FI 360 Final Exam Questions and Answers Latest (Graded)

FI 360 Final Exam Questions and Answers Latest (Graded). The feature in a bond indenture that requires systematic retirement of the bond issue is a planned call provision. sinking fund provision. forced conversion provision. mandated redemption provision. Question 2 6.5 / 6.5 pts Operating leverage describes the relationship between... EBIT and sales taxes and sales debt and equity fixed costs and variable costs Question 3 6.5 / 6.5 pts The risk-free rate is 5% and the expected return on the market portfolio is 13%. A stock has a beta of 1.5, what is its expected return? 17% 12% 19.5% 24.5% Incorrect Question 4 0 / 6.5 pts Bavarian Brew, an unlevered firm, has an expected EBIT of $500,000. The required return on assets for the firm’s assets is 10%. The company has 250,000 shares outstanding. The company is considering raising $1 million in debt with a required return of 6% and would use the proceeds to repurchase outstanding stock. What is the value of Bavarian Brew before restructuring? Assume no corporate taxes. $500,000 $5,000,000 $1,000,000 $3,300,000 Question 5 6.5 / 6.5 pts Net working capital decreases when inventory falls, accounts receivable falls, or accounts payable increases inventory increases, accounts receivable increases, or accounts payable falls cost of goods sold falls, or interest rate falls operating expenses fall, or current assets increase Question 6 6.5 / 6.5 pts The uncertainty caused by the variability of a firm’s cash flows is called . . . financial risk business risk financial leverage none of the above Question 7 6.5 / 6.5 pts A bond sold by foreign corporations to U.S. investors is called a(n Eurobond foreign bond Yankee bond none of the above Question 8 6.5 / 6.5 pts You want to buy your dream car, but you are $5,000 short. If you could invest your entire savings of $2,350 at an annual interest of 12%, how long would you have to wait until you have accumulated enough money to buy the car? 9.40 years 3.48 years 7.24 years 6.66 years Question 9 6.5 / 6.5 pts How do we calculate a company’s operating cash flow? EBIT - taxes + depreciation EBIT - taxes - depreciation EBIT + taxes + depreciation EBIT – Sales Question 10 6.5 / 6.5 pts Holding all other things constant, which of the following represents a cash outflow? The company sells a machine. The company acquires inventory. The company receives a bank loan. The company increases accounts payable. Question 11 6.5 / 6.5 pts Which statement about common shareholders is incorrect? Shareholders only have a residual claim. Shareholders have precedence over all other claimholders in the case of bankruptcy. Shareholders have a voting right. Shareholders are the ultimate owners of a corporation