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