COB 300 FINAL QUESTIONS & ANSWERS RUBIN | 2026
What is the Risk Reward Relationship? - Answers - high the risk, greater the expected
reward
Variance, Standard Deviation and Beta are all measures of volatility, and this volatility is
commonly referred to as... - Answers - Risk
What is the process used to minimize risk in a portfolio? - Answers - Diversification
What is the formula for Expected Return of a Portfolio? - Answers -
What is the formula for Correlation Coefficient? - Answers -
What are the four main Capital Structure Theories? - Answers - 1. Static Theory
(Optimal Capital Structure )
2. Signaling theory
3. Modigliani-Miller
4. Pecking Order Theory
Relationship Between operating earnings and fixed costs is called - Answers - Degree
of Operating leverage
The firm's optimal capital structure is the point where... - Answers - Stock price is
maximized and WACC is minimized
What type of financial Assets dominate the Global Capital Markets? - Answers - Debt.
Global debt is about 3 times as much as global equity.
What is the name of the following formula and what does it do?
z = 1.2x1 + 1.4x2 + 3.3x3 + 0.6x4 + 0.999x5 - Answers - Altman Z-score
Predicts bankruptcy probability of companies
higher the better
close to 1.8 close to bankruptcy
Ratio Analysis: What is it? Why do we use ratios?
What do they Show managers?
What do they show investors? - Answers - Ratio Analysis: is desinged to provide
information from a firm's financial statements in a meaningful manner. We use these
ratios to get overall impression of a firm's "Financial Health."
, Show Managers - How the firm is doing in comparison to another firm or industry
average even if their sizes differ significantly.
It provides investors with information.
What is the difference between Total Debt Ratio and Debt-to-Equity Ratio? - Answers -
Total Debt ratio = Total Debt / Total assets
- Measures the percentage of the firm's funding that comes from debt
Debt-to-Equity = Total Debt / Total Equity
- Measures the amount of debt in relation to the amount of equity used by the firm.
What are the 5 primary categories used in financial statement analysis? - Answers -
Liquidity - Short term Solvency
Asset management - Productivity
Debt Management - Long term Solvency/Financial Leverage
Profitability - Efficiency
Market Value - Shareholder
What are the two primary formulas used to identify the dupont formula - Answers - EM *
ROA = ROE
Equity multiplier = Rs
Net Income Margin * Asset TO = ROA
What is the formula for Net Working Capital? - Answers - NWC = Current Assets -
Current Liabilities
What are the three main financial statements that firms publish?
What do they provide? - Answers - Statement of CashFlow
- Cash receipts and cash disbursement by a fir during a specific period
Balance Sheet
- snap shot of the firm's financial position at a specific time
Income Statement
- Summarizes the firm's revenue and expense over a period of time
How do investors use those financial statements to their advantage? - Answers - to
understand how the business is doing financially and to provide the investor with insight
to a plethora of information in order to make an informed decision.
What is the formula for the depreciation tax shield? - Answers - depreciation amount *
Corporate Tax Rate
What is the Risk Reward Relationship? - Answers - high the risk, greater the expected
reward
Variance, Standard Deviation and Beta are all measures of volatility, and this volatility is
commonly referred to as... - Answers - Risk
What is the process used to minimize risk in a portfolio? - Answers - Diversification
What is the formula for Expected Return of a Portfolio? - Answers -
What is the formula for Correlation Coefficient? - Answers -
What are the four main Capital Structure Theories? - Answers - 1. Static Theory
(Optimal Capital Structure )
2. Signaling theory
3. Modigliani-Miller
4. Pecking Order Theory
Relationship Between operating earnings and fixed costs is called - Answers - Degree
of Operating leverage
The firm's optimal capital structure is the point where... - Answers - Stock price is
maximized and WACC is minimized
What type of financial Assets dominate the Global Capital Markets? - Answers - Debt.
Global debt is about 3 times as much as global equity.
What is the name of the following formula and what does it do?
z = 1.2x1 + 1.4x2 + 3.3x3 + 0.6x4 + 0.999x5 - Answers - Altman Z-score
Predicts bankruptcy probability of companies
higher the better
close to 1.8 close to bankruptcy
Ratio Analysis: What is it? Why do we use ratios?
What do they Show managers?
What do they show investors? - Answers - Ratio Analysis: is desinged to provide
information from a firm's financial statements in a meaningful manner. We use these
ratios to get overall impression of a firm's "Financial Health."
, Show Managers - How the firm is doing in comparison to another firm or industry
average even if their sizes differ significantly.
It provides investors with information.
What is the difference between Total Debt Ratio and Debt-to-Equity Ratio? - Answers -
Total Debt ratio = Total Debt / Total assets
- Measures the percentage of the firm's funding that comes from debt
Debt-to-Equity = Total Debt / Total Equity
- Measures the amount of debt in relation to the amount of equity used by the firm.
What are the 5 primary categories used in financial statement analysis? - Answers -
Liquidity - Short term Solvency
Asset management - Productivity
Debt Management - Long term Solvency/Financial Leverage
Profitability - Efficiency
Market Value - Shareholder
What are the two primary formulas used to identify the dupont formula - Answers - EM *
ROA = ROE
Equity multiplier = Rs
Net Income Margin * Asset TO = ROA
What is the formula for Net Working Capital? - Answers - NWC = Current Assets -
Current Liabilities
What are the three main financial statements that firms publish?
What do they provide? - Answers - Statement of CashFlow
- Cash receipts and cash disbursement by a fir during a specific period
Balance Sheet
- snap shot of the firm's financial position at a specific time
Income Statement
- Summarizes the firm's revenue and expense over a period of time
How do investors use those financial statements to their advantage? - Answers - to
understand how the business is doing financially and to provide the investor with insight
to a plethora of information in order to make an informed decision.
What is the formula for the depreciation tax shield? - Answers - depreciation amount *
Corporate Tax Rate
