Principio del formulario
4.Holding all other things constant, which of the following represents a cash outflow?
The company sells a machine.
The company acquires inventory.
The company receives a bank loan.
The company increases accounts payable.
5.What is Bavarian Sausage, Inc.’s operating cash flow?
Bavarian Sausage, Inc.
Bavarian Sausage, Inc. posted the following balance sheet and income statement.
Cash
$ 50,000
Accounts Payable
$185,000
Accounts Receivable
125,000
Notes Payable
125,000
Inventories
225,000
Long-term debt
115,000
Net Plant and
Equipment
525,000
Common Stock
350,000
Retained earnings
150,000
Total Assets
$925,000
Total liabilities and
StockholdersÂ’ Equity
$925,000
Income Statement
Sales
$525,000
Cost of goods sold
215,000
Depreciation
65,000
Earnings before
interest and taxes
245,000
Interest expense
35,000
Net profit before
taxes
210,000
Taxes (@ 40%)
84,000
Net income
$126,000
$394,000
$191,000
$226,000
$359,000
6.What is Bavarian Sausage, Inc.’s quick ratio
Bavarian Sausage, Inc.
Bavarian Sausage, Inc. posted the following balance sheet and income statement.
Cash
$ 50,000
Accounts Payable
$185,000
Accounts Receivable
125,000
Notes Payable
125,000
Inventories
225,000
Long-term debt
115,000
Net Plant and
Equipment
525,000
Common Stock
350,000
Retained earnings
150,000
Total Assets
$925,000
Total liabilities and
StockholdersÂ’ Equity
$925,000
Income Statement
Sales
$525,000
Cost of goods sold
215,000
Depreciation
65,000
Earnings before
interest and taxes
245,000
Interest expense
35,000
Net profit before
taxes
210,000
Taxes (@ 40%)
84,000
Net income
$126,000
0.5645
1.2903
1.9565
0.8871
7.What is Bavarian Sausage, Inc.’s average collection period
Bavarian Sausage, Inc.
Bavarian Sausage, Inc. posted the following balance sheet and income statement.
Cash
$ 50,000
Accounts Payable
$185,000
Accounts Receivable
125,000
Notes Payable
125,000
Inventories
225,000
Long-term debt
115,000
Net Plant and
Equipment
525,000
Common Stock
350,000
Retained earnings
150,000
Total Assets
$925,000
Total liabilities and
StockholdersÂ’ Equity
$925,000
Income Statement
Sales
$525,000
Cost of goods sold
215,000
Depreciation
65,000
Earnings before
interest and taxes
245,000
Interest expense
35,000
Net profit before
taxes
210,000
Taxes (@ 40%)
84,000
Net income
$126,000
14.39 days
4.20 days
122.56 days
86.90 days
8.You have the choice between two investments that have the same maturity and the same nominal return. Investment A pays simple interest, investment B pays compounded interest. Which one should you pick?
A, because it has a higher effective annual return.
A and B offer the same return, thus they are equally as good.
B, because it has higher effective annual return.
Not enough information.
9.Which of the following statements is true?
In an annuity due payments occur at the end of the period.
In an ordinary annuity payments occur at the end of the period.
A perpetuity will mature at some point in the future.
One cannot calculate the present value of a perpetuity.
10.Last national bank offers a CD paying 7% interest (compounded annually). If you invest $1,000 how much will you have at the end of year 5.
$712.99
$1,402.55
$1,350.00
$1,000
11.You want to buy a house in 4 years and expect to need $25,000 for a down payment. If you have $15,000 to invest, how much interest do you have to earn (compounded annually) to reach your goal?
16.67%
13.62%
25.74%
21.53%
12.A bond that grants the investor the right to exchange their bonds for common stock, is called a
zero-coupon bond.
Treasury bond.
convertible bond.
mortgage bond.
13.Of the following bonds, which one has the highest degree of interest rate risk?
20 year 8% bond
5 year 8% bond
10 year 8% bond
Not enough information.
14.Bavarian Sausage just issued a 10 year 7% coupon bond. The face value of the bond is $1,000 and the bond makes annual coupon payments. If the required return on the bond is 10%, what is the bond’s price?
$815.66
$923.67
$1,000.00
$1,256.35
15.A $1,000 par value bond that makes annual interest payments of $50 and matures in four years sells for $980. What is the yield to maturity of the bond?
5.57%
2.47%
4.54%
2.04%
16.What is the market capitalization of a company?
The market value of all outstanding debt.
The book value of the company’s debt.
The market value of all outstanding shares.
The book value of the company’s total equity.
17.Bavarian Sausage just paid a $1.57 dividend and investors expect that dividend to grow by 5% each year forever. If the required return on the stock investment is 14%, what should be the price of the stock today.
$11.21
$18.32
$17.44
$25.37
18.Smith Construction, Inc. just paid a $2.78 dividend. The dividend is expected to grow by 4% each year for the next three years. After that the company will never pay another dividend ever again. If your required return on the stock investment is 10%, what should the stock sell for today?
$7.46
$28.91
$46.33
$15.63
19.Miller Juice traditionally retains 65% of its earnings for future investments. Last year Miller’s return on equity was 15%. What is Miller’s growth rate?
15.00%
9.75%
5.25%
18.38%
20.Which of the following is an example of unsystematic risk?
IBM posts lower than expected earnings.
The Fed raises interest rates unexpectedly.
The rate of inflation is higher than expected.
None of the above.
21.What is the purpose of diversification?
Maximize possible returns.
Increase the risk of your portfolio.
Lower the overall risk of your portfolio.
None of the above.
22.You bought a share of Bavarian Sausage stock for $46.50 at the beginning of the year. During the year the stock paid a $2.75 dividend and at the end of the year it trades at $52.75. What is the total return of your stock investment?
5.91%
13.44%
26.69%
19.35%
23.The risk-free rate is 5% and the expected return on the market portfolio is 13%. A stock has a beta of 1.5, what is its expected return?
17%
12%
19.5%
24.5%
24.According to the CAPM (capital asset pricing model), the security market line is a straight line. The intercept of this line should be equal to
zero
the expected risk premium on the market portfolio
the risk-free rate
the expected return on the market portfolio
25.A particular asset has a beta of 1.2 and an expected return of 10%. The expected return on the market portfolio is 13% and the risk-free is 5%. Which of the following statement is correct?
This asset lies on the security market line.
This asset lies above the security market line.
This asset lies below the security market line.
Cannot tell from the given information.
Final del formulario