Accredited Test Bank Solution For
Intermediate Financial Management,
14th Edition Brigham [All Lessons
Included]
Complete Chapter Solution Manual
are Included (Ch.1 to Ch.29)
• Rapid Download
• Quick Turnaround
• Complete Chapters Provided
, Table of Contents are Given Below
"Intermediate Financial Management" (14th Edition) by Eugene F. Brigham and Phillip R. Daves is structured
into several parts, each encompassing chapters that delve into various facets of financial management. The
chapters are organized as follows:
Part I: Fundamental Concepts
1. An Overview of Financial Management
o Web Extension 1A: An Overview of Derivatives
o Web Extension 1B: A Closer Look at the Stock Markets
2. Risk and Return: Part I
o Web Extension 2A: Continuous Probability Distributions
o Web Extension 2B: Estimating Beta with a Financial Calculator
3. Risk and Return: Part II
4. Bond Valuation
o Web Extension 4A: A Closer Look at Zero Coupon Bonds
o Web Extension 4B: A Closer Look at TIPS: Treasury Inflation-Protected Securities
o Web Extension 4C: A Closer Look at Bond Risk: Duration
o Web Extension 4D: The Pure Expectations Theory and Estimation of Forward Rates
5. Financial Options
6. Accounting for Financial Management
o Web Extension 6A: The Federal Income Tax System for Individuals
7. Analysis of Financial Statements
8. Basic Stock Valuation
o Web Extension 8A: Derivation of Valuation Equations
Part II: Corporate Valuation
9. Financial Planning and Forecasting Financial Statements
o Web Extension 9A: Financing Feedbacks
o Web Extension 9B: Advanced Techniques for Forecasting Financial Statement Accounts
PAGE 1
, 10. Corporate Valuation, Value-Based Management, and Corporate Governance
11. Determining the Cost of Capital
• Web Extension 11A: Estimating Growth Rates
• Web Extension 11B: The Cost of Equity in the Nonconstant Dividend Growth Model
Part III: Project Valuation
12. Capital Budgeting: Decision Criteria
• Web Extension 12A: The Accounting Rate of Return (ARR)
13. Capital Budgeting: Estimating Cash Flows and Analyzing Risk
• Web Extension 13A: Replacement Project Analysis
• Web Extension 13B: Certainty Equivalents and Risk-Adjusted Discount Rates
14. Real Options
Part IV: Strategic Financing Decisions
15. Distributions to Shareholders: Dividends and Repurchases
16. Capital Structure Decisions
• Web Extension 16A: Degree of Leverage
17. Dynamic Capital Structures and Corporate Valuation
• Web Extension 17A: Projecting Consistent Debt and Interest Expenses
• Web Extension 17B: Bond Refunding Decisions
Part V: Tactical Financing Decisions
18. Initial Public Offerings, Investment Banking, and Financial Restructuring
• Web Extension 18A: Rights Offerings
19. Lease Financing
• Web Extension 19A: Percentage Cost Analysis
• Web Extension 19B: Leasing Feedback
• Web Extension 19C: Leveraged Leases
20. Hybrid Financing: Preferred Stock, Warrants, and Convertibles
• Web Extension 20A: Calling Convertible Issues
Part VI: Working Capital Management
PAGE 2
, 21. Working Capital Management
• Web Extension 21A: Secured Short-Term Financing
• Web Extension 21B: Supply Chain Finance
22. Cash and Marketable Securities Management
23. Other Topics in Working Capital Management
Part VII: Special Topics
24. Derivatives and Risk Management
• Web Extension 24A: Risk Management with Insurance
25. Bankruptcy, Reorganization, and Liquidation
• Web Extension 25A: Multiple Discriminant Analysis
26. Mergers, LBOs, Divestitures, and Holding Companies
27. Multinational Financial Management
Web Chapters
28. Time Value of Money
• Web Extension 28A: The Tabular Approach
• Web Extension 28B: Derivations of Annuity Formulas
• Web Extension 28C: Continuous Compounding
29. Valuation of Bonds and Stocks
This structure emphasizes a comprehensive understanding of financial management, combining
fundamental principles, corporate valuation, financing strategies, and special topics for real-world
applications. Let me know if you'd like more details on any chapter!
