BFIN 300 EXAM QUESTIONS WITH
ALL CORRECT ANSWERS
A business created as a distinct legal entity composed of one or more individuals or
entities is a - Answer-Corporation
The ________________ breaks down return on equity into three component parts -
Answer-Du Point Identity
Risk that affects at most a small number of assets is called - Answer-Unsystematic Risk
The cash flows of a project should - Answer-Include all incremental costs, including
opportunity costs
The rate at which a stock's price is expected to appreciate (or depreciate) is called the
_____ yield - Answer-Capital Gains
The internal rate of return for a project will increase if - Answer-The initial cost of the
project can be reduced
A bond has a market price that exceeds its face value. Therefore, the - Answer-Yield to
maturity is less than the coupon rate
It is easier to evaluate a firm using its financial statements when the firm - Answer-Uses
the same accounting procedures as other firms in its industry
The cash flow tax savings generated as a result of a firm's tax-deductible depreciation
expense is called the - Answer-Depreciation tax shield
An increase in total assets - Answer-Must be offset by an equal increase in liabilities
and shareholders' equity
The secondary market is best defined by which one of the following - Answer-Market
where outstanding shares of stock are resold
The two-stage dividend growth model evaluates the current price of a stock based on
the assumption a stock will - Answer-Grow at a fixed rate for a period of time after which
it will grow at a different rate indefinitely
ALL CORRECT ANSWERS
A business created as a distinct legal entity composed of one or more individuals or
entities is a - Answer-Corporation
The ________________ breaks down return on equity into three component parts -
Answer-Du Point Identity
Risk that affects at most a small number of assets is called - Answer-Unsystematic Risk
The cash flows of a project should - Answer-Include all incremental costs, including
opportunity costs
The rate at which a stock's price is expected to appreciate (or depreciate) is called the
_____ yield - Answer-Capital Gains
The internal rate of return for a project will increase if - Answer-The initial cost of the
project can be reduced
A bond has a market price that exceeds its face value. Therefore, the - Answer-Yield to
maturity is less than the coupon rate
It is easier to evaluate a firm using its financial statements when the firm - Answer-Uses
the same accounting procedures as other firms in its industry
The cash flow tax savings generated as a result of a firm's tax-deductible depreciation
expense is called the - Answer-Depreciation tax shield
An increase in total assets - Answer-Must be offset by an equal increase in liabilities
and shareholders' equity
The secondary market is best defined by which one of the following - Answer-Market
where outstanding shares of stock are resold
The two-stage dividend growth model evaluates the current price of a stock based on
the assumption a stock will - Answer-Grow at a fixed rate for a period of time after which
it will grow at a different rate indefinitely
