C214 FINAL PAPER UPDATED COMPLETE
QUESTIONS AND CORRECT ANSWERS
BUNDLED REVIEW GUIDE
●● 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
●● 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
QUESTIONS AND CORRECT ANSWERS
BUNDLED REVIEW GUIDE
●● 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
●● 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
