CORPORATE FINANCE FINAL EXAM REVIEWED
QUIZZZES AND ANSWERS 2024 - 2025
Which,of,the,following,variables,does,NOT,need,to,remain,constant,when,calculating,external,funds,nee
ded?
A.,assets/sales
B.,debt/equity
C.,level,of,sales
D.,retention,rate,,,ANS,-c.,level,of,sales
Which,of,the,following,statements,about,the,claims,firms,issue,to,investors,is,true?
A.,debtholders,have,a,contractual,claim,on,the,firm,that,requires,that,managers,act,in,their,best,interests
B.,stockholders,have,a,residual,claim,on,the,firm,that,does,not,require,the,firm,to,make,prespecified,pay
ments,to,them
C.,firm,directors,and,managers,have,a,contractual,obligation,to,fulfill,to,stockholders
D.,firm,directors,and,managers,have,a,fiduciary,duty,manage,in,the,interest,of,debtholders,,,ANS,-
B.,stockholders,have,a,residual,claim,on,the,firm,that,does,not,require,the,firm,to,make,prespecified,pay
ments,to,them
Which,of,the,following,would,be,considered,as,a,plug,figure,ina,financial,planning,exercise?
A.,cost,of,goods,sold
B.,new,stock,issues
C.,retained,earnings
D.,accumulated,depreciation,,,ANS,-B.,new,stock,issues
Which,of,the,following,statements,about,the,claims,firms,issue,is,correct?
A.,Households,own,a,majority,of,stock,in,public,corporations
B.,The,%,of,shares,owned,by,institutions,diminishes,as,firm,size,increases
C.,Insurance,companies,are,the,largest,owner,of,corporate,debt
,D.,Commercial,banks,own,a,higher,%,of,shares,than,corporate,debt,,,ANS,-
C.,Insurance,companies,are,the,largest,owner,of,corporate,debt
Which,of,the,following,statements,about,the,pricing,of,risk,is,false?
A.,The,Capital,Asset,Pricing,Model,or,Security,Market,Line,is,a,prominent,means,of,determining,the,appr
opriate,risk,adjusted,,required,return,for,valuing,firms
B.,The,risk,premium,on,the,market,reflects,both,the,average,compensation,of,risk,bearing
C.,The,expected,risk,premium,on,the,market,for,the,coming,year,should,be,positive
D.,A,Beta<1,indicates,that,a,firm,has,greater,than,the,average,amount,of,risk,,,ANS,-
D.,A,Beta<1,indicates,that,a,firm,has,greater,than,the,average,amount,of,risk
Accounting,statements,don't,do,which,of,the,following
A.,Shows,equity,at,the,amount,invested
B.,Shows,debt,as,the,principal,the,principal,that,remains,to,be,paid
C.,Shows,assets,at,original,cost,adjusted,for,depreciation
D.,records,expense,only,when,cash,is,paid,,,ANS,-D.,records,expense,only,when,cash,is,paid
Accounting,statements,do,which,of,the,following?
A.,Shows,equity,at,the,amount,invested
B.,Shows,debt,at,the,original,principal,,regardless,of,whether,any,principal,has,been,paid
C.,Shows,assets,at,original,cost,without,adjusting,for,depreciation
D.,records,an,expense,only,when,the,cash,has,been,paid,,,ANS,-A.,Shows,equity,at,the,amount,invested
Which,of,the,following,should,appear,in,the,Cash,Flow,from,investing,section,of,the,accounting,statemen
ts,of,cash,flows?
A.,the,retirement,of,long-term,debt
B.,the,sale,of,an,existing,piece,of,property,,plant,and,equipment
C.,an,increase,in,taxes,payable,based,on,your,actual,tax,liability,to,the,IRS
D.,an,increase,in,credit,sales,,,ANS,-B.,the,sale,of,an,existing,piece,of,property,,plant,and,equipment
, Pagemaster,Enterprises,reported,retained,earnings,of,$40,million,as,of,12/31/2004,and,$70,million,as,of,
12/31/2005.,If,the,firm's,net,income,for,2005,was,$80,million,,what,percentage,of,net,income,did,it,pay,a
s,dividends,to,common,stockholders?