1. An Overview of Financial Management
Question 1:
What is the primary goal of financial management in a corporation?
A. Maximizing sales revenue
B. Minimizing operating costs
C. Maximizing shareholder wealth
D. Ensuring regulatory compliance
Answer: C. Maximizing shareholder wealth
PAGE 3
,Explanation: The primary goal of financial management is to maximize the wealth of the shareholders by
increasing the company's stock price and ensuring long-term profitability.
Question 2:
Which of the following is NOT a function of financial management?
A. Capital budgeting
B. Capital structure management
C. Marketing strategy development
D. Working capital management
Answer: C. Marketing strategy development
Explanation: Financial management focuses on capital budgeting, capital structure, and working capital
management, whereas marketing strategy development is related to the marketing department.
Web Extension 1A: An Overview of Derivatives
Question 3:
Which of the following is a type of derivative?
A. Common stock
B. Corporate bond
C. Futures contract
D. Treasury bill
Answer: C. Futures contract
Explanation: Futures contracts are derivatives because their value is derived from the price of an underlying
asset, such as commodities or financial instruments.
Question 4:
Options give the holder the right, but not the obligation, to:
A. Buy or sell an asset at a predetermined price
B. Participate in corporate earnings
C. Vote in shareholder meetings
D. Receive dividends
Answer: A. Buy or sell an asset at a predetermined price
Explanation: Options are financial derivatives that grant the holder the right, but not the obligation, to buy or
sell an underlying asset at a set price before a certain date.
PAGE 4
,Web Extension 1B: A Closer Look at the Stock Markets
Question 5:
What does the term "liquidity" refer to in the stock market?
A. The ability to quickly buy or sell a stock without affecting its price
B. The total number of shares outstanding
C. The volatility of a stock's price
D. The market capitalization of a company
Answer: A. The ability to quickly buy or sell a stock without affecting its price
Explanation: Liquidity refers to how easily assets can be converted into cash without significantly affecting
their price. High liquidity means a stock can be bought or sold quickly with minimal price impact.
Question 6:
Which stock index is known for tracking 30 large, publicly-owned companies in the United States?
A. NASDAQ
B. S&P 500
C. Dow Jones Industrial Average
D. Russell 2000
Answer: C. Dow Jones Industrial Average
Explanation: The Dow Jones Industrial Average (DJIA) tracks 30 large, publicly-owned companies trading on
the New York Stock Exchange and the NASDAQ.
2. Risk and Return: Part I
Question 7:
What is the relationship between risk and return in financial investments?
A. Inverse relationship
B. No relationship
C. Direct relationship
D. Exponential relationship
Answer: C. Direct relationship
Explanation: Generally, higher risk is associated with the potential for higher returns, and lower risk with
lower potential returns.
PAGE 5
,Question 8:
Which measure is commonly used to assess the risk of an individual investment relative to the market?
A. Alpha
B. Beta
C. Gamma
D. Delta
Answer: B. Beta
Explanation: Beta measures an investment's volatility relative to the overall market. A beta greater than 1
indicates higher volatility than the market, while less than 1 indicates lower volatility.
Web Extension 2A: Continuous Probability Distributions
Question 9:
In finance, which continuous probability distribution is often used to model stock prices?
A. Normal distribution
B. Binomial distribution
C. Poisson distribution
D. Uniform distribution
Answer: A. Normal distribution
Explanation: The normal distribution is frequently used in finance to model the distribution of stock returns,
assuming that returns are symmetrically distributed around the mean.
Question 10:
What is the probability density function of a continuous random variable used for?
A. To calculate the probability of discrete outcomes
B. To describe the likelihood of a continuous random variable taking on a range of values
C. To determine the cumulative probability
D. To find the median of the distribution
Answer: B. To describe the likelihood of a continuous random variable taking on a range of values
Explanation: The probability density function (PDF) describes the likelihood of a continuous random variable
falling within a particular range of values, as opposed to taking on any single exact value.
PAGE 6
,Web Extension 2B: Estimating Beta with a Financial Calculator
Question 11:
Which of the following data is necessary to estimate beta using a financial calculator?
A. Company’s earnings and dividends
B. Historical returns of the stock and the market
C. Current stock price and book value
D. Total assets and liabilities
Answer: B. Historical returns of the stock and the market
Explanation: Estimating beta requires historical return data for both the stock in question and the overall
market to assess the stock's volatility relative to the market.
Question 12:
If a stock has a beta of 1.5, what does this imply about its volatility compared to the market?
A. It is less volatile than the market
B. It has the same volatility as the market
C. It is 1.5 times more volatile than the market
D. It is 1.5% more volatile than the market
Answer: C. It is 1.5 times more volatile than the market
Explanation: A beta of 1.5 indicates that the stock is 1.5 times more volatile than the overall market. If the
market moves by 1%, the stock is expected to move by 1.5% on average.
3. Risk and Return: Part II
Question 13:
Which portfolio theory emphasizes diversification to reduce unsystematic risk?
A. Capital Asset Pricing Model (CAPM)
B. Modern Portfolio Theory (MPT)
C. Arbitrage Pricing Theory (APT)
D. Efficient Market Hypothesis (EMH)
Answer: B. Modern Portfolio Theory (MPT)
Explanation: Modern Portfolio Theory advocates for diversification across various assets to minimize
unsystematic risk, which is the risk specific to individual investments.
PAGE 7
,Question 14:
What is the expected return of a risk-free asset?
A. Zero percent
B. Equal to the risk premium
C. Positive and certain
D. Equal to the market return
Answer: C. Positive and certain
Explanation: A risk-free asset is expected to provide a positive return with certainty, as it is free from default
risk. Examples include government treasury bills.
4. Bond Valuation
Question 15:
What is the present value of a bond?
A. The sum of its future cash flows discounted at the required rate of return
B. Its face value
C. The total interest it will pay over its lifetime
D. The market price divided by its par value
Answer: A. The sum of its future cash flows discounted at the required rate of return
Explanation: The present value of a bond is calculated by discounting all future coupon payments and the face
value repayment at the bond’s required rate of return.
Question 16:
Which type of bond does not pay periodic interest and is issued at a discount to its face value?
A. Callable bond
B. Convertible bond
C. Zero-coupon bond
D. Floating-rate bond
Answer: C. Zero-coupon bond
Explanation: Zero-coupon bonds do not pay periodic interest. Instead, they are sold at a discount and redeemed
at face value at maturity, with the difference representing the interest earned.
PAGE 8
, Web Extension 4A: A Closer Look at Zero Coupon Bonds
Question 17:
How does a zero-coupon bond generate a return for investors?
A. Through periodic interest payments
B. By increasing in price over time
C. By paying dividends
D. By being convertible into stock
Answer: B. By increasing in price over time
Explanation: Zero-coupon bonds are issued at a discount and mature at face value. The return comes from the
difference between the purchase price and the face value received at maturity.
Question 18:
Which of the following is a characteristic of zero-coupon bonds?
A. High current income
B. Interest rate risk
C. Callable feature
D. Variable interest rates
Answer: B. Interest rate risk
Explanation: Zero-coupon bonds are more sensitive to interest rate changes, meaning they have higher interest
rate risk compared to bonds that pay periodic interest.
Web Extension 4B: A Closer Look at TIPS: Treasury Inflation-Protected Securities
Question 19:
What feature distinguishes Treasury Inflation-Protected Securities (TIPS) from regular Treasury bonds?
A. They offer higher yields
B. They are exempt from state and local taxes
C. Their principal is adjusted for inflation
D. They have a shorter maturity period
Answer: C. Their principal is adjusted for inflation
Explanation: TIPS have their principal adjusted based on changes in the Consumer Price Index (CPI),
providing protection against inflation.
