Description
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- Question 1
2 out of 2
points
Which of the following is NOT
normally regarded as being a good reason to establish an ESOP?
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- Question 2
2 out of 2
points
Which of the following is NOT
normally regarded as being a barrier to hostile takeovers?
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- Question 3
2 out of 2
points
Rohter Galeano Inc. is considering
how to set its dividend policy. It has a capital budget of $3,000,000. The
company wants to maintain a target capital structure that is 15% debt and 85%
equity. The company forecasts that its net income this year will be
$3,500,000. If the company follows a residual dividend policy, what will be
its total dividend payment?
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- Question 4
2 out of 2
points
Which of the following statements
is CORRECT?
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- Question 5
2 out of 2
points
Which of the following statements
is correct?
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- Question 6
2 out of 2
points
Which of the following statements
is NOT correct?
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- Question 7
2 out of 2
points
Grandin Inc. is evaluating its
dividend policy. It has a capital budget of $625,000, and it wants to
maintain a target capital structure of 60% debt and 40% equity. The company
forecasts a net income of $475,000. If it follows the residual dividend
policy, what is its forecasted dividend payout ratio?
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- Question 8
2 out of 2
points
The projected capital budget of
Kandell Corporation is $1,000,000, its target capital structure is 60% debt
and 40% equity, and its forecasted net income is $550,000. If the company
follows a residual dividend policy, what total dividends, if any, will it pay
out?
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- Question 9
2 out of 2
points
If a firm adheres strictly to the
residual dividend policy, the issuance of new common stock would suggest that
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- Question 10
2 out of 2
points
Firms U and L both have a basic
earning power ratio of 20% and each has the same amount of assets. Firm U is
unleveraged, i.e., it is 100% equity financed, while Firm L is financed with
50% debt and 50% equity. Firm L’s debt has a before-tax cost of 8%. Both
firms have positive net income. Which of the following statements is CORRECT?
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- Question 11
2 out of 2
points
Companies HD and LD have identical
tax rates, total assets, and basic earning power ratios, and their basic
earning power exceeds their before-tax cost of debt, rd. However, Company HD
has a higher debt ratio and thus more interest expense than Company LD. Which
of the following statements is CORRECT?
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- Question 12
2 out of 2
points
Which of these items will not
generally be affected by an increase in the debt ratio?
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- Question 13
2 out of 2
points
Which of the following statements
is CORRECT?
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- Question 14
2 out of 2
points
Which of the following is NOT
associated with (or does not contribute to) business risk? Recall that
business risk is affected by a firm’s operations.
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- Question 15
2 out of 2
points
Which of the following statements
is CORRECT?
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- Question 16
2 out of 2
points
Barette Consulting currently has
no debt in its capital structure, has $500 million of total assets, and its
basic earning power is 15%. The CFO is contemplating a recapitalization where
it will issue debt at a cost of 10% and use the proceeds to buy back shares of
the company’s common stock, paying book value. If the company proceeds with
the recapitalization, its operating income, total assets, and tax rate will
remain unchanged. Which of the following is most likely to occur as a result
of the recapitalization?
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- Question 17
2 out of 2
points
A lockbox plan is most beneficial
to firms that
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- Question 18
2 out of 2
points
Which of the following actions
would be likely to shorten the cash conversion cycle?
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- Question 19
2 out of 2
points
Which of the following statements
is most consistent with efficient inventory management? The firm has a
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- Question 20
2 out of 2
points
Which of the following actions
should Reece Windows take if it wants to reduce its cash conversion cycle?
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- Question 21
2 out of 2
points
Which of the following items
should a company report directly in its monthly cash budget?
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- Question 22
2 out of 2
points
Other things held constant, which
of the following would tend to reduce the cash conversion cycle?
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- Question 23
2 out of 2
points
In Japan, 90-day securities have a
4% annualized return and 180-day securities have a 5% annualized return. In
the United States, 90-day securities have a 4% annualized return and 180-day
securities have an annualized return of 4.5%. All securities are of equal
risk, and Japanese securities are denominated in terms of the Japanese yen.
Assuming that interest rate parity holds in all markets, which of the
following statements is most CORRECT?
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- Question 24
2 out of 2
points
If 1.64 Canadian dollars can
purchase one U.S. dollar, how many U.S. dollars can you purchase for one
Canadian dollar?
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- Question 25
2 out of 2
points
Suppose one U.S. dollar can
purchase 144 yen today in the foreign exchange market. If the yen depreciates
by 8.0% tomorrow, how many yen could one U.S. dollar buy tomorrow?
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- Question 26
2 out of 2
points
A box of chocolate candy costs
28.80 Swiss francs in Switzerland and $20 in the United States. Assuming that
purchasing power parity (PPP) holds, what is the current exchange rate?
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- Question 27
2 out of 2
points
Suppose it takes 1.82 U.S. dollars
today to purchase one British pound in the foreign exchange market, and
currency forecasters predict that the U.S. dollar will depreciate by 12.0%
against the pound over the next 30 days. How many dollars will a pound buy in
30 days?
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- Question 28
2 out of 2
points
Suppose 1 U.S. dollar equals 1.60
Canadian dollars in the spot market. 6-month Canadian securities have an
annualized return of 6% (and thus a 6-month periodic return of 3%). 6-month
U.S. securities have an annualized return of 6.5% and a periodic return of
3.25%. If interest rate parity holds, what is the U.S. dollar-Canadian dollar
exchange rate in the 180-day forward market?
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- Question 29
2 out of 2
points
In 1985, a given Japanese imported
automobile sold for 1,476,000 yen, or $8,200. If the car still sold for the
same amount of yen today but the current exchange rate is 144 yen per dollar,
what would the car be selling for today in U.S. dollars?
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- Question 30
2 out of 2
points
Which of the following is NOT a
reason why companies move into international operations?
