FINC 600-Midterm Exam . Questions

FINC 600-Midterm Exam . Questions Question 1 of 40 The average accounting return method A. ignores some project years. B. ignores the timing of net income. C. properly discounts all values. D. is preferred by financial analysts over the alternative methods. E. is never used in practice. Question 2 of 40 Which one of these best measures a firm's long-run ability to meet its obligations? A. Cash ratio B. Total asset turnover C. EV multiple D. Return on equity E. Equity multiplier Question 3 of 40 Alto stock pays an annual dividend of $1.10 a share and has done so for the past 6 years. No changes in the dividend amount are expected. The relevant market rate of return is 7.8 percent. Given this, one share of this stock A. is basically worthless as it offers no growth potential. B. is valued as a nonconstant growth stock. C. is valued as a perpetuity. FINC600 I003 Win 20   Tests & Quizzes Tests & Quizzes 2.5/ 2.5 Points 2.5/ 2.5 Points 2.5/ 2.5 Points D. is valued as a differential growth stock. E. has a current market value of $1.10. Question 4 of 40 Which one of these is the best indicator that acquiring a firm is a good idea? A. The firm has a positive NPV at an appropriate discount rate. B. The firm has a negative NPV at all positive discount rates. C. The firm has a positive NPV at the riskless rate of return. D. The firm has increasing cash inflows. E. The firm is growing on an annual basis. Question 5 of 40 Lew, an individual investor, sold 100 shares of Global Tech stock on Monday. Janice, another individual investor, purchased those shares but never met Lew. You know for certain that this trade occurred in which market? A. Primary market B. Dealer market C. NASDAQ D. Secondary market E. NYSE