PAGE 9
Intermediate Financial Management,
14th Edition Brigham [All Lessons
Included]
Complete Chapter Solution Manual
are Included (Ch.1 to Ch.29)
• Rapid Download
• Quick Turnaround
• Complete Chapters Provided
, Table of Contents are Given Below
"Intermediate Financial Management" (14th Edition) by Eugene F. Brigham and Phillip R. Daves is structured
into several parts, each encompassing chapters that delve into various facets of financial management. The
chapters are organized as follows:
Part I: Fundamental Concepts
1. An Overview of Financial Management
o Web Extension 1A: An Overview of Derivatives
o Web Extension 1B: A Closer Look at the Stock Markets
2. Risk and Return: Part I
o Web Extension 2A: Continuous Probability Distributions
o Web Extension 2B: Estimating Beta with a Financial Calculator
3. Risk and Return: Part II
4. Bond Valuation
o Web Extension 4A: A Closer Look at Zero Coupon Bonds
o Web Extension 4B: A Closer Look at TIPS: Treasury Inflation-Protected Securities
o Web Extension 4C: A Closer Look at Bond Risk: Duration
o Web Extension 4D: The Pure Expectations Theory and Estimation of Forward Rates
5. Financial Options
6. Accounting for Financial Management
o Web Extension 6A: The Federal Income Tax System for Individuals
7. Analysis of Financial Statements
8. Basic Stock Valuation
o Web Extension 8A: Derivation of Valuation Equations
Part II: Corporate Valuation
9. Financial Planning and Forecasting Financial Statements
o Web Extension 9A: Financing Feedbacks
o Web Extension 9B: Advanced Techniques for Forecasting Financial Statement Accounts
PAGE 1
, 10. Corporate Valuation, Value-Based Management, and Corporate Governance
11. Determining the Cost of Capital
• Web Extension 11A: Estimating Growth Rates
• Web Extension 11B: The Cost of Equity in the Nonconstant Dividend Growth Model
Part III: Project Valuation
12. Capital Budgeting: Decision Criteria
• Web Extension 12A: The Accounting Rate of Return (ARR)
13. Capital Budgeting: Estimating Cash Flows and Analyzing Risk
• Web Extension 13A: Replacement Project Analysis
• Web Extension 13B: Certainty Equivalents and Risk-Adjusted Discount Rates
14. Real Options
Part IV: Strategic Financing Decisions
15. Distributions to Shareholders: Dividends and Repurchases
16. Capital Structure Decisions
• Web Extension 16A: Degree of Leverage
17. Dynamic Capital Structures and Corporate Valuation
• Web Extension 17A: Projecting Consistent Debt and Interest Expenses
• Web Extension 17B: Bond Refunding Decisions
Part V: Tactical Financing Decisions
18. Initial Public Offerings, Investment Banking, and Financial Restructuring
• Web Extension 18A: Rights Offerings
19. Lease Financing
• Web Extension 19A: Percentage Cost Analysis
• Web Extension 19B: Leasing Feedback
• Web Extension 19C: Leveraged Leases
20. Hybrid Financing: Preferred Stock, Warrants, and Convertibles
• Web Extension 20A: Calling Convertible Issues
Part VI: Working Capital Management
PAGE 2
, 21. Working Capital Management
• Web Extension 21A: Secured Short-Term Financing
• Web Extension 21B: Supply Chain Finance
22. Cash and Marketable Securities Management
23. Other Topics in Working Capital Management
Part VII: Special Topics
24. Derivatives and Risk Management
• Web Extension 24A: Risk Management with Insurance
25. Bankruptcy, Reorganization, and Liquidation
• Web Extension 25A: Multiple Discriminant Analysis
26. Mergers, LBOs, Divestitures, and Holding Companies
27. Multinational Financial Management
Web Chapters
28. Time Value of Money
• Web Extension 28A: The Tabular Approach
• Web Extension 28B: Derivations of Annuity Formulas
• Web Extension 28C: Continuous Compounding
29. Valuation of Bonds and Stocks
This structure emphasizes a comprehensive understanding of financial management, combining
fundamental principles, corporate valuation, financing strategies, and special topics for real-world
applications. Let me know if you'd like more details on any chapter!
