117 CFA Final Exam Prep Questions and Answers, Rated A

117 CFA Final Exam Prep Questions and Answers, Rated A Document Content and Description Below 117 CFA Final Exam Prep Questions and Answers Given cash flow, calculate NPV and IRR. Required rate is 8 percent -C $3,379 10.9% Given cash flow, calculate payback and discounted period. Required rate is 8 percent - C 1.01 years longer than payback period Investment of $100. Required rate is 20 percent. NPV closest to -B $58.33 Investment of $150,000. Cost of capital is 10%. What is IRR -C 28.79 percent Kim corporation. required return 10%. what is NPV and IRR -A 102 million and 14.0% Kim corporation. payback and discounted period are closest to -B 4.3 years and 5.9 years Investment of $20,000. Rate is 8 percent. What is Profitability index. -C 1.25 Hermann Corporation. Required rate 10 percent. What is PI -C 1.56 Erin Chou. If all double, IRR would: -B stay the same and the NPV would increase Shirley Shea, neg NPV, pos IRR. Possible? -A Yes An investment w/ enhancement increases outlay. vertical intercept of NPV shifts: -A up and the horizontal interest shifts left Table attached - Two projects mutually exclusive. What is appropriate decision? -C Investment in Project 2 because it has higher NPV Table Attached - What discount rate would be same NPV for both? -B rate between 10.00 percent and 15.02 percent Wilson Flannery question. How many discount rates produce 0 NPV -C. Two, discount rates of 0 and 62% With regard to NPV of two projects, crossover rate is best described -A two projects have same NPV With regard to NPV, point profile crosses vertical axis is -B the sum off the undercounted cash flows from a project With regard to NPV, point profile crosses horizontal axis is -C a project's internal rate of return when the project's NPV is equal to zeroWith regard to capital budgeting, estimate least likely to include -interest costs Equity equals -A Assets - Liabilities Shareholders' equity most likely differs from market value because -B some factors that affect the generation of future cash flows are excluded All of the following are current assets except -B goodwill The most likely costs included in inventory, plant, equipment are -C delivery costs debt due within one year is -A Current The carrying value of inventories reflects -C the lower of historical cost or net realizable value accrued expenses are -C expenses that have been reported on the income statement but not yet paid Defining total asset turnover as revenue divided...most likely result in an increase for company -C both the debt-to-equity ratio and the total asset turnover the item "retained earnings" is a part of -C shareholders' equity When a company buys shares of its own stock, it records a reduction in -B both assets and shareholders' equity which of the following would an analysis most likely determine from a common-size analysis... -B An increase or decrease in financial leverage An investor concerned meeting near-term calculate the -A current ratio Most stringent test of liquidity -A Cash ratio An investor worried about long-term most likely examines -C debt-to-equity ratio Big table - based on exhibit 1 which is correct? -C Company A has made one or more acquisitions big table - Based on exhibit 1, leverage of company B is closest to -C 2.22 Big table - based on exhibit 1 which ratio indicates lower risk for A compared to b -A Cash ratio In order to assess ability to fulfill long-term, analysis examine -C solvency ratiosWhich ratio would a company use to examine short-term -A Current ratio Which of the ratio useful determine company's ability for lease and interest charges? - C Fixed charge coverage Table above - based on date, analyst least likely conclude -C Management of receivables has contributed to improved liquidity Table above - which of the following most likely conclusion -A the company is becoming increasingly less solvent, as evidenced by the increase in its debt-to-equity ratio from 0.35 to 0.50 from FY3 to Fy5 Problem 6, most reasonable for financial data -C. The decline in the company's equity indicates that the company may be incurring losses, paying dividends greater than income, and/or repurchasing shares Analyst decrease inventory turnover, most likely explanation -C. the company installed a new inventory management system but experienced some operational difficulties resulting in duplicate orders being placed with suppliers. Best explain increase in receivables turnover -B. Due to problems with an error in its old credit scoring system, the company had accumulated a substantial amount of uncollectible accounts and wrote off a large amount of its receivables Brown corporation...change in average accounts receivable -A. +$0.41 million Table, best described conductions to pay obligations -A. Company A's current ratio of 4.0 indicates it is more liquid than company B, whose current ratio is only 1.2, but Company B is more solvent, as indicated by its lower debt-to-equity ratio. Huge income statement...total assets, best explanation company's efficiency. -C. Comparing FY14 with FY10, the company's efficiency deteriorated due to asset growth faster than turnover revenue growth Huge income statement...best describes company's solvency -B. Comparing FY14 with FY10, the company's solvency deteriorated, as indicated by a decrease in interest coverage from 10.6 to 8.4 Huge income statement...best describes company's liquidity -C. Comparing FY14 with FY10, the company's liquidity improved, as indicated by an increase in its current ratio from 0.71 to 0.75 Huge income statement...best describes company profitability -B. Comparing Fy14 with FY10, the company's profitability deteriorated, as indicated by a decrease in its net profit margin from 11.0 to 5.7 percent.Assuming no changes in other variables, which of the following would decrease ROA? - C. An increase in average assets Based on information above, most appropriate FY13 to FY15 -C. net profit margin has decreased but its financial leverage has increased. What does P/E ratio measure? -A. The "multiple" that the stock market places on a company's EPS A creditor most likely consider a decrease to be good news -B. debt-to-total assets When developing forecasts, analysts should most likely -B. Use the results of financial analysis, analysis of other information, and judgement. Three factor DuPont Analysis is comprised of -C. Asset turnover, profit margin, financial leverage Within the Dupont Analysis -B. An increase in financial leverage is met with an increase in the use of debt In Dupont Analysis where the financial leverage has constantly increased over the past several years -D. The ROE will be higher than the ROA The current ROA of a firm is 13% and it has an equity multiple of 3.0. The resulting ROE... -B. 39% the ACME company...Sales $2,340,000...accounts payable $98,000 -A. The asset turnover and profit margin are 2.36 and 10.68% The P/E ratio is considered to be a price multiple. True? -B. An increasing P/E implies that the price of the stock is becoming more expensive If a stock has a beta of 2.0, which of the following is true? -D. The stock is considered to be more volatile than the market. The cost of equity is each to the -B. rate of return required by the stockholders Which of the following statements is correct? -B. For a given company, the after-tax cost of debt is generally less than both the cost of preferred equity and the cost of common equity. Using the dividend discount model, stock price C$45 -C. 15.61 percent Show Less Last updated: 7 months ago Preview 1 out of 8 pages Instant download OR