C214 FINAL EXAM QUESTIONS | THE SMART WAY TO
PASS | REAL TESTS, REAL RESULTS!
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
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
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
, 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
What statements are required to be filed with the SEC - Answer: Annual audited
financial statements
What are the issues with understanding foreign financial statements? - Answer: Foreign
financial statements use international financial reporting standards and they are
different from US accounting standards
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
PASS | REAL TESTS, REAL RESULTS!
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
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
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
, 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
What statements are required to be filed with the SEC - Answer: Annual audited
financial statements
What are the issues with understanding foreign financial statements? - Answer: Foreign
financial statements use international financial reporting standards and they are
different from US accounting standards
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