1. An Overview of Financial Management
Question 1:
What is the primary goal of financial management in a corporation?
A. Maximizing sales revenue
B. Minimizing operating costs
C. Maximizing shareholder wealth
D. Ensuring regulatory compliance
Answer: C. Maximizing shareholder wealth
PAGE 3
,Explanation: The primary goal of financial management is to maximize the wealth of the shareholders by
increasing the company's stock price and ensuring long-term profitability.
Question 2:
Which of the following is NOT a function of financial management?
A. Capital budgeting
B. Capital structure management
C. Marketing strategy development
D. Working capital management
Answer: C. Marketing strategy development
Explanation: Financial management focuses on capital budgeting, capital structure, and working capital
management, whereas marketing strategy development is related to the marketing department.
Web Extension 1A: An Overview of Derivatives
Question 3:
Which of the following is a type of derivative?
A. Common stock
B. Corporate bond
C. Futures contract
D. Treasury bill
Answer: C. Futures contract
Explanation: Futures contracts are derivatives because their value is derived from the price of an underlying
asset, such as commodities or financial instruments.
Question 4:
Options give the holder the right, but not the obligation, to:
A. Buy or sell an asset at a predetermined price
B. Participate in corporate earnings
C. Vote in shareholder meetings
D. Receive dividends
Answer: A. Buy or sell an asset at a predetermined price
Explanation: Options are financial derivatives that grant the holder the right, but not the obligation, to buy or
sell an underlying asset at a set price before a certain date.
PAGE 4
,Web Extension 1B: A Closer Look at the Stock Markets
Question 5:
What does the term "liquidity" refer to in the stock market?
A. The ability to quickly buy or sell a stock without affecting its price
B. The total number of shares outstanding
C. The volatility of a stock's price
D. The market capitalization of a company
Answer: A. The ability to quickly buy or sell a stock without affecting its price
Explanation: Liquidity refers to how easily assets can be converted into cash without significantly affecting
their price. High liquidity means a stock can be bought or sold quickly with minimal price impact.
Question 6:
Which stock index is known for tracking 30 large, publicly-owned companies in the United States?
A. NASDAQ
B. S&P 500
C. Dow Jones Industrial Average
D. Russell 2000
Answer: C. Dow Jones Industrial Average
Explanation: The Dow Jones Industrial Average (DJIA) tracks 30 large, publicly-owned companies trading on
the New York Stock Exchange and the NASDAQ.
2. Risk and Return: Part I
Question 7:
What is the relationship between risk and return in financial investments?
A. Inverse relationship
B. No relationship
C. Direct relationship
D. Exponential relationship
Answer: C. Direct relationship
Explanation: Generally, higher risk is associated with the potential for higher returns, and lower risk with
lower potential returns.
PAGE 5
,Question 8:
Which measure is commonly used to assess the risk of an individual investment relative to the market?
A. Alpha
B. Beta
C. Gamma
D. Delta
Answer: B. Beta
Explanation: Beta measures an investment's volatility relative to the overall market. A beta greater than 1
indicates higher volatility than the market, while less than 1 indicates lower volatility.
Web Extension 2A: Continuous Probability Distributions
Question 9:
In finance, which continuous probability distribution is often used to model stock prices?
A. Normal distribution
B. Binomial distribution
C. Poisson distribution
D. Uniform distribution
Answer: A. Normal distribution
Explanation: The normal distribution is frequently used in finance to model the distribution of stock returns,
assuming that returns are symmetrically distributed around the mean.
Question 10:
What is the probability density function of a continuous random variable used for?
A. To calculate the probability of discrete outcomes
B. To describe the likelihood of a continuous random variable taking on a range of values
C. To determine the cumulative probability
D. To find the median of the distribution
Answer: B. To describe the likelihood of a continuous random variable taking on a range of values
Explanation: The probability density function (PDF) describes the likelihood of a continuous random variable
falling within a particular range of values, as opposed to taking on any single exact value.
