quiz-ch27 - Questions in[New Questions 1 Roadside...

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Sheet1 Page 1 Questions in [New Questions] 1) Roadside Restaurants has a fixed cost of selling securities of $1,100. The firm requires $2.62 million a year for transaction v [ ] $22,135 [ ] $24,318 [ ] $28,909 [ ] $29,911 [ ] $36,548 2) Bledsloe Development has a fixed cost of selling securities of $1,100. Currently, the interest rate on marketable securities h [ ] $867,548 [ ] $922,063 v [ ] $1,024,822 [ ] $1,219,407 [ ] $1,455,045 3) Firms that invest in marketable securities on a temporary basis normally invest in securities that mature in: [ ] 7 days or less. [ ] 30 days or less. [ ] 45 days or less. [ ] 60 days or less. v [ ] 90 days or less. 4) Which one of the following statements is correct regarding investment vehicles used for investing excess funds on a short-t [ ] The level of default risk is irrelevant since the investment is only for the short-term. [ ] The taxability of the income earned on the investment vehicle has no effect on the return earned on a short-term basis. [ ] The longer the maturity, the more appropriate the investment. [ ] All short-term investment vehicles are unaffected by interest rate risk. v [ ] The investment vehicle should be highly marketable. 5) Wendel Painting Supply has set the minimum safety level of cash at $20,000. The estimated standard deviation of the daily [ ] $64,509 [ ] $67,118 v [ ] $84,369 [ ] $87,439 [ ] $90,251 6) The Baumol model: [ ] assumes that cash disbursements increase at a constant rate over time. v [ ] assumes that cash is spent at a constant rate. [ ] includes a safety stock of cash and thus limits the total cash available on a daily basis. [ ] assumes that all cash receipts occur on the first day of each month. [ ] assumes that all cash receipts occur on the last day of each quarter. 7) Greater Erie Stores makes a bank deposit on Friday evening which includes all of the checks the store received that day fro [ ] net float [ ] mail float v [ ] availability float [ ] processing float [ ] disbursement float 8) Western Turf has an average collection delay of 2.2 days and average daily receipts of $284,050. The firm's cost of debt ca
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Sheet1 Page 2 [ ] $25,564.50 [ ] $56,241.90 [ ] $84,362.85 [ ] $142,025.00 v [ ] $284,050.00 9) Pine River Lodge receives an average of 148 checks per day with an average check amount of $319. On average, the firm [ ] -$116,788 [ ] -$87,247 [ ] -$28,409 [ ] $87,247 v [ ] $116,788 10) British Import Cars requires $3.68 million a year for transaction costs. The fixed cost of selling securities is $840 and the in [ ] $236,409 [ ] $244,021 [ ] $269,318 [ ] $277,609 v [ ] $285,215 11) Cold River Fisheries collects an average of 63 checks per day with an average check amount of $6,492. On average, the [ ] -$860,382 [ ] -$411,909 [ ] $138,414 v [ ] $537,676 [ ] $638,778 12) The present value of eliminating float is equal to the amount of: [ ] mail float. [ ] processing float. [ ] availability float. [ ] one day's float. v [ ] total float. 13) Which of the following are transaction reasons for holding cash? I. compensating banks by maintaining specified minimum cash balances at the bank II. paying dividends to shareholders of the firm III. issuing paychecks to employees of the firm IV. submitting taxes to the government based on the firm's taxable income [ ] I and III only [ ] II and IV only v [ ] II, III, and IV only [ ] I, III, and IV only [ ] I, II, III, and IV 14) A firm has an initial cash balance of $248,000 and replenishes that balance every three weeks. The interest rate on marke [ ] $8,267 [ ] $24,800 [ ] $62,000 [ ] $82,667 v [ ] $124,000
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Sheet1 Page 3 15) Hughes Supply has set the minimum safety level of cash at $10,000. The estimated standard deviation of the daily cash fl
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