BUSN602 Final Exam

BUSN602 Final Exam

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Part 1 of 1 -         100.0 Points       

Question 1 of 25               4.0 Points           

The security market line can be used to determine the expected return on a security if we know the:

 A.risk-free rate                                  

                 B.systematic risk of that security                                

                 C.market risk premium                   

                 D.all of the above                          

 

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           

The ________ is the discount rate that equates the present value of the cash inflows with the initial investment.

                  

                 A.payback period                              

                 B.average rate of return                                

                 C.cost of capital                                 

                 D.internal rate of return                             

Question 4 of 25               4.0 Points           

Which one of the following types of ratios indicates the ability to meet short-term obligations to creditors as they come due?

                  

                 A.liquidity ratios                                

                 B.asset management ratios                          

                 C.capital structure ratios                                

                 D.profitability ratios                         

                 E.market value ratios                   

Question 5 of 25               4.0 Points           

A business organization that receives the limited liability of a corporation but is taxed as a proprietorship or partnership is called a:

                  

                 A.limited proprietorship                                

                 B.limited partnership                      

                 C.limited corporation                      

                 D.S corporation                               

Question 6 of 25               4.0 Points           

The accrued liabilities of a firm are:

                  

                 A.retained earnings from past years                        

                 B.reflect the prepayment of certain expenses                    

                 C.owners’ equity in the firm                        

                 D.amounts owed but not yet due                          

Question 7 of 25               4.0 Points           

Which one of the following is not considered to be a generally recognized type of market efficiency?

                  

                 A.strong-form                    

                 B.semi-strong form                          

                 C.weak-form                      

                 D.insider-information form                       

                  

Question 8 of 25               4.0 Points           

The internal rate of return concept is best explained by which of the following?

                  

                 A.rate where NPV is equal to zero                            

                 B.point where initial investment has been returned                         

                 C.marginal cost of capital                               

                 D.average book value                  

 

Question 9 of 25               4.0 Points           

The estimate of how quickly a firm may grow by maintaining a constant mix of debt and equity is called:

                  

                 A.the retention growth rate                        

                 B.dividend growth rate                                  

                 C.sustainable growth rate                             

                 D.the internal growth rate                         

Question 10 of 25             4.0 Points           

The primary purpose of the liquidity ratios is to determine:

                  

                 A.the extent to which borrowed funds are used to finance assets                             

                 B.the ability of the firm to meet short-term obligations to creditors                          

                 C.the extent to which assets are used to support sales                   

                 D.none of the above                    

 

Question 11 of 25             4.0 Points           

Firms issue more equities than bonds for the following reason(s).

                  

                 A.it is cheaper to raise equity than to borrow                       

                 B.bonds have a maturity date making them pricier                            

                 C.both a and b are true                                  

                 D.none of the above are true                   

Question 12 of 25             4.0 Points           

All of the following accounts are considered to be current liabilities on the balance sheet except:

                  

                 A.depreciation                   

                 B.accounts payable                          

                 C.accruals                             

                 D.notes payable