SampleFinal(Spring11)finance 320

SampleFinal(Spring11)finance 320 - Sample Copy of the...

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Sample Copy of the Fin320 Department Final Exam Student Name ________________________ Student ID# _________________________ 50 Questions - 2 Points Each 1. Which of the following factors tend to encourage management to pursue stock price maximization as a goal? a. shareholders link management's compensation to company performance b. managers' reactions to the threats of firing and takeover c. managers do not have goals other than stock price maximization d. statements a and b are both correct e. statements a, b, and c are all correct 2. Capital market instruments include a. negotiable certificates of deposit b. corporate equities c. commercial paper d. treasury bills 3. Activities of the investment banker include 4. Savings are generally transferred to the business firms by 5. The agency problem arises due to the separation of ownership and control in a firm. 6. Kingsbury Associate's current assets are as follows: Cash $3,000 Accounts Receivable $4,500 Inventories $8,000 If Kingsbury has a current ratio of 3.2, what is its quick ratio? a. 2.07 b. l.55 c. 0.48 d. none of the above
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7. The debt ratio is a measure of a firm's 8. You just purchased a parcel of land for $10,000. If you expect a 14% annual rate of return on your investment, how much will you sell the land for in 10 years? 9. An IPO (Initial Public Offering) is an example of secondary market transaction. 10. Market risk refers to the tendency of a stock to move with the general stock market. A stock with above-average market risk will tend to be more volatile than an average stock and it will also have a beta which is greater than 1.0. a. True b. False 11. Bobby's grandmother deposited $100 in a savings account for him when he was born. The money has been earning an annual rate of 12% interest, compounded quarterly for the last 25 years. He is getting married and would like to take his new bride on a fabulous honeymoon. How much does he have in this account to use? 12. Choose the most correct answer for the following: (1) Which is the measure of risk for choosing an asset which is to be held in isolation? (2) Which is the measure of risk for choosing an asset to be held as part of a well- diversified portfolio?
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