2008_F_F3250_Exam_1_Key

2008_F_F3250_Exam_1_Key - Fall 2008 FIN 3250 Exam 1 Dr...

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Fall 2008 FIN 3250 Exam 1 Dr. Tufte Part 1: Conceptual Questions (no partial credit) Chapter 1 1. When considering a capital budgeting project the financial manager should consider the: I. Size of the project II. Timing of the project’s cash flows III. Risk associated with the project’s cash flows a. I only b. II only c. I and III only d. II and III only e. I, I I, and I I I 2. Which of the following are advantages of the corporate form of business ownership? I. limited liability for firm debt II. double taxation III. ability to raise capital IV. unlimited firm life a. I and II only b .III and IV only c. I, II, and III only d. II, III, and IV only e. I, I I I, and IV only 3. A firm which opts to “go dark” in response to the Sarbanes-Oxley Act: 1
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Fall 2008 FIN 3250 Exam 1 Dr. Tufte a. must continue to provide audited financial statements which have been signed by the corporate officers. b. must continue to provide a detailed list of internal control deficiencies on an annual basis. c. can, and mostly likely will, provide less information to its shareholders than if did prior to the act. d. can continue trading their stock on the stock exchanges. e. will rarely experience any resulting change in the price of their stock. 4. 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 2
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Fall 2008 FIN 3250 Exam 1 Dr. Tufte 5. Which of the following represent cash outflows from a firm? I. issuance of securities II. payment of dividends III. new loan proceeds IV. payment of government taxes a. I and III only b. I I and IV only c. I and IV only d. I, and II, and IV only e. II, III, and IV only Chapter 2 6. Liquidity is: a. equal to net working capital b. another term for current assets c. equal to the market value of a firm’s total assets minus its current liabilities d. valuable to a firm even though holding liquid assets is not very profitable. e. generally associated with intangible assets.
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This note was uploaded on 04/22/2011 for the course QET 112 taught by Professor Hong during the Spring '11 term at Abu Dhabi University.

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2008_F_F3250_Exam_1_Key - Fall 2008 FIN 3250 Exam 1 Dr...

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