VoyForums
[ Show ]
Support VoyForums
[ Shrink ]
VoyForums Announcement: Programming and providing support for this service has been a labor of love since 1997. We are one of the few services online who values our users' privacy, and have never sold your information. We have even fought hard to defend your privacy in legal cases; however, we've done it with almost no financial support -- paying out of pocket to continue providing the service. Due to the issues imposed on us by advertisers, we also stopped hosting most ads on the forums many years ago. We hope you appreciate our efforts.

Show your support by donating any amount. (Note: We are still technically a for-profit company, so your contribution is not tax-deductible.) PayPal Acct: Feedback:

Donate to VoyForums (PayPal):

[ Login ] [ Contact Forum Admin ] [ Main index ] [ Post a new message ] [ Search | Check update time | Archives: [1], 2, 3 ]

[ Next Thread | Previous Thread | Next Message | Previous Message ]

Date Posted: 23:30:06 04/28/07 Sat
Author: audra
Subject: Re: A sample quiz with most questions related to chapters 4 and 14

>Some quiz questions from chapters 3, 4, and 14. The
>online class is only can expect questions from
>chapters 4 and 14 only. Post your answers, I will
>correct any errors.
>
>NAME __Audra __________________________________
>
>INSTRUCTIONS:
>
>* Be sure to put your name on the test and your
>Homework problems and questions.
>* Please read the instructions for each question type
>and mark or record your answer as instructed.
>* If a question follows a the multiple choice or
>true-false question, give a brief answer. Each of the
>short answer questions following a question are worth
>4 points.
>* If you don't understand a question, ask me to
>explain it. If you need assumptions to answer a
>question, write your assumptions near the question.
>
>MULTIPLE CHOICE QUESTION INSTRUCTIONS
>
>* Choose the single best answer.
>* Each question is worth 3 points.
>
>&*( 4. The New York Stock Exchange is primarily
> a. A secondary market.
> b. An organized auction market.
> c. An over-the-counter market.
> d. Answers a and b above are both correct.
> e. Answers b and c above are both correct.
>
>&*( SA2 - What are the differences between money
>markets and capital markets?
>
>
>
>
>
>&*( 5. In a recent year, interest rates on
>long-term government and corporate
> bonds were as follows:
> T-bond = 6.2% A = 7.9%
> AAA = 7.2% BBB = 8.5%
>
> The differences in rates among these issues were
>caused primarily by
> a. Tax effects.
> b. Default risk differences.
> c. Maturity risk differences.
> d. Inflation differences.
> e. Answers b and d are both correct.
>
>&*( 6. Which of the following statements is most
>correct?
> a. The maturity premiums embedded in the
>interest rates on U.S. Treasury securities are due
>primarily to the fact that the probability of default
>is higher on long-term bonds than on short-term bonds.
> b. Reinvestment rate risk is lower, other things
>held constant, on long-term than on short-term bonds.
> c. According to the market segmentation theory
>of the term structure of interest rates, we should
>normally expect the yield curve to slope downward.
> d. The expectations theory of the term structure
>of interest rates states that borrowers generally
>prefer to borrow on a long-term basis while savers
>generally prefer to lend on a short-term basis, and
>that as a result, the yield curve is normally upward
>sloping.
> e. If the maturity risk premium was zero and the
>rate of inflation was expected to decrease in the
>future, then the yield curve for U.S. Treasury
>securities would, other things held constant, have an
>upward slope.
>
>&*( SA4 - Define financial intermediary. Give an
>example of one.
>
>
>
>
>
>
>10. Taxes, payment patterns, and reporting
>considerations, as well as credit sales and non-cash
>costs, are reasons why operating cash flows can differ
>from accounting profits.
> a. True b. False
>
>&*( 12. The secondary market is defined as the market
>for securities of the largest firms.
> a. True b. False
>
>PROBLEM INSTRUCTIONS
>
>* Show all work.
>* Be sure to label each section of the answer.
>* Use the back of the test if you need more room.
>* This portion of the exam is open book, open notes.
>
>&*( 1. (3 points) Given the following data, find
>the expected rate of inflation during
> the next year.
>
> k * = real risk-free rate = 2.5%.
