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NAME: _______________________________
BSAD 180: Managerial Finance
Midterm Exam
I. Multiple Choices (40%)
(
b)
1.
The primary goal of financial management is to:
a.
maximize current dividends per share of the existing stock.
b.
maximize the current value per share of the existing stock.
c.
avoid financial distress.
d.
minimize operational costs and maximize firm efficiency.
e.
maintain steady growth in both sales and net earnings.
(
c
)
2.
The interest rate expressed as if it were compounded once per year is called the _____
rate.
a. stated interest
b. compound interest
c. effective annual
d. periodic interest
e. daily interest
(
b
)
3.
You are comparing two investment options. The cost to invest in either option is the same
today. Both options will provide you with $20,000 of income. Option A pays five annual
payments starting with $8,000 the first year followed by four annual payments of $3,000 each.
Option B pays five annual payments of $4,000 each. Which one of the following statements is
correct given these two investment options?
a.
Both options are of equal value given that they both provide $20,000 of income.
b.
Option A is the better choice of the two given any positive rate of return.
c.
Option B has a higher present value than option A given a positive rate of return.
d.
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This note was uploaded on 12/13/2009 for the course MBA 816 taught by Professor Terry during the Spring '09 term at Fort Hays.
 Spring '09
 Terry
 Finance, Management, Dividends, Corporate Finance

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