COB 300 Finance Final Questions and Answers | 2024
An issue or conflict that arises due to potential divergence of interest between
managers, shareholders, and creditors is best described as a(n): **** Agency Problem
Corporations represent by far the largest contributor to overall revenue from all forms of
business. They also represent the largest proportion of total entities. **** False
An advantage of the corporate form of business is its: **** Access to capital
Your mom & dad inherit $100,000 and wants to invest these funds for their retirement.
They are very concerned about business continuity and want to be able to pass on this
investment to the next generation of the family. Which of the following investment
opportunities would not be appropriate for them? **** Food truck business operating as
a sole proprietorship
Which of the following is a true statement in reference to a corporation. It: **** May
have its stock traded in the secondary market
If the pension fund you managed purchased stock of Google's new seasoned equity
offering from the underwriters, Goldman-Sachs, this transaction will take place in ____
market and ____ market. **** Capital; Primary
Which of the following transactions takes place in the secondary market? An investor
buying: **** 500 shares of stock in his online brokerage account
The term IPO stands for **** Initial Public Offering
Suppose a company reports on its statement of cash flows that it has a cash outflow for
long-term investing activities and a cash inflow for financing activities. This company
most likely has **** Purchased new property, plant, and equipment, financing this by
issuing new debt or equity
Which of the following would be classified as a use of cash? **** An increase in
inventories
The first major section of a typical statement of cash flows is "Operating Activities," and
the first entry in this section is "Net Income." Then, also in the first section, we show
some items that represent increases or decreases to cash, and the last entry is called
, "Net Cash Provided by Operating Activities." This number can be either positive or
negative, but if it is negative, the firm is almost certain to soon go bankrupt. **** False
Which of the following are considered current liabilities? [indicate all that apply] ****
Accounts Payable; Wages Payable
The Times-Interest Earned (TIE) ratio directly measures the ability of a firm to meet
which one of its following obligations? **** Payment of interest to a lender
The underlying theory of Financial Statement Analysis is: **** There is no underlying
theory
A firm increased the amount of debt it had outstanding while holding their equity
outstanding the same, their profit margin remained consistent and their return in equity
was the same. Therefore: **** Total asset turnover decreased
When comparing firms of differing sizes Common Sizing allows you to more easily
compare the performance of the firms. This is accomplished by taking the items on the
Balance Sheets as a percentage of Total Sales. **** False
The greater the number of compounding periods within a year, then (1) the smaller the
future value of a lump sum investment at Time 0 and (2) the greater the present value of
a given lump sum to be received at some future date. **** False
The Fisher Effect primarily emphasizes the effects of _____ on an investor's rate of
return. **** Inflation
Martin invested $1,000 six years ago and expected to have $1,500 today. He has not
added or withdrawn any money from this account since his initial investment. All interest
was reinvested in the account. As it turns out, Martin only has $1,420 in his account
today. Which one of the following must be true? **** Martin earned a lower interest rate
than he expected
Truist Bank has an account that pays a 8% nominal rate of interest. The account
compounds quarterly. Which of the following statements is correct? **** The periodic
rate of interest is 2.0% and the effective rate of interest is greater than 8.0%
The cash flows for an annuity must all be equal, and they must occur at regular
intervals, such as once a year or once a month. **** True
The value of a perpetuity today that pays $325 per year with an interest rate of 4.8% is
closest to: **** $6,770
You expect to receive $18,000 at graduation in two years. You plan on investing it at 11
percent until you have $91,000. How long will you wait from now? **** 17.53 Years
An issue or conflict that arises due to potential divergence of interest between
managers, shareholders, and creditors is best described as a(n): **** Agency Problem
Corporations represent by far the largest contributor to overall revenue from all forms of
business. They also represent the largest proportion of total entities. **** False
An advantage of the corporate form of business is its: **** Access to capital
Your mom & dad inherit $100,000 and wants to invest these funds for their retirement.
They are very concerned about business continuity and want to be able to pass on this
investment to the next generation of the family. Which of the following investment
opportunities would not be appropriate for them? **** Food truck business operating as
a sole proprietorship
Which of the following is a true statement in reference to a corporation. It: **** May
have its stock traded in the secondary market
If the pension fund you managed purchased stock of Google's new seasoned equity
offering from the underwriters, Goldman-Sachs, this transaction will take place in ____
market and ____ market. **** Capital; Primary
Which of the following transactions takes place in the secondary market? An investor
buying: **** 500 shares of stock in his online brokerage account
The term IPO stands for **** Initial Public Offering
Suppose a company reports on its statement of cash flows that it has a cash outflow for
long-term investing activities and a cash inflow for financing activities. This company
most likely has **** Purchased new property, plant, and equipment, financing this by
issuing new debt or equity
Which of the following would be classified as a use of cash? **** An increase in
inventories
The first major section of a typical statement of cash flows is "Operating Activities," and
the first entry in this section is "Net Income." Then, also in the first section, we show
some items that represent increases or decreases to cash, and the last entry is called
, "Net Cash Provided by Operating Activities." This number can be either positive or
negative, but if it is negative, the firm is almost certain to soon go bankrupt. **** False
Which of the following are considered current liabilities? [indicate all that apply] ****
Accounts Payable; Wages Payable
The Times-Interest Earned (TIE) ratio directly measures the ability of a firm to meet
which one of its following obligations? **** Payment of interest to a lender
The underlying theory of Financial Statement Analysis is: **** There is no underlying
theory
A firm increased the amount of debt it had outstanding while holding their equity
outstanding the same, their profit margin remained consistent and their return in equity
was the same. Therefore: **** Total asset turnover decreased
When comparing firms of differing sizes Common Sizing allows you to more easily
compare the performance of the firms. This is accomplished by taking the items on the
Balance Sheets as a percentage of Total Sales. **** False
The greater the number of compounding periods within a year, then (1) the smaller the
future value of a lump sum investment at Time 0 and (2) the greater the present value of
a given lump sum to be received at some future date. **** False
The Fisher Effect primarily emphasizes the effects of _____ on an investor's rate of
return. **** Inflation
Martin invested $1,000 six years ago and expected to have $1,500 today. He has not
added or withdrawn any money from this account since his initial investment. All interest
was reinvested in the account. As it turns out, Martin only has $1,420 in his account
today. Which one of the following must be true? **** Martin earned a lower interest rate
than he expected
Truist Bank has an account that pays a 8% nominal rate of interest. The account
compounds quarterly. Which of the following statements is correct? **** The periodic
rate of interest is 2.0% and the effective rate of interest is greater than 8.0%
The cash flows for an annuity must all be equal, and they must occur at regular
intervals, such as once a year or once a month. **** True
The value of a perpetuity today that pays $325 per year with an interest rate of 4.8% is
closest to: **** $6,770
You expect to receive $18,000 at graduation in two years. You plan on investing it at 11
percent until you have $91,000. How long will you wait from now? **** 17.53 Years