> Maturity risk premium on 10-year T-bonds = 2%.
>It is zero on 1-year
> bonds, and a linear relationship exists.
> Default risk premium on 10-year, A-rated bonds =
>1.5%.
> Liquidity premium = 0%.
> Going interest rate on 1-year T-bonds = 8.5%.
>
>3. The 1995 annual balance sheet and income statement
>for Becker, Beaker & Becker is
> presented below.
> BALANCE SHEET (000)
> Cash $ 2,500
> Accounts receivable $1,500
> Inventories $ 500
> Current assets $ 4,500
> Net fixed assets $ 5,000
> Total Assets $ 9,500
> Accounts payable $ 1,200
> Bank note $ 2,300
> Total current liabilities $ 3,500
> Long term debt $ 4,000
> Common stock $ 300
> Retained earnings $ 1,700
> Total liabilities and owner's equity $ 7,500
>
> INCOME STATEMENT (000)
> Net sales (all credit) $ 11,500
> Cost of goods sold (3,400)
> Gross profit $ 8,100
> Operating expenses (3,900)
> Net operating income $ 4,200
> Interest expense (1,980)
> Earnings before taxes $ 2,220
> Income tax (34%) (755)
> Net income $ 1,465
>(10 points) Compute the following ratios:
> Current ratio
>
> Acid test ratio
>
> Debt ratio
>
> Fixed asset turnover
>
> Basic Earnings Power
>
> Return on Total Assets
>
> Net profit margin
>
> Times interest earned
>
> Inventory turnover
>
> Return on Common Equity
>
> 3. All of the following represent cash outflows to
>the firm except
>a. Taxes.
>b. Interest payments.
>c. Dividends.
>d. Purchase of plant and equipment.
>e. Depreciation.
>
> 5. Recently the M&M Company has been having
>problems. As a result, its financial situation has
>deteriorated. M&M approached the First National Bank
>for a badly needed loan, but the loan officer insisted
>that the current ratio (now 0.5) be improved to at
>least 0.8 before the bank would even consider granting
>the credit. Which of the following actions would do
>the most to improve the ratio in the short run?
>a. Using some cash to pay off some current liabilities.
>b. Collecting some of the current accounts receivable.
>c. Paying off some long-term debt.
>d. Selling some of the existing inventory at cost.
>e. Purchasing additional inventory on credit (accounts
>payable).
>
>&*( 7. The constant ratio method of forecasting is
>based on which of the following assumptions?
>a. All balance sheet accounts are tied directly to
>sales.
>b. Most balance sheet accounts are tied directly to
>sales.
>c. The current level of total assets are optimal for
>the current sales level.
>d. Answers a and c above.
>e. Answers b and c above.
>
>&*( 9. The constant ratio forecasting method
>produces accurate results unless which of the
>following condition(s) is (are) present?
>a. Fixed assets are "lumpy."
>b. Strong economies of scale are present.
>c. Excess capacity exists because of a temporary
>recession.
>d. Answers a, b, and c all make the projected balance
>sheet method inaccurate.
>e. Answers a and c make the projected balance sheet
>method inaccurate, but, as the text explains, the
>assumption of increasing economies of scale is built
>into the projected balance sheet method.
>
>&*( 10. Which of the following statements is most
>correct?
>a. If the capital intensity ratio is high, this
>permits sales to grow more rapidly without much
>outside capital.
>b. The lower the profit margin, the lower the
>additional funds needed because less assets are needed
>to support existing sales.
>c. When positive economies of scale are present,
>linear balance sheet relationships no longer hold. As
>sales increase, a proportionately greater stock of
>assets is required to support the higher sales level.
>d. Technological considerations often require firms to
>add fixed assets in large, discrete units. Such
>assets are called lumpy assets and they affect the
>firm's financial requirements through the fixed
>assets/sales ratio at different sales levels.
>e. The projected balance sheet method accounts for
>changing balance sheet ratios and thus, cyclical
>changes in the actual sales/assets ratio do not have
>an impact on financing requirements.
>
>13. An increase in an asset account is a source of
>cash, whereas an increase in a liability account is a
>use of cash.
>a. True
>b. False

[ Next Thread | Previous Thread | Next Message | Previous Message ]
[ Contact Forum Admin ]

Forum timezone: GMT-8
VF Version: 3.00b, ConfDB:
Before posting please read our privacy policy.
VoyForums(tm) is a Free Service from Voyager Info-Systems.
Copyright © 1998-2019 Voyager Info-Systems. All Rights Reserved.