A.,37.50%
B.,50.00%
C.,62.50%
D.,87.50%,,,ANS,-C.,62.50%
On,a,common-
size,balance,sheet,,all,_______________,accounts,are,shown,as,a,percentage,of,______________.
A.,income;,sales
B.,Liability;,net,income
C.,asset;,sales
D.,liability;,current,assets
E.,equity;,sales,,,ANS,-A.,income;,sales
RK,Diversified,Products,is,a,mature,manufacturing,firm,with,high,operating,earnings,(as,measured,by,EBI
T),and,a,low,rate,of,investment.,RK,relies,on,debt,financing,as,an,important,source,of,capital.,RK,doesn't,
expect,to,issue,debt,or,repurchase,stock,this,year,but,will,pay,a,large,dividend.,With,regard,to,the,accoun
ting,statement,of,cash,flows,,which,of,the,following,statements,is,true?
A.,The,interest,payment,will,cause,a,large,negative,figure,for,cash,flow,from,financing
B.,RK's,cash,flow,from,investment,is,likely,to,be,a,small,negative,figure
C.,RK's,cash,flow,from,operations,will,be,a,large,negative,figure
D.,The,dividend,payment,will,cause,a,large,positive,figure,for,cash,flow,from,financing,,,ANS,-
B.,RK's,cash,flow,from,investment,is,likely,to,be,a,small,negative,figure
Thompson,Tractors,has,a,current,market,price,of,$32,per,share.,Suppose,that,you,believe,Thompson's,int
rinsic,value,is,$26,per,share,while,insiders,believe,that,Thompson's,intrinsic,value,is,$34.
A.,You,should,buy,Thompson,shares
B.,Insiders,believe,the,stock,to,be,overvalued
C.,Insiders,should,sell,Thompson,shares
QUIZZZES AND ANSWERS 2024 - 2025
Which,of,the,following,variables,does,NOT,need,to,remain,constant,when,calculating,external,funds,nee
ded?
A.,assets/sales
B.,debt/equity
C.,level,of,sales
D.,retention,rate,,,ANS,-c.,level,of,sales
Which,of,the,following,statements,about,the,claims,firms,issue,to,investors,is,true?
A.,debtholders,have,a,contractual,claim,on,the,firm,that,requires,that,managers,act,in,their,best,interests
B.,stockholders,have,a,residual,claim,on,the,firm,that,does,not,require,the,firm,to,make,prespecified,pay
ments,to,them
C.,firm,directors,and,managers,have,a,contractual,obligation,to,fulfill,to,stockholders
D.,firm,directors,and,managers,have,a,fiduciary,duty,manage,in,the,interest,of,debtholders,,,ANS,-
B.,stockholders,have,a,residual,claim,on,the,firm,that,does,not,require,the,firm,to,make,prespecified,pay
ments,to,them
Which,of,the,following,would,be,considered,as,a,plug,figure,ina,financial,planning,exercise?
A.,cost,of,goods,sold
B.,new,stock,issues
C.,retained,earnings
D.,accumulated,depreciation,,,ANS,-B.,new,stock,issues
Which,of,the,following,statements,about,the,claims,firms,issue,is,correct?
A.,Households,own,a,majority,of,stock,in,public,corporations
B.,The,%,of,shares,owned,by,institutions,diminishes,as,firm,size,increases
C.,Insurance,companies,are,the,largest,owner,of,corporate,debt
,D.,Commercial,banks,own,a,higher,%,of,shares,than,corporate,debt,,,ANS,-
C.,Insurance,companies,are,the,largest,owner,of,corporate,debt
Which,of,the,following,statements,about,the,pricing,of,risk,is,false?
