BUSN602 Final Exam Set 2
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Part 1 of 1 - 100.0
Points
Question 1 of 25 4.0
Points
As a general rule, the capital structure that
maximizes stock price also:
A.minimizes the weighted average
cost of capital
B.maximizes
the weighted average cost of capital
C.minimizes
the required rate of return on equity
D.maximizes
the cost of debt
Question 2 of 25 4.0
Points
The constant dividend growth model assumes:
A.a
constant annual dividend
B.a
constant dividend growth rate for no more than the first 10 years
C.that the discount rate must be
greater than the dividend growth rate
D.two
of above are true assumptions
Question 3 of 25 4.0
Points
As a general rule, the capital structure that:
A.minimizes
the cost of equity also maximizes the stock price
B.maximizes the stock price also
minimizes the weighted average cost of capital
C.minimizes
the cost of debt also maximizes the expected earnings per share
D.none
of the above is a true statement
Question 4 of 25 4.0
Points
The financial statement that provides a snapshot
view of the financial condition of a business at a point in time is the:
A.balance sheet
B.income
statement
C.statement
of cash flows
D.statement
of retained earnings
Question 5 of 25 4.0
Points
Consolidated Edison has just paid an annual
dividend of $3 per share. If the expected growth rate for Con Ed is 10%, and
your required rate of return is 16%, how much are you willing to pay for this
stock?
A.$55
B.$50
C.$46.50
D.none
of the above
Question 6 of 25 4.0
Points
Internal rate of return (IRR) and net present
value (NPV) methods:
A.generally arrive at the same
accept/reject decisions
B.are
less sophisticated than the payback period
C.cannot
make use of the same cash flows
D.can
be substituted for by the payback period
Question 7 of 25 4.0
Points
What is ratio analysis? Also briefly describe the
three basic categories or ways that ratio analysis is used.
Question 8 of 25 4.0
Points
Cash flows from operating activities might
include:
A.net income
B.increase
in equity sold to investors
C.dividend
payment
D.all
the above
E.none
of the above
Question 9 of 25 4.0
Points
A sinking fund:
A.is
a special fund set up to pay of the creditors of bankrupt firms
B.requires
specific approval by the firm’s the board of directors
C.requires the issuer to retire a
bond issue incrementally over time
D.none
of the above
Question 10 of 25 4.0
Points
The actual disbursement of cash is recorded in
which of the following financial statements?
A.income
statement
B.balance
sheet
C.statement of cash flows
D.treasurer’s
report
Question 11 of 25 4.0
Points
Which of the following accounts is usually part
of the owners’ equity for a corporation?
A.common
stock
B.paid-in-capital
C.retained
earnings
D.all of the above
Question 12 of 25 4.0
Points
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