term rates higher than long term rates
b. no general relationship between short and long term rates
c. intermediate rates (1-5 years) lower than both short term and long term rates
d. long term rates higher than short term rates correct answer D
(T/F) An increase in sales and/or profits means there is also an increase in cash on
the balance sheet. correct answer True
(T/F) any action taken by the financial manger that increases risk will also increase
the required return. correct answer True
(T/F) As the contribution margin rises, the breakeven point goes down. correct
answer True
(T/F) Floatation costs reduce the net proceeds from the sale of a bond whether
sold at a premium, at a discount, or at its par value. correct answer True
(T/F) If a firm has unlimited funds to invest, all the mutually exclusive projects
that meet its minimum investment criteria can be implemented. correct answer
False
(T/F) If a firm is subject to capital rationing, it is able to accept all independent
projects that provide an acceptable return. correct answer False
(T/F) If Product Corporation has beginning inventory of 100 units, projected sales
of 400 units, and desired ending inventory of 200 units, production must be
planned for 300 units. correct answer False
(T/F) In a practical sense, the longer the term of a bond, the greater the default
risk associated with the bond. correct answer True
, (T/F) In paying off a mortgage loan, the amount of the periodic payment that goes
toward the reduction of principal increases over the life of the mortgage. correct
answer True
(T/F) Maximizing the Shareholder's wealth is the goal of financial management.
correct answer True
(T/F) Preferred stock is a special form of stock having a fixed periodic dividend
that must be paid prior to payment of any interest to outstanding bonds. correct
answer False
(T/F) The APR is generally lower than the stated rate by the bank. correct answer
False
(T/F) The more certain the return from an asset, the less variability and therefore
the less risk. correct answer True
(T/F) The payback period is generally viewed as an unsophisticated capital
budgeting technique, because it does not explicitly consider the time value of
money by discounting cash flows to find the present value. correct answer True
A "normal" term structure of interest rates would depict
a. short term rates higher than long term rates
b. no general relationship between short and long term rates
c. intermediate rates (1-5 years) lower than both short term and long term rates
d. long term rates higher than short term rates correct answer D