PAGE 6
,Web Extension 2B: Estimating Beta with a Financial Calculator
Question 11:
Which of the following data is necessary to estimate beta using a financial calculator?
A. Company’s earnings and dividends
B. Historical returns of the stock and the market
C. Current stock price and book value
D. Total assets and liabilities
Answer: B. Historical returns of the stock and the market
Explanation: Estimating beta requires historical return data for both the stock in question and the overall
market to assess the stock's volatility relative to the market.
Question 12:
If a stock has a beta of 1.5, what does this imply about its volatility compared to the market?
A. It is less volatile than the market
B. It has the same volatility as the market
C. It is 1.5 times more volatile than the market
D. It is 1.5% more volatile than the market
Answer: C. It is 1.5 times more volatile than the market
Explanation: A beta of 1.5 indicates that the stock is 1.5 times more volatile than the overall market. If the
market moves by 1%, the stock is expected to move by 1.5% on average.
3. Risk and Return: Part II
Question 13:
Which portfolio theory emphasizes diversification to reduce unsystematic risk?
A. Capital Asset Pricing Model (CAPM)
B. Modern Portfolio Theory (MPT)
C. Arbitrage Pricing Theory (APT)
D. Efficient Market Hypothesis (EMH)
Answer: B. Modern Portfolio Theory (MPT)
Explanation: Modern Portfolio Theory advocates for diversification across various assets to minimize
unsystematic risk, which is the risk specific to individual investments.
PAGE 7
,Question 14:
What is the expected return of a risk-free asset?
A. Zero percent
B. Equal to the risk premium
C. Positive and certain
D. Equal to the market return
Answer: C. Positive and certain
Explanation: A risk-free asset is expected to provide a positive return with certainty, as it is free from default
risk. Examples include government treasury bills.
4. Bond Valuation
Question 15:
What is the present value of a bond?
A. The sum of its future cash flows discounted at the required rate of return
B. Its face value
C. The total interest it will pay over its lifetime
D. The market price divided by its par value
Answer: A. The sum of its future cash flows discounted at the required rate of return
Explanation: The present value of a bond is calculated by discounting all future coupon payments and the face
value repayment at the bond’s required rate of return.
Question 16:
Which type of bond does not pay periodic interest and is issued at a discount to its face value?
A. Callable bond
B. Convertible bond
C. Zero-coupon bond
D. Floating-rate bond
Answer: C. Zero-coupon bond
Explanation: Zero-coupon bonds do not pay periodic interest. Instead, they are sold at a discount and redeemed
at face value at maturity, with the difference representing the interest earned.
PAGE 8
, Web Extension 4A: A Closer Look at Zero Coupon Bonds
Question 17:
How does a zero-coupon bond generate a return for investors?
A. Through periodic interest payments
B. By increasing in price over time
C. By paying dividends
D. By being convertible into stock
Answer: B. By increasing in price over time
Explanation: Zero-coupon bonds are issued at a discount and mature at face value. The return comes from the
difference between the purchase price and the face value received at maturity.
Question 18:
Which of the following is a characteristic of zero-coupon bonds?
A. High current income
B. Interest rate risk
C. Callable feature
D. Variable interest rates
Answer: B. Interest rate risk
Explanation: Zero-coupon bonds are more sensitive to interest rate changes, meaning they have higher interest
rate risk compared to bonds that pay periodic interest.
Web Extension 4B: A Closer Look at TIPS: Treasury Inflation-Protected Securities
Question 19:
What feature distinguishes Treasury Inflation-Protected Securities (TIPS) from regular Treasury bonds?
A. They offer higher yields
B. They are exempt from state and local taxes
C. Their principal is adjusted for inflation
D. They have a shorter maturity period
Answer: C. Their principal is adjusted for inflation
Explanation: TIPS have their principal adjusted based on changes in the Consumer Price Index (CPI),
providing protection against inflation.
PAGE 9
