Exam1 FIN370 B Key (2)

Exam1 FIN370 B Key (2) - Exam1 FIN370-02 Winter 2011 Key...

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Exam1 FIN370-02 Winter 2011 Key Version B 1. An agency problem is prone to exist in public corporations because: A. of the size of the operations. B. managers tend to be long-term employees. C. some owners are also company employees. D. operations are frequently spread over various geographic locations. E. management is frequently separated from ownership. BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 001 #44 SECTION: 1.5 TOPIC: AGENCY PROBLEM TYPE: CONCEPTS 2. Larson, Inc. has total assets of $248,000 and an equity multiplier of 2.5. What is the debt-equity ratio? A. .40 B. 2.5 C. .67 D. 3.5 E. 1.5 BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 003 #52 SECTION: 3.2 TOPIC: DEBT-EQUITY RATIO TYPE: PROBLEMS
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3. Kate wants to invest $1,000 for five years. Which one of the following will provide her with the largest future value? A. 7 percent simple interest B. 7 percent interest, compounded monthly C. 6 percent interest, compounded annually D. 6 percent interest, compounded monthly E. 6 percent simple interest BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #11 SECTION: 4.1 TOPIC: COMPOUND INTEREST TYPE: CONCEPTS 4. A corporation: I. is a separate legal entity. II. becomes a "resident" of the state in which it is incorporated. III. can own property and borrow money. IV. has its business purpose and intended life spelled out in its bylaws. A. I, III, and IV only B. I, II, III, and IV C. I and II only D. I, II, and III only E. III and IV only BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 001 #30 SECTION: 1.3 TOPIC: CORPORATION TYPE: CONCEPTS 5. 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. 6.37 percent B. 7.76 percent C. 9.12 percent D. 8.80 percent E. 9.65 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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6. Your firm has been told that it needs $100,000 today to fund a $150,000 expansion project 8 years from now. What rate of interest was used in the present value computation? A. 10.40 percent B. 5.20 percent C. 9.08 percent D. 6.83 percent E. 7.94 percent BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #51 SECTION: 4.3 TOPIC: INTEREST RATE TYPE: PROBLEMS 7. The current value of future cash flows discounted at the appropriate discount rate is called the: A. present value. B.
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Exam1 FIN370 B Key (2) - Exam1 FIN370-02 Winter 2011 Key...

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