BUSI 530 QUIZ 4 / BUSI530 QUIZ 4:LATEST-LIBERTY UNIVERSITY

BUSI 530 QUIZ 4 / BUSI530 QUIZ 4:LATEST-LIBERTY UNIVERSITY• BUSI 530 QUIZ 4 Question 1 2 out of 2 points When financial managers take action to minimize the carrying costs of current assets, they: Answer • Question 2 2 out of 2 points As for the preparation of cash budgets, capital expenditures are: Answer • Question 3 2 out of 2 points Which of the following statements about total capital requirement is least likely to be correct for a profitable firm? Answer • Question 4 2 out of 2 points Field warehousing can be an important source of: Answer • Question 5 2 out of 2 points Which of the following is correct for a firm that reduces its accounts receivable balance from the previous quarter? Answer • Question 6 2 out of 2 points In "field warehousing" the inventory is kept by the: Answer • Question 7 2 out of 2 points Which of the following is least likely to be correct for a firm that repeatedly stretches its payables? Answer • Question 8 2 out of 2 points What strategy regarding long- versus short-term financing is not being followed if managers resort to short-term investing during downturns in the business cycle? Answer • Question 9 2 out of 2 points A firm which follows a "relaxed strategy" towards the total capital requirement will be Answer • Question 10 2 out of 2 points If a firm decided to speed up its collection from its customers by reducing the receivables period and kept the inventory period and payable period the same, then: Answer • Question 11 2 out of 2 points Relative to its assets, a firm with a large volume of retained earnings and a high ROE: Answer • Question 12 0 out of 2 points A firm's required external financing is determined by the: Answer • Question 13 0 out of 2 points The observation that additions to fixed assets are "lumpier" than additions to current assets indicates that: Answer • Question 14 0 out of 2 points Which of the following statements is correct concerning the internal growth rate? Answer • Question 15 2 out of 2 points If a firm with an asset base of $3 million recently added $150,000 to retained earnings after a dividend payment of $100,000, then its internal growth rate is: Answer • Question 16 2 out of 2 points Alternative "What if?" scenarios can be easily accommodated in financial planning by use of: Answer • Question 17 2 out of 2 points Which of the following is not typically included among the three major components of a financial planning model? Answer • Question 18 2 out of 2 points With respect to the balance sheet, an increase in equity of $2,000 with an increase in net income to $2,500, leads us to believe: Answer • Question 19 0 out of 2 points The phrase, "Forecasts do not develop in a vacuum," is a reminder that: Answer • Question 20 0 out of 2 points What is the required asset turnover for a firm with a 12% profit margin, 50% equity, and a 40% dividend payout that wishes to grow at 6% using only internal funding? Answer • Question 21 2 out of 2 points Dividend changes are typically viewed by investors as signals of future changes in: Answer • Question 22 2 out of 2 points An investor owns 5,000 shares, which is 1% of a corporation's outstanding stock before a stock repurchase. The investor did not sell any of his stock during the 25,000 share repurchase. Which of the following statements is correct? Answer • Question 23 0 out of 2 points An increase in dividends might not increase price and may actually decrease stock price if: Answer • Question 24 0 out of 2 points A stock split and/or a stock dividend will result in an: Answer • Question 25 0 out of 2 points Corporations may have a legitimate preference for dividends over capital gains because: Answer Selected Answer: dividends received by corporations are not taxable. • Question 26 0 out of 2 points Automatic dividend reinvestment plans allow firms to: Answer • Question 27 2 out of 2 points Why are dividend changes rather than their absolute level perceived to be more important to managers and shareholders? Answer • Question 28 2 out of 2 points High dividends may be used as __________ of a firm's __________. Answer • Question 29 0 out of 2 points Which of the following is not an example of market imperfections that make dividend policy relevant? Answer • Question 30 0 out of 2 points Which of the following statements regarding "taxation of dividends and capital gains under current tax law" is incorrect (assuming that the marginal tax rate for a large corporation is 35%): Answer • Question 31 2 out of 2 points Money-market securities usually have a maturity of: Answer • Question 32 2 out of 2 points A firm offered 3/10, net 30 as terms of trade credit on a $1,000 invoice dated January 1. How much must the purchaser offer to pay in full on January 4th? Answer • Question 33 2 out of 2 points An agreement by a firm to make partial payments to its creditors in exchange for relief of its debt is known as: Answer • Question 34 2 out of 2 points The bank's ledger balance for a firm is equal to the: Answer • Question 35 2 out of 2 points Which of the following is true for a "repurchase agreement"? Answer • Question 36 2 out of 2 points Assuming that the firm can either hold cash paying no interest or invest in marketable securities, which of the following might induce the manager to hold higher cash balances? Answer • Question 37 0 out of 2 points Select the earliest date below which does not deserve a cash discount if the terms of a January 1 sale are 2/10, EOM, net 30? Answer • Question 38 2 out of 2 points Which of the following statements is true regarding repurchase agreements? Answer • Question 39 2 out of 2 points Which of the following is not an accepted method of attempting to increase a firm's net float? Answer • Question 40 2 out of 2 points When sales are made without the accompaniment of a formal debt contract, the sales are said to be on: Answer • Question 41 2 out of 2 points Stockholders' expected return on a stock priced at $25 per share with zero-growth dividends of $4.00 is: Answer • Question 42 2 out of 2 points What is the expected rate of return to equityholders if the firm has a 35% tax rate, a 10% rate of interest paid on debt, a 15% WACC and a 60% debt-asset ratio? Answer • Question 43 2 out of 2 points With the inclusion of taxes, MM I is incorrect and the capital structure of the firm can be important due to: Answer • Question 44 2 out of 2 points Which of the following would not be expected to change with changes in the firm's capital structure? Answer • Question 45 2 out of 2 points Ignoring taxes, a firm's weighted-average cost of capital is equal to: Answer • Question 46 2 out of 2 points One advantage of debt financing over equity financing is: Answer • Question 47 2 out of 2 points With risky debt and MM II, the expected return on assets _____ as the debt-equity ratio _____. Answer • Question 48 2 out of 2 points Under the assumptions necessary for MM I, if investors can borrow or lend at the same terms as the firm, they will: Answer • Question 49 2 out of 2 points According to the trade-off theory, the capital structure is a trade-off between: Answer • Question 50 2 out of 2 points A firm's capital structure is represented by its mix of: Answer