Chapter 4: FINANCIAL PLANNING AND FORECASTING
MULTIPLE CHOICE
1. In the percent-of-sales forecasting method, all of the following balance sheet and income statement
items are assumed to increase proportionately with sales EXCEPT:
a. dividends
b. accounts
Chapter 3: EVALUATION OF FINANCIAL PERFORMANCE
MULTIPLE CHOICE
1. Which of the following financial ratios are market-based ratios?
a. debt-to-equity
b. price-to-earnings
c. return on investment
d. gross profit margin
ANS: B
PTS: 1
OBJ: TYPE: Fact
LOC: Kno
Chapter 14: CAPITAL STRUCTURE MANAGEMENT IN PRACTICE
MULTIPLE CHOICE
1. Raw material and direct labor costs are examples of
a. fixed costs
b. overhead costs
c. variable costs
d. capital costs
ANS: C
PTS: 1
OBJ: TYPE: Fact
LOC: Knowledge of capital budgeti
Chapter 11: CAPITAL BUDGETING AND RISK
MULTIPLE CHOICE
1. The discount rate used in calculating the certainty equivalent net present value is the
a. risk-adjusted discount rate
b. cost of capital
c. risk-free rate
d. cost of equity capital
ANS: C
PTS: 1
O
Chapter 8: ANALYSIS OF RISK AND RETURN
MULTIPLE CHOICE
1. The _ is a statistical measure of the mean or average value of the possible outcomes.
a. probability distribution
b. standard deviation
c. expected value
d. coefficient of variation
ANS: C
PTS: 1
L
Chapter 5: THE TIME VALUE OF MONEY
MULTIPLE CHOICE
1. The amount of simple interest is equal to the product of the principal times _ times _.
a. (1 + rate per time period), the number of time periods
b. (1 + rate per time period), (the number of time peri
Chapter 10: CAPITAL BUDGETING: DECISION CRITERIA AND REAL OPTION
CONSIDERATIONS
MULTIPLE CHOICE
1. Multiple internal rates of return can occur when there is (are):
a. large abandonment costs at the end of a project's life
b. a major shutdown and rebuildin
Chapter 12: THE COST OF CAPITAL
MULTIPLE CHOICE
1. The Institutional Brokers' Estimate Service (IBES) summarizes analysts' _.
a. short-term earnings forecasts
b. long-term earnings growth rates
c. bankruptcy forecasts
d. short-term earnings forecasts and
Chapter 2: THE DOMESTIC AND INTERNATIONAL FINANCIAL
MARKETPLACE
MULTIPLE CHOICE
1. The difference between merchandise exports and imports is known as the _.
a. transaction exposure
b. difference in purchasing power
c. merchandise trade balance
d. import/e
Chapter 10A: Appendix: MUTUALLY EXCLUSIVE INVESTMENTS HAVING
UNEQUAL LIVES
MULTIPLE CHOICE
1. _ is (are) used when evaluating mutually exclusive investments having unequal lives.
a. Equivalent annual annuities
b. Replacement chains
c. Linear programming
d
Chapter 5A: Appendix: CONTINUOUS COMPOUNDING AND DISCOUNTING
MULTIPLE CHOICE
1. With continuous compounding
a. the effective rate is higher than the nominal rate
b. the effective rate is higher than the logarithmic rate
c. the base "e" is the effective ra
Chapter 14A: Appendix: BREAKEVEN ANALYSIS
MULTIPLE CHOICE
1. The breakeven point occurs where total revenues intersect with:
a. market returns
b. the risk-free rate
c. total costs
d. total interest and taxes
ANS: C
PTS: 1
OBJ: TYPE: Fact
LOC: Knowledge of
Chapter 2A: Appendix: TAXES
MULTIPLE CHOICE
1. Intercompany dividends, or dividends paid by one corporation to another, are normally entitled to a
_ percent exclusion from Federal income taxes.
a. 15
b. 30
c. 50
d. 70
ANS: D
PTS: 1
LOC: Understand stocks