1 points  QUESTION 50By examining a company's balance sheet, which of the following can you notassetsliabilities

1.  determine?

book value

market value

1 points  

QUESTION 51

1. When a bank borrows in the federal funds market, this means:

it is borrowing from the Federal Reserve

it is lending to the Federal Reserve

it is borrowing from another bank

it is borrowing from the US Treasury

1 points  

QUESTION 52

1. A twenty-year bond has a 5% coupon. Yesterday, its yield-to-maturity was 5%. Interest rates rose today, which caused the bond's yield to rise as well. Which of the following is true of the bond's price?

Yesterday it was at a premium, today it is at a discount.

Yesterday it was at a discount, today it is at a premium.

Yesterday it was at par, today it is at a discount.

Yesterday it was at a discount, today it is at par.

Yesterday it was at par, today it is at a premium.

1 points  

QUESTION 53

1. If a bond is convertible, its interest rate (yield) should be _________ the rate on an ordinary bond of the same issuer and maturity:

higher than

lower than

the same as

1 points  

QUESTION 54

1. Suppose a company earns a profit this year and has a dividend payout ratio of one half. What does this mean?

It will have no retained earnings.

Its book value at the beginning of next year will be less than that of this year.

It will not pay out all its earnings as dividends.

All the above.

1 points  

QUESTION 55

1. What is the general distinction between dealers and banks?

Dealers buy and sell securities; banks borrow and lend money

Dealers borrow and lend money; banks buy and sell securities

Dealers use their balance sheet for their business; banks do not

Dealers have minimum capital requirements; banks do not

1 points  

QUESTION 56

1. Magnificent Shoe Corporation has been granted a $250 million bank loan with an interest rate of 3-month LIBOR plus 2%. The loan begins today (December 21). 3-month LIBOR today is 1%. If 3-month LIBOR rises to 1.5% on March 21 2021, MSC's first payment of interest on that date will be (approximately; i.e., ignoring day counts):

$8,750,000

$7,500,000

$2,875,000

$2,500,000

$2,187,500

$1,875,000

$1,562,500

$1,250,000

1 points  

QUESTION 57

1. The higher a company's ratio of market value to brook value:

the greater the profits investors expect the company to produce in the future

the higher the tax rate investors expect the IRS to impose in the future

the more the losses investors expect the company to suffer in the future

the more inventory inventors expect the company to accumulate in the future.

1 points  

QUESTION 58

1. Steve's Bicycle Repair Shop, Inc., has $150,000 in assets (tools, refurbished bikes, parts). Owners' equity is the full $150,000. Now Steve wants to borrow $10,000 in order to stock new bikes. This will ______ the owners' equity in the company:

add to

subtract from

not change

1 points  

QUESTION 59

1. A clothing retailer had an excellent summer season, selling out at a healthy profit all the ensembles it purchased. As part of the promotion, customers do not pay for any purchases until the beginning of next year. What does this mean for this year?

Zero profits and negative change in cash

Negative profits and no change in cash

Positive profits and positive change in cash

Positive profits and negative change in cash

Negative profits and negative change in cash

1 points  

QUESTION 60

1. A company's profit margin this past year was 25%. It has no debt. In order for ROE to equal 16% its Turnover Ratio must have been (not in %):

.04

 .25

 .4

.64

 1.5625

1 points  

QUESTION 61

1.  Suppose a bank sells some of its Treasury bonds and uses the proceeds to make corporate loans. What does this do to its capital requirements?

increases

decreases

do not change

1 points  

QUESTION 62

1. Charley Davison Inc. produced 10,000 motorcycles last year and sold 9,000 of them each for $18,000/bike. Variable cost was $13,000/bike. Fixed cost was $25 million and it had no debt. Assume no profits tax. It paid out all profits as dividends. Which of the following are true? Choose two.

Profits = $20 million

Profits = $25 million

Profits = −$13 million (loss)

Change in cash = +$20 million

Change in cash = −$25 million

Change in cash = −$13 million

2 points  

QUESTION 63

1.  Preferred dividends are paid:

from a company's revenue, similar to interest.

out of profits, but before profits tax is applied

out of after-tax profits

after dividends on common shares are paid

1 points  

QUESTION 64

1. Which of the following would increase a bank's Net Interest Margin, assuming all else stays the same? Choose Two

an increase in the interest rate on its loans

companies paying off some of their loans and the bank using the funds to purchase Treasury bonds

customers switching a portion of their time deposits to demand deposits

the bank issues additional equity and keeps the funds in cash

an increase in the federal funds rate assuming the bank borrows more in the federal funds market than it lends

2 points  

QUESTION 65

1. Mutual Fund ABC owns shares in stocks X, Y and Z. Investor I is an investor in ABC. Who receives the dividends from X, Y & Z?

ABC

I

XYZ

all the above

1 points  

QUESTION 66

1. A company has a market value of $990 million, with 10 million shares outstanding. It achieved an ROE of 20%. What are earnings-per-share?

$198 million

$2 million

$19.8

More information is required

1 points  

QUESTION 67

1. All else the same, the higher the discount rate applied to a company's future cash flows the {lower, higher, same} its share price:

higher

lower

same

1 points  

QUESTION 68

1. What does an increase in the tax rate on corporate profits do to a firm's coverage ratio?

increases it

decreases it

nothing

1 points  

QUESTION 69

1. Which of the following adds to a company's book value?

Selling additional shares to existing owners

Issuing shares to new investors

Earning a profit and paying only a portion as dividends to owners

All the above