FIN 304 Exam Questions And Answers
1. Financial ratios that measure a firm's ability to pay its bills over the short run
without undue stress are known as _____ ratios.
a. asset management
b. long-term solvency
c. short-term solvency
d. profitability
e. market value
2. Net income divided by sales is known as a firm's:
A. profit margin.
b. return on assets.
c. return on equity
.d. asset turnover.
e. earnings before interest and taxes.
3. Ratios that measure a firm's financial leverage are known as _____ ratios.
a. asset management
B. long-term solvency
c. short-term solvency
d. profitability
e. book value
4.If a firm's debt ratio is greater than 0.5, then:
A. its current liabilities are quite high.
B.its debt-equity ratio exceeds 1.0.
C. it has too few total assets.
D. it has more long-term debt than equity.
5.If a firm's quick ratio is equal to its current ratio:
A. It has a low level of current liabilities.
B.It has no inventory.
C. It faces a potentially serious liquidity crisis.
D. It is in a loss-making position.
Assume a bond is currently selling at par value. What will happen in the future if
the yield on the bond is lower than the coupon rate?
, A.The price of the bond will increase.
B. The coupon rate of the bond will increase.
C. The par value of the bond will decrease.
D. The coupon payments will be adjusted to the new discount rate
Which of the following statements is correct for a 10% coupon bond that has a
current yield of 7%?
A. The face value of the bond has decreased.
B. The bond's maturity value exceeds the bond's price.
C. The bond's internal rate of return is 7%.
D.The bond's market value is higher than its face value.
The discount rate that makes the present value of a bond's payments equal to its
price is termed the:
A. dividend yield
.B.yield to maturity.
C. current yield.
D. coupon rate.
Which one of the following bond values will change when interest rates change?
A. The expected cash flows
B.The present value
C. The coupon payment
D. The maturity value
What happens to the coupon rate of a $1,000 face value bond that pays $80
annually in interest if market interest rates change from 9% to 10%?
A. The coupon rate increases to 10%
.B. The coupon rate remains at 9%.
C.The coupon rate remains at 8%.
D. The coupon rate decreases to 8%.
f a bond is priced at par value, then:
A. it has a very low level of default risk.
B.its coupon rate equals its yield to maturity.
C. it must be a zero-coupon bond.
D. the bond is quite close to maturity.
If a bond offers a current yield of 5% and a yield to maturity of 5.45%, then the:
A.bond is selling at a discount.
1. Financial ratios that measure a firm's ability to pay its bills over the short run
without undue stress are known as _____ ratios.
a. asset management
b. long-term solvency
c. short-term solvency
d. profitability
e. market value
2. Net income divided by sales is known as a firm's:
A. profit margin.
b. return on assets.
c. return on equity
.d. asset turnover.
e. earnings before interest and taxes.
3. Ratios that measure a firm's financial leverage are known as _____ ratios.
a. asset management
B. long-term solvency
c. short-term solvency
d. profitability
e. book value
4.If a firm's debt ratio is greater than 0.5, then:
A. its current liabilities are quite high.
B.its debt-equity ratio exceeds 1.0.
C. it has too few total assets.
D. it has more long-term debt than equity.
5.If a firm's quick ratio is equal to its current ratio:
A. It has a low level of current liabilities.
B.It has no inventory.
C. It faces a potentially serious liquidity crisis.
D. It is in a loss-making position.
Assume a bond is currently selling at par value. What will happen in the future if
the yield on the bond is lower than the coupon rate?
, A.The price of the bond will increase.
B. The coupon rate of the bond will increase.
C. The par value of the bond will decrease.
D. The coupon payments will be adjusted to the new discount rate
Which of the following statements is correct for a 10% coupon bond that has a
current yield of 7%?
A. The face value of the bond has decreased.
B. The bond's maturity value exceeds the bond's price.
C. The bond's internal rate of return is 7%.
D.The bond's market value is higher than its face value.
The discount rate that makes the present value of a bond's payments equal to its
price is termed the:
A. dividend yield
.B.yield to maturity.
C. current yield.
D. coupon rate.
Which one of the following bond values will change when interest rates change?
A. The expected cash flows
B.The present value
C. The coupon payment
D. The maturity value
What happens to the coupon rate of a $1,000 face value bond that pays $80
annually in interest if market interest rates change from 9% to 10%?
A. The coupon rate increases to 10%
.B. The coupon rate remains at 9%.
C.The coupon rate remains at 8%.
D. The coupon rate decreases to 8%.
f a bond is priced at par value, then:
A. it has a very low level of default risk.
B.its coupon rate equals its yield to maturity.
C. it must be a zero-coupon bond.
D. the bond is quite close to maturity.
If a bond offers a current yield of 5% and a yield to maturity of 5.45%, then the:
A.bond is selling at a discount.
