BFIN 300 FINAL EXAM QUESTIONS
WITH REVISED ANSWERS 100%
GUARANTEED PASS
1) Which type of company analysis only allows for one variable to change?
a) Simulation Analysis
b) Break-even Analysis
c) Sensitivity Analysis
d) Scenario analysis
e) Cash flow analysis - Answer-b) Sensitivity Analysis
2) Which type of company analysis considers the inter-relationships between different
cash flow components?
a) Simulation Analysis
b) Break-even Analysis
c) Sensitivity Analysis
d) Scenario analysis
e) Cash flow analysis - Answer-a) Simulation Analysis
Simulation analysis considers the inter-relationships between different variables or
components and assesses the impact of changes in these variables on the overall
outcome. In the context of company analysis, it can be used to model the impact of
various factors on cash flows, profits, or other financial metrics by allowing multiple
variables to change simultaneously under different scenarios.
3) If a company in in violation of a financial covenant, and is precluded from accessing
funding to undertake a positive NPV project, what type of situation what kind of capital
rationing would this be considered?
a) Soft rationing
b) Bankruptcy
c) Hard rationing
d) S#@t out of luck
e) FTX Company - Answer-c) Hard rationing
Hard rationing occurs when a company is constrained by external factors, such as the
inability to access funding due to a violation of financial covenants. In this situation,
external constraints, often imposed by lenders or financial institutions, restrict the
, company's ability to obtain additional capital even if there are positive NPV projects
available.
4) Which of the following is a true statement about "operating leverage"?
a) The greater the degree of operating leverage, the greater the potential for forecasting
risk
b) Suggests that a business is capital intensive
c) The degree to which a business relies on fixed costs
d) Small errors in operating leverage can magnify problems in forecasting
e) All of the above - Answer-e) All of the above
1) Steve "Uncle Stevie" Cohen is speaking to David Stearns about "efficient capital
markets theory". Uncle Stevie would be correct if he stated the following about "efficient
capital markets":
a) A market in which a security trades is priced efficiently
b) Based on available information, there is no reason that the current share price is too
high or too low
c) Although market inefficiencies may exist, they are relatively small and uncommon
d) The theory is nonsense and is just taught so professors can sell textbooks
e) All of the above - Answer-e) All of the above
2) How is return on investment (ROI) of an equity security calculated?
a) It cannot be calculated
b) Adding the dividend to a company's share price
c) Adding the dividend yield to the coupon rate
d) Adding the capital gain percentage to the dividend yield
e) All of the above - Answer-d) Adding the capital gain percentage to the dividend yield
The formula for calculating the total return (ROI) of an equity security is:
ROI=Capital Gain Percentage+Dividend Yield
3) How is return volatility on a security measured?
a) Variance and standard deviation
b) Normal distribution
c) Bell curve
d) a, b, and c
e) None of the above - Answer-a) Variance and standard deviation
Return volatility on a security is measured using statistical measures such as variance
and standard deviation. These measures quantify the degree of variation or dispersion
of a set of returns from their mean (average). A higher standard deviation indicates
higher volatility, suggesting that the returns are more spread out from the average, and
vice versa.
1) Brandon Nimmo has a $10,000,000 portfolio, of which $500,000 is in bond,
$3,000,000 is in alternative investments, and the remainder in equities. What is his
equity portfolio weight?
WITH REVISED ANSWERS 100%
GUARANTEED PASS
1) Which type of company analysis only allows for one variable to change?
a) Simulation Analysis
b) Break-even Analysis
c) Sensitivity Analysis
d) Scenario analysis
e) Cash flow analysis - Answer-b) Sensitivity Analysis
2) Which type of company analysis considers the inter-relationships between different
cash flow components?
a) Simulation Analysis
b) Break-even Analysis
c) Sensitivity Analysis
d) Scenario analysis
e) Cash flow analysis - Answer-a) Simulation Analysis
Simulation analysis considers the inter-relationships between different variables or
components and assesses the impact of changes in these variables on the overall
outcome. In the context of company analysis, it can be used to model the impact of
various factors on cash flows, profits, or other financial metrics by allowing multiple
variables to change simultaneously under different scenarios.
3) If a company in in violation of a financial covenant, and is precluded from accessing
funding to undertake a positive NPV project, what type of situation what kind of capital
rationing would this be considered?
a) Soft rationing
b) Bankruptcy
c) Hard rationing
d) S#@t out of luck
e) FTX Company - Answer-c) Hard rationing
Hard rationing occurs when a company is constrained by external factors, such as the
inability to access funding due to a violation of financial covenants. In this situation,
external constraints, often imposed by lenders or financial institutions, restrict the
, company's ability to obtain additional capital even if there are positive NPV projects
available.
4) Which of the following is a true statement about "operating leverage"?
a) The greater the degree of operating leverage, the greater the potential for forecasting
risk
b) Suggests that a business is capital intensive
c) The degree to which a business relies on fixed costs
d) Small errors in operating leverage can magnify problems in forecasting
e) All of the above - Answer-e) All of the above
1) Steve "Uncle Stevie" Cohen is speaking to David Stearns about "efficient capital
markets theory". Uncle Stevie would be correct if he stated the following about "efficient
capital markets":
a) A market in which a security trades is priced efficiently
b) Based on available information, there is no reason that the current share price is too
high or too low
c) Although market inefficiencies may exist, they are relatively small and uncommon
d) The theory is nonsense and is just taught so professors can sell textbooks
e) All of the above - Answer-e) All of the above
2) How is return on investment (ROI) of an equity security calculated?
a) It cannot be calculated
b) Adding the dividend to a company's share price
c) Adding the dividend yield to the coupon rate
d) Adding the capital gain percentage to the dividend yield
e) All of the above - Answer-d) Adding the capital gain percentage to the dividend yield
The formula for calculating the total return (ROI) of an equity security is:
ROI=Capital Gain Percentage+Dividend Yield
3) How is return volatility on a security measured?
a) Variance and standard deviation
b) Normal distribution
c) Bell curve
d) a, b, and c
e) None of the above - Answer-a) Variance and standard deviation
Return volatility on a security is measured using statistical measures such as variance
and standard deviation. These measures quantify the degree of variation or dispersion
of a set of returns from their mean (average). A higher standard deviation indicates
higher volatility, suggesting that the returns are more spread out from the average, and
vice versa.
1) Brandon Nimmo has a $10,000,000 portfolio, of which $500,000 is in bond,
$3,000,000 is in alternative investments, and the remainder in equities. What is his
equity portfolio weight?
