CONTENTS
PREFACE
About This Edition v
Acknowledgments vii
Correspondence vii
AACSB Tags viii
TEST QUESTIONS
Chapter 1 An Overview of Financial Management 1
Chapter 2 Financial Markets and Institutions 23
Chapter 3 Financial Statements, Cash Flow, and Taxes 33
Chapter 4 Analysis of Financial Statements 89
Chapter 5 Time Value of Money 137
,Web Appendix 5A Continuous Compounding and Discounting 203
Chapter 6 Interest Rates 207
Chapter 7 Bonds and Their Valuation 237
Web Appendix 7A Zero Coupon Bonds 275
Web Appendix 7B Bankruptcy and Reorganization 291
Chapter 8 Risk and Rates of Return 295
Web Appendix 8A Calculating Beta Coefficients 349
Chapter 9 Stocks and Their Valuation 357
Appendix 9A Stock Market Equilibrium 393
Chapter 10 The Cost of Capital 397
Chapter 11 The Basics of Capital Budgeting 437
Chapter 12 Cash Flow Estimation and Risk Analysis 487
Appendix 12A Tax Depreciation 521
,Web Appendix 12C Using the CAPM to Estimate the Risk-Adjusted
Cost of Capital 523
Web Appendix 12D Techniques for Measuring Beta Risk 527
Web Appendix 12E Comparing Mutually Exclusive Projects
with Unequal Lives 531
Chapter 13 Capital Structure and Leverage 533
Web Appendix 13A Degree of Leverage 569
Chapter 14 Distributions to Shareholders:
Dividends and Share Repurchases 585
Chapter 15 Working Capital Management 615
Chapter 16 Financial Planning and Forecasting 663
Chapter 17 Multinational Financial Management 677
, PREFACE
About This Edition
This Test Bank is designed for use with the 6th Edition of Fundamentals of Financial Management:
Concise, and it differs from the previous test bank in many significant ways. Indeed, when we are
asked to name the most important changes that were made to the new text and ancillary package,
we always list improvements in the test bank as one of the top two. Here are the key changes, along
with some observations about the test bank based on our experience in the introductory course.
1. We reviewed each question and problem carefully for writing style and clarity, and this led to
many significant improvements. The “quality” of the writing in the test bank now matches
that in the text itself.
2. For each chapter we have true/false questions, conceptual multiple choice questions, and
problems that have numerical answers. For the multiple choice questions and the problems
we show 5 answer choices, one of which is correct.
3. The test bank is available in three forms: a paper book, a Word file, and a computerized test
bank (ExamView). The ExamView version is extremely powerful yet easy to use, and it can
algorithmically change the problems and answers and thus generate a nearly unlimited
number of versions of each problem.1 For example, a capital budgeting problem might give
students information and require them to calculate an NPV. The algorithmic generator would
make a random change in a variable to create as many versions as an instructor desires. This
feature can virtually eliminate the possibility of cheating, and it can also be used to develop
sample tests for student practice.2
1 Note that the true/false and multiple-choice conceptual questions in the test bank do not have this feature.
2 We wrote the test bank problems, used a financial calculator to get the answers, and then used Excel to check the answers. Next, we
specified ranges for the inputs in the algorithmic versions and then sent everything off to be put into ExamView. A lot of programming
was required to set up the algorithmic procedure, and guess where this programming was actually done--Moscow! When we heard this,
we were afraid things would get lost in the translation. After we reviewed the Russian programmers’ work, we started worrying about
the U.S. holding its own in the world economy. Our students need to keep their noses to the grindstone!
PREFACE
About This Edition v
Acknowledgments vii
Correspondence vii
AACSB Tags viii
TEST QUESTIONS
Chapter 1 An Overview of Financial Management 1
Chapter 2 Financial Markets and Institutions 23
Chapter 3 Financial Statements, Cash Flow, and Taxes 33
Chapter 4 Analysis of Financial Statements 89
Chapter 5 Time Value of Money 137
,Web Appendix 5A Continuous Compounding and Discounting 203
Chapter 6 Interest Rates 207
Chapter 7 Bonds and Their Valuation 237
Web Appendix 7A Zero Coupon Bonds 275
Web Appendix 7B Bankruptcy and Reorganization 291
Chapter 8 Risk and Rates of Return 295
Web Appendix 8A Calculating Beta Coefficients 349
Chapter 9 Stocks and Their Valuation 357
Appendix 9A Stock Market Equilibrium 393
Chapter 10 The Cost of Capital 397
Chapter 11 The Basics of Capital Budgeting 437
Chapter 12 Cash Flow Estimation and Risk Analysis 487
Appendix 12A Tax Depreciation 521
,Web Appendix 12C Using the CAPM to Estimate the Risk-Adjusted
Cost of Capital 523
Web Appendix 12D Techniques for Measuring Beta Risk 527
Web Appendix 12E Comparing Mutually Exclusive Projects
with Unequal Lives 531
Chapter 13 Capital Structure and Leverage 533
Web Appendix 13A Degree of Leverage 569
Chapter 14 Distributions to Shareholders:
Dividends and Share Repurchases 585
Chapter 15 Working Capital Management 615
Chapter 16 Financial Planning and Forecasting 663
Chapter 17 Multinational Financial Management 677
, PREFACE
About This Edition
This Test Bank is designed for use with the 6th Edition of Fundamentals of Financial Management:
Concise, and it differs from the previous test bank in many significant ways. Indeed, when we are
asked to name the most important changes that were made to the new text and ancillary package,
we always list improvements in the test bank as one of the top two. Here are the key changes, along
with some observations about the test bank based on our experience in the introductory course.
1. We reviewed each question and problem carefully for writing style and clarity, and this led to
many significant improvements. The “quality” of the writing in the test bank now matches
that in the text itself.
2. For each chapter we have true/false questions, conceptual multiple choice questions, and
problems that have numerical answers. For the multiple choice questions and the problems
we show 5 answer choices, one of which is correct.
3. The test bank is available in three forms: a paper book, a Word file, and a computerized test
bank (ExamView). The ExamView version is extremely powerful yet easy to use, and it can
algorithmically change the problems and answers and thus generate a nearly unlimited
number of versions of each problem.1 For example, a capital budgeting problem might give
students information and require them to calculate an NPV. The algorithmic generator would
make a random change in a variable to create as many versions as an instructor desires. This
feature can virtually eliminate the possibility of cheating, and it can also be used to develop
sample tests for student practice.2
1 Note that the true/false and multiple-choice conceptual questions in the test bank do not have this feature.
2 We wrote the test bank problems, used a financial calculator to get the answers, and then used Excel to check the answers. Next, we
specified ranges for the inputs in the algorithmic versions and then sent everything off to be put into ExamView. A lot of programming
was required to set up the algorithmic procedure, and guess where this programming was actually done--Moscow! When we heard this,
we were afraid things would get lost in the translation. After we reviewed the Russian programmers’ work, we started worrying about
the U.S. holding its own in the world economy. Our students need to keep their noses to the grindstone!
