C214 FINAL EXAM 2025/2026
QUESTIONS AND ANSWERS 100% PASS
Coupon Rate - ANS The interest rate that a company promises to pay on bonds
Market Rate - ANS The interest rate on other comparable bonds
Par Value - ANS The amount payable on maturity of the bond
Market rate - ANS Same as YTM - Yield to Maturity
Gordon Growth Model - ANS Assumes stable growth rates and does not incorporate risk
CAPM Model - ANS Allows to determine expected return on stocks and incorporates risk
How do public companies maximize shareholder value? - ANS By maximizing Earnings Per
Share
How do private companies maximize shareholder value? - ANS By keeping control within the
company
Positive credit rating has what effect on capital? - ANS Lowers cost of capital
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, What is cash flow from operating activities? - ANS It is cash flow generated for sale of
products and services
What is the formula for retained earnings? - ANS Ending retained earnings=Beginning
retained earnings + Net Income = Dividends
Is depreciation and salvage value on an asset precise or is it an estimate? - ANS It is an
estimate
What is an example of accounting difference - ANS Companies using different accounting
methods
What is an example of a timing difference? - ANS Companies using different fiscal years
Do stock holders or bond holders have voting rights? - ANS Stock holders have voting rights
What factors are considered for the initial outlay of a new investment? - ANS Purchase price
of new equipment, shipping costs, and investment in working capital
What is the risk associated with debt financing? - ANS Too much debt can lead to bankruptcy
What are inventory related costs? - ANS Product costs, storage costs, and opportunity costs
What statements are required to be filed with the SEC - ANS Annual audited financial
statements
What are the issues with understanding foreign financial statements? - ANS Foreign financial
statements use international financial reporting standards and they are different from US
accounting standards
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
QUESTIONS AND ANSWERS 100% PASS
Coupon Rate - ANS The interest rate that a company promises to pay on bonds
Market Rate - ANS The interest rate on other comparable bonds
Par Value - ANS The amount payable on maturity of the bond
Market rate - ANS Same as YTM - Yield to Maturity
Gordon Growth Model - ANS Assumes stable growth rates and does not incorporate risk
CAPM Model - ANS Allows to determine expected return on stocks and incorporates risk
How do public companies maximize shareholder value? - ANS By maximizing Earnings Per
Share
How do private companies maximize shareholder value? - ANS By keeping control within the
company
Positive credit rating has what effect on capital? - ANS Lowers cost of capital
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, What is cash flow from operating activities? - ANS It is cash flow generated for sale of
products and services
What is the formula for retained earnings? - ANS Ending retained earnings=Beginning
retained earnings + Net Income = Dividends
Is depreciation and salvage value on an asset precise or is it an estimate? - ANS It is an
estimate
What is an example of accounting difference - ANS Companies using different accounting
methods
What is an example of a timing difference? - ANS Companies using different fiscal years
Do stock holders or bond holders have voting rights? - ANS Stock holders have voting rights
What factors are considered for the initial outlay of a new investment? - ANS Purchase price
of new equipment, shipping costs, and investment in working capital
What is the risk associated with debt financing? - ANS Too much debt can lead to bankruptcy
What are inventory related costs? - ANS Product costs, storage costs, and opportunity costs
What statements are required to be filed with the SEC - ANS Annual audited financial
statements
What are the issues with understanding foreign financial statements? - ANS Foreign financial
statements use international financial reporting standards and they are different from US
accounting standards
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
