FIN 571 Final Exam 1


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FIN 571 Final Exam

  1. All else equal, the contribution margin must increase as:​
  2. Ratios that measure a firm’s ability to pay its bills over the short run without undue stress are known as:​
  3. An interest rate that is compounded monthly, but is expressed as if the rate were compounded annually, is called the _____ rate.​
  4. The market price of a bond increases when the:​
  5. The underlying assumption of the dividend growth model is that a stock is worth:​
  6. Which one of the following statements about preferred stock is true?
  7. The cash flow resulting from a firm’s ongoing, normal business activities is referred to as the:​
  8. You plan to invest $6,500 for three years at 4 percent simple interest. What will your investment be worth at the end of the three years?
  9. The primary goal of financial management is to:
  10. Under the ____________ method, the underwriter buys the securities for less than the offering price and accepts the risk of not selling the issue, while under the ________ method, the underwriter does not purchase the shares but merely acts as an agent.
  11. Book Value:
  12. One disadvantage of the corporate form of business ownership is the:
  13. Which of the following is an example of a nondiversifiable risk?
  14. The costs of avoiding a bankruptcy filing by a financially distressed firm are classified as
  15. What is the present value of $6,811 to be … one year if the discount rate is 6.5 percent?
  16. Which one of these statements is correct concerning the cash cycle?
  17. Lois is purchasing an annuity that will pay $5,000 annually for 20 years, with the first annuity payment made on the date of purchase. What is the value of the annuity on the purchase date ….a discount rate of 7 percent?​
  18. All else held constant, interest rate risk will increase when the time to maturity:
  19. The process of planning and managing a firm’s long-term assets is …
  20. Which one of these is a correct definition?
  21. An efficient capital market is one in which:
  22. Which term defines the tax rate that applies to the next dollar of taxable income earned?
  23. Which one of the following statements is false?
  24. The discount rate that makes the net present value of an investment exactly equal to zero is ….
  25. Futures contracts contrast with forward contracts by
  26. The higher the inventory turnover, the:
  27. A firm has a debt-equity ratio of .64, a pretax cost of 8.5%, and a required return on assets of 12.6%. What is the cost of equity if you ignore taxes?
  28. The excess return you earn by moving from a relatively risk-free investment to a risky investment is …..:
  29. A project has an initial cost of $2,250. The cash inflows are $0, $500, $900, and $700 for years 1-4, respectively. What is the payback period?
  30. A firm has a total debt ratio for .47. This means that the firm has 47 cents in debt for every: