FINC 341 Exam 1 Theory Guyton UPDATED ACTUAL Questions And Correct
Answers
Terms in this set (90)
When two of different size (of investment) are compared False
using ROE, the one with the lower ROE will add less
value to the firm than the other one
ROE does not consider risk or the amount of invested True
capital
Trying to maximize a companies ROE leads managers to True
sometimes reject a project with a very acceptable ROE
, ROE looks at return on the shareholders' investment, but True
maximization of ROE in not desirable
A firm's ROA will equal the firm's ROE if no debt is used as True
capital
Upper corporate managers are highly motivated to give True
their stockholders an appropriate return on the stock
because in the stockholders start selling the stock, the
company's stock price will decrease and the company
can become a takeover target
Stock prices have increased significantly since President True
Trump was elected due to expectations that the U.S.
economy will gain strength in the future from lower
corporate tax rates, repatriation of corporate cash from
abroad, and some deregulation of business
From World War I to 2000, the economy grew at a an False
average growth rate of 3.5 % per year. From 2000 until
today, it has grown at about 1.5% on average per year
When interest rates are high, an investor should consider True
buying bonds and then selling them once interest rates
go back down if they want to make capital gains on
bonds
As U.S. rates go up, the dollar should strengthen and help True
U.S. companies that import goods
The repeal of the Glass Steagall Act of 1933 under True
President Clinton's administration has been partially
blamed for the 2008-09 crisis
In 2015, the U.S. had a trade deficit of about $800 million True
The Volcker Rule has never actually taken affect, even True
though it's in the Dodd Frank Bill. It was supposed to
keep big banks from taking on investments that could put
the bill in bankruptcy
When a company buys it's own stock, its P/E ratio is False
decreased, thus making its stock price decrease
The NASDAQ has acquired the Philadelphia Stock True
Exchange and 25% of the London Stock Exchange
If a stock's market price is more than the perceived False
intrinsic value of the stock, investor demand for
purchasing the stock will decrease and the stock's market
price will rise to seek equilibrium
Answers
Terms in this set (90)
When two of different size (of investment) are compared False
using ROE, the one with the lower ROE will add less
value to the firm than the other one
ROE does not consider risk or the amount of invested True
capital
Trying to maximize a companies ROE leads managers to True
sometimes reject a project with a very acceptable ROE
, ROE looks at return on the shareholders' investment, but True
maximization of ROE in not desirable
A firm's ROA will equal the firm's ROE if no debt is used as True
capital
Upper corporate managers are highly motivated to give True
their stockholders an appropriate return on the stock
because in the stockholders start selling the stock, the
company's stock price will decrease and the company
can become a takeover target
Stock prices have increased significantly since President True
Trump was elected due to expectations that the U.S.
economy will gain strength in the future from lower
corporate tax rates, repatriation of corporate cash from
abroad, and some deregulation of business
From World War I to 2000, the economy grew at a an False
average growth rate of 3.5 % per year. From 2000 until
today, it has grown at about 1.5% on average per year
When interest rates are high, an investor should consider True
buying bonds and then selling them once interest rates
go back down if they want to make capital gains on
bonds
As U.S. rates go up, the dollar should strengthen and help True
U.S. companies that import goods
The repeal of the Glass Steagall Act of 1933 under True
President Clinton's administration has been partially
blamed for the 2008-09 crisis
In 2015, the U.S. had a trade deficit of about $800 million True
The Volcker Rule has never actually taken affect, even True
though it's in the Dodd Frank Bill. It was supposed to
keep big banks from taking on investments that could put
the bill in bankruptcy
When a company buys it's own stock, its P/E ratio is False
decreased, thus making its stock price decrease
The NASDAQ has acquired the Philadelphia Stock True
Exchange and 25% of the London Stock Exchange
If a stock's market price is more than the perceived False
intrinsic value of the stock, investor demand for
purchasing the stock will decrease and the stock's market
price will rise to seek equilibrium