A.,The,Capital,Asset,Pricing,Model,or,Security,Market,Line,is,a,prominent,means,of,determining,the,appr
opriate,risk,adjusted,,required,return,for,valuing,firms
B.,The,risk,premium,on,the,market,reflects,both,the,average,compensation,of,risk,bearing
C.,The,expected,risk,premium,on,the,market,for,the,coming,year,should,be,positive
D.,A,Beta<1,indicates,that,a,firm,has,greater,than,the,average,amount,of,risk,,,ANS,-
D.,A,Beta<1,indicates,that,a,firm,has,greater,than,the,average,amount,of,risk
Accounting,statements,don't,do,which,of,the,following
A.,Shows,equity,at,the,amount,invested
B.,Shows,debt,as,the,principal,the,principal,that,remains,to,be,paid
C.,Shows,assets,at,original,cost,adjusted,for,depreciation
D.,records,expense,only,when,cash,is,paid,,,ANS,-D.,records,expense,only,when,cash,is,paid
Accounting,statements,do,which,of,the,following?
A.,Shows,equity,at,the,amount,invested
B.,Shows,debt,at,the,original,principal,,regardless,of,whether,any,principal,has,been,paid
C.,Shows,assets,at,original,cost,without,adjusting,for,depreciation
D.,records,an,expense,only,when,the,cash,has,been,paid,,,ANS,-A.,Shows,equity,at,the,amount,invested
Which,of,the,following,should,appear,in,the,Cash,Flow,from,investing,section,of,the,accounting,statemen
ts,of,cash,flows?
A.,the,retirement,of,long-term,debt
B.,the,sale,of,an,existing,piece,of,property,,plant,and,equipment
C.,an,increase,in,taxes,payable,based,on,your,actual,tax,liability,to,the,IRS
D.,an,increase,in,credit,sales,,,ANS,-B.,the,sale,of,an,existing,piece,of,property,,plant,and,equipment
, Pagemaster,Enterprises,reported,retained,earnings,of,$40,million,as,of,12/31/2004,and,$70,million,as,of,
12/31/2005.,If,the,firm's,net,income,for,2005,was,$80,million,,what,percentage,of,net,income,did,it,pay,a
s,dividends,to,common,stockholders?
A.,37.50%
B.,50.00%
C.,62.50%
D.,87.50%,,,ANS,-C.,62.50%
On,a,common-
size,balance,sheet,,all,_______________,accounts,are,shown,as,a,percentage,of,______________.
A.,income;,sales
B.,Liability;,net,income
C.,asset;,sales
D.,liability;,current,assets
E.,equity;,sales,,,ANS,-A.,income;,sales
RK,Diversified,Products,is,a,mature,manufacturing,firm,with,high,operating,earnings,(as,measured,by,EBI
T),and,a,low,rate,of,investment.,RK,relies,on,debt,financing,as,an,important,source,of,capital.,RK,doesn't,
expect,to,issue,debt,or,repurchase,stock,this,year,but,will,pay,a,large,dividend.,With,regard,to,the,accoun
ting,statement,of,cash,flows,,which,of,the,following,statements,is,true?
A.,The,interest,payment,will,cause,a,large,negative,figure,for,cash,flow,from,financing
B.,RK's,cash,flow,from,investment,is,likely,to,be,a,small,negative,figure
C.,RK's,cash,flow,from,operations,will,be,a,large,negative,figure
D.,The,dividend,payment,will,cause,a,large,positive,figure,for,cash,flow,from,financing,,,ANS,-
B.,RK's,cash,flow,from,investment,is,likely,to,be,a,small,negative,figure
Thompson,Tractors,has,a,current,market,price,of,$32,per,share.,Suppose,that,you,believe,Thompson's,int
rinsic,value,is,$26,per,share,while,insiders,believe,that,Thompson's,intrinsic,value,is,$34.
A.,You,should,buy,Thompson,shares
B.,Insiders,believe,the,stock,to,be,overvalued
C.,Insiders,should,sell,Thompson,shares
