1. The _ has more sales in dollars than any other form of business organization
2. The money markets deal with _.
B. short-term securities
3. The _ is the most common form of business organization in the U.S.
C. sole proprietorship
4. The a
You have $1000 you want to save. If four different banks offer four different compounding
methods for interest, which method should you choose to maximize your $1000?
The present value of a dollar to be received in the future is:
A low price/earnings ratio usually means that a firm:
In valuing a financial asset, you use these variables:
The principal amount of a bond at issue is called:
One characteristic of preferred stock is that:
A high price/earnings ratio usually indicates that a firm is a:
Common stock that has no growth in dividends is valued as if it were:
The premium to compensate an investor for the eroding effect of rising prices is called
When faced with mutually exclusive option, which project should be accepted under the payback
Since capital budgeting uses cash flows instead of accounting flows, the financial manager must
add back _ to the analysis.
The cost of each component of a firm's capital structure multiplied by its weight in the capital
structure is called the:
The most expensive source of financing for a firm is:
The overall cost of financing for the firm is
The cost of retained earnings does not consider _ in the equation.
When establishing their optimal capital structure, firms should strive to:
The cost of issuing new stock is called:
The cost of debt financing i
How would an investor decide between two mutually exclusive investments, each with a
different level of risk and differing levels of return?
Generally, the larger the standard deviation of an investment's expected outcomes, the
The standard deviation measures:
If an individual stock's beta is higher than 1.0, that stock is:
What measure would a risk averse investor use to decide which combination of stocks to include
in a portfolio?
When a firm places a budgetary constraint on the projects it invests in, this is called:
If the Internal Rates of Return of two, mutually exclusive options are both greater than the cost
of capital, which option should be selected un
The 5 C's of credit include:
The transaction motive for holding cash is for:
daily operating requirements
The use of safety stock by a firm will:
increase inventory costs
Which of the following motives
If a bank offers a firm a simple interest loan of $1000 for 120 days at a cost of $60 interest, what is the
effective rate of interest on the loan?
If a firm needs to borrow $100,000, at 8% interest, to finance working
An asset sold in time to generate the cash needed to pay for itself is called a _ asset.
Financing plans that utilize a high degree of short term debt when the firm experiences low liquidity
A. high return but high risk
Examples of cash disbursements are all but _.
B. collection of accounts receivable
Pro forma statements are _ statements.
Planning for future growth is called:
C. financial forecasting
In developing the pro forma balance sheet, we get common
How can an analyst determine the sources of profitability?
B. By using the Du Pont method to analyze profit margin
All of the following can present problems for ratio analysis except:
D. none of the above
Trend analysis allows a firm to compare its perfor
Bondholders receive _ from the business firm.
C. interest payments
All of the following are tax-deductible expenses except_.
C. common stock dividends
One of the limitations of the _ is that it is based on historical costs.
C. balance sheet
Which of the f
If you win the lottery and you choose to have your proceeds distributed to you over a twentyyear time period, with the first payment coming to you one year from today, which calculation
would you use to calculate the worth of those proceeds to