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Corporate Finance
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What is the relationship between the interest rate and bond price?
Corporate Finance
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Questions
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Answers
1
What is the relationship between the interest rate and bond price?
Inverse
no relationship
not clear
Positive
2
image
x bar - 13.667
Sx - 3.79%
x bar - 13
Sx - 3.676%
3
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$40,100.60
$41,000.00
$41,610.00
$40,010.16
4
image
$41.74
$47.41
$48.15
$51.48
5
image
$50
$35
$45
$40
6
What is the relationship between long run profitability and ethical behavior?
No relationship
Negative
Positive
Inverse
7
image
19%
19.75%
18.75%
18%
8
image
net income $2900
net income $2600
net income $2700
net income $2800
9
in 1985 tuition was $1800. Thirty years later its $18,514. What is the growth rate of tuition?
4%
5%
7%
8%
10
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$801.07
$757.17
$53.54
$810.70
11
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$47,049,365.56
$123,456,790
$29,022,946.01
$47,904,556,26
12
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3.91%
3%
3.87%
3.78%
13
Bank loan of $15,000 to buy a car. Loan is for 5 years. I/Y is 5.5%. What is monthly payment?
$301.38
$286.52
$250
$269.24
14
Which statement is correct
the OTC market is an auction market
Executive stock options are call options
Institutional investors cannot do proxy fights
New York Stock Exchange is a primary market
15
What are the functions of financial management?
Planning and control
Acquisition of funds
Dividend decisions
Allocation of funds
16
Which of the following is the advantage of the corporate form compared to partnership form?
Corporate investors are exposed to double taxation
Corporate shareholders are exposed to limited liability
Corporations generally face fewer regulations
corporations are subject to limited life
17
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$4500
$5000
$4000
$5500
18
The primary goal for publicly-owned firms serving stockholders should be to...
Maximize expected total corporate profit
Maximize expected EPS
Maximize expected net income
Maximize the stock price per share
19
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$16,800... $16,000... $15,200
$16,000
$15,200... $16,000... $16,800
$12,000
20
sales $11,050, Depreciation $4000, op expense $4050 & net income $1000. What's the cash flow?
$4650
$5100
$4800
$5000
21
Which of the following is correct...
Idiosyncratic risk cannot be diversified
Betas can be negative
In equlibrium, the required return is > than expected return
The market price is determined by undiversified investors
22
Which of the following is NOT the problem of the payback period rule?
The cutoff period is arbitrary
It ignores cash flows after cutoff period
The time value of money is not directly taken into account
It is useless as a risk indicator
23
What mechanisms alleviate the agency problem?
Demand for a good manager
Threat of firing/take over
Decreases in pay
Managerial compensation plans
24
Should firms behave ethically?
No
Yes
Who cares?
Only sometimes
25
If you want $50,000 after 20 years, how much do you have to deposit today at 7%?
$13,834.02
$14,294.77
$13.327.89
$12,920.95
26
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9%
9.29%
9.10%
9.20%
27
image
10.25%
10%
2.105%
9.5%
28
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FVA = 500 [ (1+ i) + 1 / (1+i) + 1 / (1+i)2 + 1 ]
FVA = 1 [ (500+ i) + 500 / (1+i) + 500 / (1+i)2 + 500 ]
FVA = $1000
29
Presently you have $6000 invested at a rate of 2%, when will your investment double?
25 years
40 years
35 years
48 years
30
Money markets are markets for...
Foreign currencies
Corporate stocks
Short-term debt securities
Long-term bonds
31
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$570.77
$556.70
$755.50
$750.55
32
The constant growth rate in dividends ( g ) stands for...
capital gains yield
dividend yield
current yield
abnormal yield
33
What is the most important concept in finance
TVM
Risk and Return
Dividend rates
Loan amortizaton
34
What is an executive stock option?
Right to own stock
Right to sell your stock
Right to taxes until sale of stock
Right to buy stock at a specified price.
35
image
x bar - 6.25%
Sx - 8.27%
Sx - 8.72%
x bar - 5.25%
36
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14%
15%
16%
17%
37
What is the main
disadvantage
of a sole proprietorship?
No corporate income tax
Unlimited liability
Limited life
Difficult to raise capital
38
image
$20.00
$22
$21.50
$22.08
39
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$29,502,531.63
$29,205,135.36
40
Which of the following is NOT the goal for financial managers?
Maximize the firm value
Maximize the expected EPS
Maximize the shareholder wealth
Maximize the stock price
