The focus of current asset management is on:
a. property, plant, and equipment acquisition.
b. cash, accounts receivable, and inventory levels.
c. investments in marketable securities.
both a and c.
all of the above.
With regard to the hedging principle, which of the following assets should be financed with current liabilities?
a. Minimum level of cash required for year-round operations
b. Expansion of accounts receivable to meet seasonal demands
c. Machinery used to produce a firm’s inventory
d. Both a and b
e. Both b and c
If you place $50 in a savings account with an interest rate of 7% compounded weekly, what will the investment be worth at the end of five years (round to the nearest dollar)?
The break-even model enables the manager of the firm to:
a. calculate the minimum price of common stock for certain situations.
b. set appropriate equilibrium thresholds.
c. determine the quantity of output that must be sold to cover all operating costs.
d. determine the optimal amount of debt financing to use.
A firm that uses large amounts of debt financing in an industry characterized by a high degree of business risk would have __________ earnings per share fluctuations resulting from changes in levels of sales.
A machine costs $1,000, has a three-year life, and has an estimated salvage value of $100. It will generate after-tax annual cash flows (ACF) of $600 a year, starting next year. If your required rate of return for the project is 10%, what is the NPV of this investment? (Round your answerwer to the nearest $10.)
If the NPV of a project is positive, then the project’s IRR ____________ the required rate of return.
a. must be less than
b. must be greater than
c. could be greater or less than
d. cannot be determined without actual cash flows
Once a cash discount period has passed:
a. one should pay immediately.
b. there is no financial incentive to pay before the final due date.
c. one should pay after the final due date.
d. cannot be determined from the information.
A managerial benefit of a lock box arrangement is:
a. better audit control of the documents received.
b. elimination of clerical functions.
less chance of losing documents.
d. all of the above.
A firm expects total demand for its product over the planning period to be 10,000 units with an ordering cost per order of $400 and a carrying cost per unit of $2. This firm’s economic ordering quantity is:
a. is used to deal with the two most limited assumptions of the EOQ model.
b. must be higher the more certain are the inflows and outflows from the inventory.
c. will be lower when costs of carrying additional inventory are low.
d. does not affect average inventory levels.
Which of the following statements is consistent with long-term financing leases?
a. They are not reported on the balance sheet.
b. They are addressed in the footnotes to the annual report.
They result in interest expense on the company’s income statement.
Both b and c.
e. All of the above.
1. Which of the following is not a reason why financial analysts use ratio analysis?
a. Ratios help to pinpoint a firm’s strengths.
b. Ratios restate accounting data in relative terms.
c. Ratios are ideal for smoothing out the differences that may exist when comparing firms that use different accounting practices.
d. Some of a firm’s weaknesses can be identified through the usage of ratios.
2. Which of the following relationships is true, regarding the costs of issuing the below securities?
a. Common stock > bonds > preferred stock
b. Preferred stock > common stock > bonds
c. Bonds > common stock > preferred stock
d. Common stock > preferred stock > bonds
3. According to the SEC, the correct sequence of events for a security issue is:
a. red herring, final prospectus, SEC registration.
b. SEC registration, red herring, final prospectus.
c. final prospectus, SEC registration, red herring.
d. red herring, SEC registration, final prospectus.
4. What is the most important ingredient in developing a firm’s financial plan?
a. A forecast of sales revenues
b. Determining the amount of dividends to pay shareholders
c. Projecting the rate of interest on proposed new debt
d. Deciding upon which method of depreciation a firm should utilize
5. Which of the following statements about the percent-of-sales method of financial forecasting is true?
a. It is the least commonly used method of financial forecasting.
b. It is a much more precise method of financial forecasting than a cash budget would be.
c. It involves estimating the level of an expense, asset, or liability for a future period as a percent of the forecast for sales revenues.
d. It projects all liabilities as a fixed percentage of sales.
6. You wish to borrow $2,000 to be repaid in 12 monthly installments of $189.12. The annual interest rate is:
7. If you invest $750 every six months at 8% compounded semi-annually, how much would you accumulate at the end of 10 years?
1. If an airline began to experience reductions in ticket sales associated with news of its difficulty in servicing its debt (making debt payments), this would be an example of
a. agency problems
b. a tax shield
c. financial distress
d. managerial entrenchment
e. the pecking order view of capital structure
2.Which of the following assets would be most suitable to financing with relatively larger amounts of debt?
a. current assets, such as inventory
b. specialized long term assets
c. intangible long term assets
d. tangible (physical), standardized, and widely tradable fixed assets
e. This question is irrelevant because firms should avoid using debt whenever possible.
3. Existing shareholders generally consider leverage increasing events to be
a. good news
b. bad news
4. Empirical evidence suggests that larger firm (based on assets or sales) tend to have
a. more leverage
b. less leverage
5. Financial distress generally
a. increases firm value, since it signals to investors that the firm’s managers are working for the shareholders
b. increases firm value, since it signals that the firm is operating extremely efficiently by not having too much liquidity
c. decreases firm value, since it means the firm may be losing sales revenue and/or the manager’s focus may be distracted from the core business operations
d. decreases firm value, since it means the firm’s product line is becoming obsolete
e. all of the above
6. Which of the following statements is (are) TRUE regarding the pecking order view of capital structure for financing new projects? (Please read all alternatives carefully before answering)
a. firms prefer borrowing (debt) over issuing more equity.
b. firms prefer internally generated funds over borrowing.
c. firms prefer equity over debt
d. firms prefer paying out all of the firm’s earnings as dividends to existing shareholders to maximize shareholders’ wealth
e. BOTH A & B.
