BUSI 530 QUIZ 1 / BUSI530 QUIZ 1:LATEST-LIBERTY UNIVERSITY

BUSI 530 QUIZ 1 / BUSI530 QUIZ 1:LATEST-LIBERTY UNIVERSITY• BUSI 530 QUIZ 1 Question 1 2 out of 2 points A firm with no leases has a long-term debt ratio of 50%. This means that the book value of equity: Answer • Question 2 2 out of 2 points The use of debt in the firm's capital structure will increase ROE if the firm: Answer • Question 3 2 out of 2 points When Tri-C Corp. compares its ratios to industry averages, it has a higher current ratio, an average quick ratio, and a low inventory turnover. What might you assume about Tri-C? Answer • Question 4 2 out of 2 points Calculate the average collection period for Dotte Inc. if its accounts receivables were $500 and $600 at the end of each of the last two years, and its revenue over the last year was $3,000: Answer • Question 5 2 out of 2 points A high dividend yield indicates: Answer • Question 6 2 out of 2 points TSI Inc. has enough liquid assets to finance its operations for 67 days and cash, marketable securities, and receivables totaling $1,000. TSI's average daily expenditures from operations are: Answer • Question 7 2 out of 2 points Which of the following may be the best measure of company performance? Answer • Question 8 2 out of 2 points The financial ratios of a firm can best be compared to: Answer • Question 9 2 out of 2 points Which of the following changes will provide an increase (if only in the short-run) in a firm's ROE? Answer • Question 10 2 out of 2 points A sign that a firm is efficient is a: Answer • Question 11 2 out of 2 points Which of the following is not typically considered a function of financial intermediaries? Answer • Question 12 0 out of 2 points Suppose Cryogenic Concepts expects a 10 percent return on a new product investment, when top-quality corporate bonds are also offering 10 percent rates of return. What should the firm do? Answer • Question 13 0 out of 2 points Property insurance companies protect themselves against the extensive damage caused by hurricanes and earthquakes by: Answer • Question 14 2 out of 2 points Long-term financing decisions commonly occur in the: Answer • Question 15 0 out of 2 points Which of the following financial assets might be least likely to have an active secondary market? Answer • Question 16 2 out of 2 points Primary markets can be distinguished from secondary markets in that primary markets sell: Answer • Question 17 0 out of 2 points Liquidity is important to a mutual fund because: Answer • Question 18 2 out of 2 points A financial intermediary provides financing for: Answer • Question 19 2 out of 2 points Reinvestment means: Answer • Question 20 2 out of 2 points Which of the following financial markets is not located in one, centralized location? Answer • Question 21 2 out of 2 points When subtracting an asset's accumulated depreciation from its historic cost, the resulting value is termed the: Answer • Question 22 2 out of 2 points What is the most likely conclusion for a firm whose statement of cash flows shows an increase in cash balances and has negative cash flows from both operations and financing? Answer • Question 23 2 out of 2 points Net working capital is a measure of the company's: Answer • Question 24 2 out of 2 points A balance sheet may be considered "backward looking," from the perspective that: Answer • Question 25 2 out of 2 points Which of the following is not a typical reason for differences between profit and cash flow? Answer • Question 26 0 out of 2 points What balancing entry is most likely to be called for if previously excluded intangible assets were added to a firm's balance sheet? Answer • Question 27 2 out of 2 points If a firm's cash-flow statement shows that cash was used for investments, which of the following would seem most likely? Answer • Question 28 0 out of 2 points Which of the following values would most likely interest a shareholder? Answer • Question 29 2 out of 2 points If market interest rates have increased since a company last borrowed long-term funds, the market value of these long-term funds will likely be: Answer • Question 30 0 out of 2 points ABC Corp.'s balance sheet shows their long-term debt to be $20 million. The debt was issued with a 10% interest rate, and the current interest rate is 7%. Based on this information, the market value of this debt would be: Answer • Question 31 0 out of 2 points If interest is paid m times per year, then the per-period interest rate equals the: Answer compound interest rate times m. annual percentage rate divided by m. • Question 32 0 out of 2 points $50,000 is borrowed, to be repaid in three equal, annual payments with 10% interest. Approximately how much principal is amortized with the first payment? Answer • Question 33 2 out of 2 points What is the present value of the following payment stream, discounted at 8% annually: $1,000 at the end of year 1, $2,000 at the end of year 2, and $3,000 at the end of year 3? Answer • Question 34 2 out of 2 points Given a set future value, which of the following will contribute to a lower present value? Answer • Question 35 0 out of 2 points What is the present value of your trust fund if it promises to pay you $50,000 on your 30th birthday (7 years from today) and earns 10% compounded annually? Answer • Question 36 2 out of 2 points How much can be accumulated for retirement if $2,000 is deposited annually, beginning one year from today, and the account earns 9% interest compounded annually for 40 years? Answer • Question 37 2 out of 2 points What will be the monthly payment on a home mortgage of $75,000 at 12% interest, to be amortized over 30 years? Answer • Question 38 2 out of 2 points What is the relationship between an annually compounded rate and the annual percentage rate (APR) which is calculated for truth-in-lending laws for a loan requiring monthly payments? Answer • Question 39 2 out of 2 points Cash flows occurring in different periods should not be compared unless: Answer • Question 40 2 out of 2 points How much must be deposited today in an account earning 6% annually to accumulate a 20% down payment to use in purchasing a car one year from now, assuming that the car's current price is $20,000, and inflation will be 4%? Answer Need $20,800 x .2 = $4,160 PV = $4,160/(1.06) = $3,924.55 • Question 41 2 out of 2 points Which of the following forms of compensation is most likely to align the interests of managers and shareholders? Answer • Question 42 2 out of 2 points An example of a firm's financing decision would be: Answer • Question 43 2 out of 2 points Which of the following would be considered an advantage of the sole proprietorship form of organization? Answer • Question 44 2 out of 2 points Which of the following would not be considered a financial asset? Answer • Question 45 2 out of 2 points The term "corporate stakeholder" typically refers to: Answer • Question 46 2 out of 2 points When managers' compensation plans are tied in a meaningful manner to the profits of the firm, agency problems: Answer • Question 47 2 out of 2 points A common problem for closely held corporations is: Answer • Question 48 2 out of 2 points The stockholders in a sole proprietorship are represented by: Answer • Question 49 2 out of 2 points Financial markets are used for trading: Answer • Question 50 2 out of 2 points Which of the following statements generally cannot be correct for an investor who faces unlimited liability on an investment? Answer