Exam1 FIN370 A Key (1)

# Exam1 FIN370 A Key (1) - Exam1 FIN370-02 Winter 2011 Key...

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Exam1 FIN370-02 Winter 2011 Key Version A 1. Limited liability companies are primarily designed to: I. be taxed like a partnership. II. be taxed like a corporation. III. operate like a corporation. IV. provide limited liability for the owners. A. I and III only B. II and III only C. I and IV only D. II and IV only E. IV only BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 001 #35 SECTION: 1.3 TOPIC: LIMITED LIABILITY COMPANY TYPE: CONCEPTS 2. Hilltop, Inc. earns \$.12 in profit on every \$1 of sales. The firm pays out 55 percent of its profits to its shareholders. The firm has \$.75 in assets for every \$1 of sales. What is the internal growth rate? A. 8.80 percent B. 9.12 percent C. 6.37 percent D. 9.65 percent E. 7.76 percent BLOOMS TAXONOMY QUESTION TYPE: ANALYSIS LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: CHALLENGE Ross - Chapter 003 #100 SECTION: 3.4 TOPIC: INTERNAL GROWTH RATE TYPE: PROBLEMS

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3. An increase in which of the following will increase the future value of a lump sum investment made today assuming that all interest is reinvested? Assume the interest rate is a positive value. I. interest rate II. amount of the lump sum III. frequency of the interest payments IV. length of the investment period A. I and III only B. I, II, and IV only C. II and IV only D. II, III, and IV only E. I, II, III, and IV BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 004 #17 SECTION: 4.1 TOPIC: FUTURE VALUE TYPE: CONCEPTS 4. Anderson Enterprises currently has \$400 in cash. The company owes \$1,200 to suppliers for merchandise and \$4,500 to the bank for a long-term loan. Customers owe Anderson's \$1,900. The inventory has a book value of \$3,700 and an estimated market value of \$4,400. If Anderson's compiled a financial statement today, how much would it show as the value of the current assets? A. \$6,000 B. \$6,700 C. \$6,300 D. \$5,600 E. \$5,200 BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEVEL OF DIFFICULTY: BASIC Ross - Chapter 002 #55 SECTION: 2.1 TOPIC: CURRENT ASSETS TYPE: PROBLEMS 5. The process of adding the interest earned on an investment to the original investment in order to earn more interest is called: A. discounting. B. indexing. C. compounding. D. duplicating. E. multiplying. BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #2 SECTION: 4.1 TOPIC: COMPOUNDING TYPE: DEFINITIONS
6. Which one of the following statements is correct concerning market and book values? A. Market values must be greater than or equal to book values. B. Market values are more predictable than book values. C.

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Exam1 FIN370 A Key (1) - Exam1 FIN370-02 Winter 2011 Key...

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