7. All of the following are advantages of debt financing except which one?
a. interest is a tax-deductible expense
b. it allows for the use of “other people’s money” in financing a business
c. the cost of debt financing is cheaper than equity financing.
d. it results in loss of ownership control of the business
e. Owners do not have to share the potential gains of the business, since debt only requires repayment of the amount owed
8. If a tax paying firm went from zero debt to successively higher levels of debt, why would you expect its stock price to rise? (Note: beyond a point, excessive use of debt would cause the stock price to then hit a peak, and then begin to decline.)
a. concentration of ownership (i.e., increased use of “other people’s money” on operating the firm)
b. debt is a cheaper cost of capital, thus the use of debt decreases the financing expenses for the firm.
c. Debt payments, i.e., interest payments, are a tax-deductible expense, which creates a debt tax shield
d. All of the above
e. None of the above.
9. Which of the following industries would tend to generally have less debt in their capital structure mix?
a. transportation industry firms
b. high tech firms
10. According to the Miller & Modigliani (MM) Value of a Levered Firm with corporate taxes view (aka, the corporate tax view) of capital structure, the value of a levered firm increases as debt is increased.
a. True, because of a debt tax shield (corporate tax)
b. True, because debt increases potential financial distress
c. False, because the debt tax shield decreases value
d. False, because debt is bad for the firm
e. None of the above
1. Eva plays near other children with similar materials but
doesn’t try to influence their behavior. She’s involved in
A. nonsocial activity. C. parallel play.
B. associative play. D. cooperative play.
2. Professor Kinship views the family as a complex of interacting
relationships influenced by the larger social context. Professor
Kinship endorses the _______ perspective of family.
A. social systems C. ethological
B. dynamic systems D. behaviorist
3. Children first acquire skills for interacting with peers
A. from cartoon characters.
B. from child-care workers.
C. when they begin formal schooling.
D. within the family.
4. _______ has the highest divorce rate in the world.
A. Canada C. Italy
B. New Zealand D. The United States
5. Which student is most likely to express interest in computers and rate his or her computer skills as “excellent”?
A. A high-SES girl C. A low-SES girl
B. A high-SES boy D. A low-SES boy
6. The most common form of the blended family is a _______ arrangement.
A. mother-stepfather C. grandparent-grandchild
B. father-stepmother D. mother–foster mother
7. Parents start to socialize their children in earnest during
A. the first year, when babies can interact socially.
B. the second year, when toddlers are first able to comply with parental directions.
C. the preschool years, when children start formal schooling.
D. early adolescence, when per pressure is strongest.
8. Friendships start to become more complex and psychologically based during the stage of Friendship as
A. Mutual Trust and Assistance.
C. Intimacy, Mutual Understanding, and Loyalty.
D. a Handy Playmate.
9. Which form of child maltreatment is most commonly reported?
A. Physical abuse C. Sexual abuse
B. Neglect D. Emotional abuse
10. Mr. and Mrs. Lopez are highly accepting and involved with their children. They’re warm, attentive, and sensitive to their needs. The Lopez’s are using a/an _______ childrearing style.
A. authoritarian C. permissive
B. uninvolved D. authoritative
11. A decrease in competition and increased harmony are two positive outcomes of
A. traditional classrooms.
B. homogeneous grouping arrangements.
C. multigrade classrooms.
12. _______ are especially likely to profit from extracurricular pursuits that require them
to take on meaningful roles and responsibilities.
A. Overweight adolescents
B. Adolescents with physical limitations
C. Adolescents with academic, emotional, and social problems
D. Popular-prosocial adolescents
13. Research indicates that the link between family size and children’s IQ can be explained by the
A. Flynn effect.
B. strong trend for mothers lower in intelligence to give birth to more children.
C. strong trend for mothers higher in intelligence to give birth to more children.
D. growing use of birth-control techniques.
14. Compared with popular-aggressive children, rejected-aggressive children are
A. more socially skilled.
B. less antagonistic and more prosocial.
C. more often extremely antagonistic.
D. popular with younger peers.
15. Most of the 1,500 children who die from maltreatment each year
A. are under age five.
B. are adolescents.
C. leave siblings behind who remain with the abusive parents.
D. had been referred to the social-services system, but their case hadn’t yet been
16. Anxious, withdrawn children who _______ seem better equipped to withstand peer
A. take self-defense classes
B. learn to project a sense of false bravado
C. learn meditation techniques
D. who have a prosocial best friend
17. Sixteen-year-old Bonita strives to develop a sense of herself as a separate, self governing individual. Bonita is developing
A. maturation. C. coregulation.
B. autonomy. D. adolescence.
18. Which child probably watches TV most often?
A. Bonnie, from a low-SES family
B. Brynn, whose parents only watch the news
C. Brandi, who comes from a small family
D. Brenda, from a high-SES family
19. In dual-earner families, the father’s _______ is crucial to the emotional health of the mother.
A. earning potential
B. attitude toward career-oriented women
C. work schedule
D. willingness to share child-care responsibilities
20. In Mr. Yi’s classroom, students participate in a wide range of challenging activities with teachers and peers, with whom they jointly construct understandings. Mr. Yi most likely teaches in a _______ classroom.
A. philosophical C. social-constructivist
B. traditional D. Montessori