Fin Midterm 2

Fin Midterm 2 - FI 3716- Fall 2010 MIDTERM 2 SOLUTIO Name _...

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FI&3716- Fall 2010 MIDTERM 2 SOLUTIO& Name ________________________________________________ Section____________ Time: 75 Min Total Point: 68 Work on this exam is to be yours alone. Any discussion of either the questions or your answers with anyone other than your instructor will be considered as cheating and, thus, as a violation of the LSU honor code. For Multiple Choice questions, circle the letter/s of the correct multiple-choice answer. You have to show your work to receive partial credit ( if applicable and when possible ) for the answer. Your answers must be and your work “ ”. Multiple Choice Questions (Each question 4 points) 1. The internal growth rate of a firm is best described as the: A. minimum growth rate achievable assuming a 100 percent retention ratio. B. minimum growth rate achievable if the firm maintains a constant equity multiplier. C. maximum growth rate achievable excluding external financing of any kind. D. maximum growth rate achievable excluding any external equity financing while maintaining a constant debt-equity ratio. E. maximum growth rate achievable with unlimited debt financing. 2. A firm is operating at 90 percent of capacity. This information primarily affects which one of the following accounts when compiling pro forma statements? A. sales B. costs of goods sold C. accounts receivable D. fixed assets E. long-term debt 3. Mary just purchased a bond which pays $60 a year in interest. What is this $60 called? A. coupon B. face value C. discount D. call premium E. yield 4. Which one of the following terms is used to describe a loan wherein each payment is equal in amount and includes both interest and principal? A. amortized loan B. modified loan C. balloon loan D. pure discount loan E. interest-only loan
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5. You can deposit your savings at LSU Bank, which offers to pay 13.6 percent interest compounded quarterly, or at Region Bank, which will pay interest of 13.4 percent compounded daily (Assume 360 days in a year.). With this information, which bank offer should you choose? A.
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This note was uploaded on 05/10/2011 for the course FIN 3716 taught by Professor Fang during the Spring '10 term at LSU.

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Fin Midterm 2 - FI 3716- Fall 2010 MIDTERM 2 SOLUTIO Name _...

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