FIN 370 chapter 8 Exam Questions and
Answers Graded A+
what is common stock? - Correct answer-shares entitling their holder to dividends
that vary in amount and may even be missed, depending on the fortunes of the
company.
what is weighted average cost of capital? - Correct answer-A company uses this to
determine the true cost of their capital
what is the value of operations? - Correct answer-the present value of expected
future FCF that is discounted by the WACC
who has claims on corporate value? - Correct answer--debtholders
-preferred stockholfers
-stockholder
what are value drivers? - Correct answer-inputs of FCF valuation model that
managers are able to influence sales growth, operating profitability, capital
requirements, cost of capital
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
Answers Graded A+
what is common stock? - Correct answer-shares entitling their holder to dividends
that vary in amount and may even be missed, depending on the fortunes of the
company.
what is weighted average cost of capital? - Correct answer-A company uses this to
determine the true cost of their capital
what is the value of operations? - Correct answer-the present value of expected
future FCF that is discounted by the WACC
who has claims on corporate value? - Correct answer--debtholders
-preferred stockholfers
-stockholder
what are value drivers? - Correct answer-inputs of FCF valuation model that
managers are able to influence sales growth, operating profitability, capital
requirements, cost of capital
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1