C214 FINAL EXAM QUESTIONS AND
100% CORRECT ANSWERS GRADED A+
2026
Coupon Rate ANSWER >>> The interest rate that a company promises to pay on
bonds
Market Rate ANSWER >>> The interest rate on other comparable bonds
Par Value ANSWER >>> The amount payable on maturity of the bond
Market rate ANSWER >>> Same as YTM - Yield to Maturity
Gordon Growth Model ANSWER >>> Assumes stable growth rates and does not
incorporate risk
CAPM Model ANSWER >>> Allows to determine expected return on stocks and
incorporates risk
How do public companies maximize shareholder value? ANSWER >>> By maximizing
Earnings Per Share
1
, How do private companies maximize shareholder value? ANSWER >>> By keeping
control within the company
Positive credit rating has what effect on capital? ANSWER >>> Lowers cost of capital
What is cash flow from operating activities? ANSWER >>> It is cash flow generated for
sale of products and services
What is the formula for retained earnings? ANSWER >>> Ending retained
earnings=Beginning retained earnings + Net Income = Dividends
Is depreciation and salvage value on an asset precise or is it an estimate? ANSWER
>>> It is an estimate
What is an example of accounting difference ANSWER >>> Companies using different
accounting methods
What is an example of a timing difference? ANSWER >>> Companies using different
fiscal years
Do stock holders or bond holders have voting rights? ANSWER >>> Stock holders
have voting rights
What factors are considered for the initial outlay of a new investment? ANSWER >>>
Purchase price of new equipment, shipping costs, and investment in working capital
What is the risk associated with debt financing? ANSWER >>> Too much debt can
lead to bankruptcy
What are inventory related costs? ANSWER >>> Product costs, storage costs, and
opportunity costs
2
100% CORRECT ANSWERS GRADED A+
2026
Coupon Rate ANSWER >>> The interest rate that a company promises to pay on
bonds
Market Rate ANSWER >>> The interest rate on other comparable bonds
Par Value ANSWER >>> The amount payable on maturity of the bond
Market rate ANSWER >>> Same as YTM - Yield to Maturity
Gordon Growth Model ANSWER >>> Assumes stable growth rates and does not
incorporate risk
CAPM Model ANSWER >>> Allows to determine expected return on stocks and
incorporates risk
How do public companies maximize shareholder value? ANSWER >>> By maximizing
Earnings Per Share
1
, How do private companies maximize shareholder value? ANSWER >>> By keeping
control within the company
Positive credit rating has what effect on capital? ANSWER >>> Lowers cost of capital
What is cash flow from operating activities? ANSWER >>> It is cash flow generated for
sale of products and services
What is the formula for retained earnings? ANSWER >>> Ending retained
earnings=Beginning retained earnings + Net Income = Dividends
Is depreciation and salvage value on an asset precise or is it an estimate? ANSWER
>>> It is an estimate
What is an example of accounting difference ANSWER >>> Companies using different
accounting methods
What is an example of a timing difference? ANSWER >>> Companies using different
fiscal years
Do stock holders or bond holders have voting rights? ANSWER >>> Stock holders
have voting rights
What factors are considered for the initial outlay of a new investment? ANSWER >>>
Purchase price of new equipment, shipping costs, and investment in working capital
What is the risk associated with debt financing? ANSWER >>> Too much debt can
lead to bankruptcy
What are inventory related costs? ANSWER >>> Product costs, storage costs, and
opportunity costs
2
