Midter-BUAD-6200-SAMPLE Midterm-2008

Midter-BUAD-6200-SAMPLE Midterm-2008 - The UNIVERSITY OF...

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The UNIVERSITY OF TOLEDO College of Business Administration BUAD-6200-002– Financial Systems Fall 2008 SAMPLE MIDTERM (with Solution!) Midterm October 15, 2008 You must attempt to solve all the questions. Please do not leave a question unanswered, for I want to give you partial credit. You must also show your work! Without clearly indicating how you reached to the solution, you will NOT get much credit. Q-1. (4 pts) Which one of the following is a primary market transaction? a. a dealer selling shares of stock to an individual investor b. a dealer buying newly issued shares of stock from a corporation c. an individual investor selling shares of stock to another individual d. a bank selling shares of a medical firm to an individual e. a sole proprietor buying shares of stock from an individual investor Q-2. (4 pts) Which one of the following actions by a financial manager creates an agency problem? a. refusing to borrow money when doing so will create losses for the firm b. refusing to lower selling prices if doing so will reduce the net profits c. agreeing to expand the company at the expense of stockholders’ value d. agreeing to pay bonuses based on the market value of the company stock e. increasing current costs in order to increase the market value of the stockholders’ equity Q-3. (4 pts) If a project has a net present value equal to zero, then: I. the present value of the cash inflows exceeds the initial cost of the project. II. the project produces a rate of return that just equals the rate required to accept the project. III. the project is expected to produce only the minimally required cash inflows. IV. any delay in receiving the projected cash inflows will cause the project to have a negative net present value. a. II and III only b. II and IV only c. I, II, and IV only d. II, III, and IV only e. I, II, and III only 1
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Q-4. (6 pts) The following information to solve the problem Nabors, Inc. 2006 Income Statement
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This note was uploaded on 02/09/2010 for the course FINANCE MGT337 taught by Professor Huggins during the Spring '08 term at University of Toronto- Toronto.

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Midter-BUAD-6200-SAMPLE Midterm-2008 - The UNIVERSITY OF...

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