FIN 321 FINAL EXAM SAMPLE
QUESTIONS #1 AND #2
Itouisounotoucorrectoutooudiscountoutheoucashouflowsouofouaouleveredoufirmouwithoutheoucosto
uofouequityouofoutheouunleveredoufirm,oubecauseou-ouans--
leverageouincreasesoutheouriskouofoutheouequityouofoutheoufirm.
Theoutrade-
offoutheoryouofouoptimaloucapitaloustructureouweighsoutheoubenefitsouofoudebtouagainstouth
eoucostsouofou-ouans--financialoudistress.
Asymmetricouinformationouimpliesouthatou________oumayouhaveoubetterouinformationouab
outouaoufirm'soucashouflowsouthanouotheroustakeholdersouhave.ou-ouans--Managers
Anyoneouwhooupurchasesoutheoustockouonouorouafteroutheou________oudateouwillounotoure
ceiveoutheoudividend.ou-ouans--ex-dividend
Whenouaoufirmouoffersoutooubuyouitsousharesouatouaoupre-
specifiedoupriceouduringouaoushortoutimeouperiod,ouitouisoualsoouknownouasoua(n)ou-ouans--
tenderouoffer.
Taxouratesouonoudividendsouandoucapitalougainsoudifferouacrossouinvestorsouforouaouvariety
ouofoureasonsouincludingou-ouans--allouofoutheouabove.
WhichouformouofoutheouEfficientouMarketsouHypothesisoustatesouthatouoneoucannotouprofito
ufromouonlyoulookingouatoupastoudataoubutoucanouprofitoufromoulookingouatoupubliclyouavaila
bleouinformation?ou-ouans--weak-formouEMH
Theouassetouandouliabilityousidesouofouaouproouformaoubalanceousheetouprojectionouwillouno
toubalance,ouinougeneral,ouunlessouweoumakeouassumptionsouaboutouhowou________ouan
dou________ouwillougrowouwithousales.ou-ouans--debt;ouequity
Whichouofoutheoufollowingoubestoudescribesouaoulimitedoupartnershipouthatouspecializesoui
nouraisingoumoneyoutoouinvestouinoutheouprivateouequityouofouyoungoufirms?ou-ouans--
ventureoucapitaloufirms
WhichouofoutheoufollowingoubestoudescribesouaoufirmoucommitmentouIPO?ou-ouans--
Theouunderwriteroupurchasesoutheouentireouissueouatouaousmalloudiscountouandouthenoures
ellsouitouatoutheouofferouprice.
QUESTIONS #1 AND #2
Itouisounotoucorrectoutooudiscountoutheoucashouflowsouofouaouleveredoufirmouwithoutheoucosto
uofouequityouofoutheouunleveredoufirm,oubecauseou-ouans--
leverageouincreasesoutheouriskouofoutheouequityouofoutheoufirm.
Theoutrade-
offoutheoryouofouoptimaloucapitaloustructureouweighsoutheoubenefitsouofoudebtouagainstouth
eoucostsouofou-ouans--financialoudistress.
Asymmetricouinformationouimpliesouthatou________oumayouhaveoubetterouinformationouab
outouaoufirm'soucashouflowsouthanouotheroustakeholdersouhave.ou-ouans--Managers
Anyoneouwhooupurchasesoutheoustockouonouorouafteroutheou________oudateouwillounotoure
ceiveoutheoudividend.ou-ouans--ex-dividend
Whenouaoufirmouoffersoutooubuyouitsousharesouatouaoupre-
specifiedoupriceouduringouaoushortoutimeouperiod,ouitouisoualsoouknownouasoua(n)ou-ouans--
tenderouoffer.
Taxouratesouonoudividendsouandoucapitalougainsoudifferouacrossouinvestorsouforouaouvariety
ouofoureasonsouincludingou-ouans--allouofoutheouabove.
WhichouformouofoutheouEfficientouMarketsouHypothesisoustatesouthatouoneoucannotouprofito
ufromouonlyoulookingouatoupastoudataoubutoucanouprofitoufromoulookingouatoupubliclyouavaila
bleouinformation?ou-ouans--weak-formouEMH
Theouassetouandouliabilityousidesouofouaouproouformaoubalanceousheetouprojectionouwillouno
toubalance,ouinougeneral,ouunlessouweoumakeouassumptionsouaboutouhowou________ouan
dou________ouwillougrowouwithousales.ou-ouans--debt;ouequity
Whichouofoutheoufollowingoubestoudescribesouaoulimitedoupartnershipouthatouspecializesoui
nouraisingoumoneyoutoouinvestouinoutheouprivateouequityouofouyoungoufirms?ou-ouans--
ventureoucapitaloufirms
WhichouofoutheoufollowingoubestoudescribesouaoufirmoucommitmentouIPO?ou-ouans--
Theouunderwriteroupurchasesoutheouentireouissueouatouaousmalloudiscountouandouthenoures
ellsouitouatoutheouofferouprice.
