are171a-sample-final-key

are171a-sample-final-key - ARE 171a ) NAME: _ This exam has...

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ARE 171a ) NAME: _ This exam has two sections. Section A consists of 13 multiple choice questions worth 10 points each, for a total of 130 points. Section B is made up of8 short problems, worth 40 points each, for a total of 320 possible points. Total points possible on this exam = 450. Show your work in section B; partial credit is given for correct approach. t\lok W'€ etJ~i CVVL VlI\u.J(QJ Lvrt~ X
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Section A. (10 pts. eacb) )( 1. ThemanagementofStormguardWindows has adopted a conservative working capital policy. What does this imply? a. The firm maintains high levelsofcurrent assets and current liabilities relativeto industry averages. b. The firm maintains low levels ofcurrent assets and current liabilities relativeto industry averages. ® The firm maintains a high level ofcurrent assets and a low level ofcurrent liabilities relative to industry averages. d. The finn maintains a low level ofcurrent assets and a high level ofcurrent liabilities relative to industry averages. 2. Daphne is a California resident. She is in the 28% Federal income tax bracket, and the 9.5% CA state income tax bracket. Which ofthe newly issued bonds below will provide her with the highest after-tax yield? (Assume all these bonds are selling at par value). ~ A corporate bond with a coupon rate of 6%. 1>. A US Treasury bond with a coupon rate of4.14%. <:,. A City of Fresno municipal bond with a coupon rate of3.0 %. ~. These bonds' after-tax yields are approximately equal. )(3. QwickyMartCorporationkeeps onlya smallamountofcasbonhandateachofitsoutlets. What could explain this corporate policy? .. ,, a. The firm believes its stores are likely to be robbed. ..l The firm earns a high interest rate on its bank deposits. ~ Either a or b could explain this policy e. Neither a nor b is consistent with this policy. X. 4. What is the likely impact ofthe new federal law known as "Check 21 "? a. Increase the float time between when a check is written. and when the funds are withdrawn from the consumer's account. b. Increase the "bold time" between when a customer deposits funds in his or her account, and when these funds become available for withdrawal. (C') Cause layoffs in the air cargo industry. (( Allofthe above. e. None ofthe above. 5. Cantrell Industries has 2 million shares of stock outstanding. Currently, the stock sells for $l0/share. The firm's book value is $14 million, and its liquidation value is $18 million. What do you conclude? Ii) The firm is viewed by investors as a going concern. ". The:firm should be liquidated. c. The firm is overvalued in the market, and investors should sell their shares. d. The:firm is undervalued in the market, and investors should buy more shares.
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are171a-sample-final-key - ARE 171a ) NAME: _ This exam has...

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