D076 OA QUESTIONS AND CORRECT
ANSWERS 100% PASS
\Q\.What does the term legal describe?
Encourage manipulation of accounting procedures to optimize the company's profit
Release managers who do not attempt to maximize immediate shareholder value
Set strict covenants that the company cannot uphold if it chooses a risky project
An action that is in accordance with the laws and rules set by an authority. - ANSWERS✔-An
action that is in accordance with the laws and rules set by an authority.
\Q\.What does high inventory turnover relative to the industry and competitors indicate?
Models are required by the SEC when a firm plans to issue additional stock on the public
market.
The firm holds too much inventory and its successful selling its good and services.
Models allow users to see the complex relationships between sales and other aspects of the
business.
The firm does not hold enough inventory and is making its customers wait longer to receive
their purchased goods. - ANSWERS✔-The firm does not hold enough inventory and is making its
customers wait longer to receive their purchased goods.
\Q\.What is the ratio that tells you on average how long it takes for a firm to collect accounts
receivable.
Average Benchmarking
,Opportunity cost
Average collection period
Leading indicator - ANSWERS✔-Average collection period
\Q\.Three different names are used for interest rate for different purposes and perspectives:
Discount rate, required rate, and cost of capital.
Required rate, correlated indicator, opportunity cost
Cost of capital, interest rate, and renew rate
required rate, discount method, cost of interest - ANSWERS✔-Discount rate, required rate, and
cost of capital.
\Q\.What is the main purpose of charging interest?
interest can be a good tool because it summarizes the required return, but it is a detriment
because it requires a larger cost of capital.
The higher risk an investor takes, the higher return the investor expects to receive.
Compounding interest can be a good tool to understand the time value of money, but it is a
detriment because it does not take inflation into account.
It allows borrowers to pay to use the assets of another entity to accomplish their own goals. -
ANSWERS✔-It allows borrowers to pay to use the assets of another entity to accomplish their
own goals.
\Q\.The required rate of return is also known as the BLANK in the context of corporate finance.
Inflation
Hurdle rate
, Opportunity cost
Risk - ANSWERS✔-Hurdle rate.
\Q\.The BLANK is the rate of return or compensation that an investor or lender will accept for
investments such as stocks, bonds, or loans.
Hurdle rate
Inflation
Opportunity cost
Required rate of return - ANSWERS✔-Required rate of return
\Q\.BLANK Is the possibility that the realized or actual return will differ from the expected
return?
Hurdle rate.
Inflation
Opportunity cost
Risk - ANSWERS✔-Risk
\Q\.Which components of an interest rate is an indicator of inflation and opportunity cost?
Capital growth rate
Risk-free rate
Sustainable growth rate
Sales growth rate - ANSWERS✔-Risk-free rate
ANSWERS 100% PASS
\Q\.What does the term legal describe?
Encourage manipulation of accounting procedures to optimize the company's profit
Release managers who do not attempt to maximize immediate shareholder value
Set strict covenants that the company cannot uphold if it chooses a risky project
An action that is in accordance with the laws and rules set by an authority. - ANSWERS✔-An
action that is in accordance with the laws and rules set by an authority.
\Q\.What does high inventory turnover relative to the industry and competitors indicate?
Models are required by the SEC when a firm plans to issue additional stock on the public
market.
The firm holds too much inventory and its successful selling its good and services.
Models allow users to see the complex relationships between sales and other aspects of the
business.
The firm does not hold enough inventory and is making its customers wait longer to receive
their purchased goods. - ANSWERS✔-The firm does not hold enough inventory and is making its
customers wait longer to receive their purchased goods.
\Q\.What is the ratio that tells you on average how long it takes for a firm to collect accounts
receivable.
Average Benchmarking
,Opportunity cost
Average collection period
Leading indicator - ANSWERS✔-Average collection period
\Q\.Three different names are used for interest rate for different purposes and perspectives:
Discount rate, required rate, and cost of capital.
Required rate, correlated indicator, opportunity cost
Cost of capital, interest rate, and renew rate
required rate, discount method, cost of interest - ANSWERS✔-Discount rate, required rate, and
cost of capital.
\Q\.What is the main purpose of charging interest?
interest can be a good tool because it summarizes the required return, but it is a detriment
because it requires a larger cost of capital.
The higher risk an investor takes, the higher return the investor expects to receive.
Compounding interest can be a good tool to understand the time value of money, but it is a
detriment because it does not take inflation into account.
It allows borrowers to pay to use the assets of another entity to accomplish their own goals. -
ANSWERS✔-It allows borrowers to pay to use the assets of another entity to accomplish their
own goals.
\Q\.The required rate of return is also known as the BLANK in the context of corporate finance.
Inflation
Hurdle rate
, Opportunity cost
Risk - ANSWERS✔-Hurdle rate.
\Q\.The BLANK is the rate of return or compensation that an investor or lender will accept for
investments such as stocks, bonds, or loans.
Hurdle rate
Inflation
Opportunity cost
Required rate of return - ANSWERS✔-Required rate of return
\Q\.BLANK Is the possibility that the realized or actual return will differ from the expected
return?
Hurdle rate.
Inflation
Opportunity cost
Risk - ANSWERS✔-Risk
\Q\.Which components of an interest rate is an indicator of inflation and opportunity cost?
Capital growth rate
Risk-free rate
Sustainable growth rate
Sales growth rate - ANSWERS✔-Risk-free rate
