FINC 600 Week 8 Final Quiz Question 1 If an investor buys “a” proportion of an unlevered firm’s (firm U) equity then his/her payoff is: A.(a) * (profits) B.(a) * (interest) C.(a) * (profits – interest) D.none of the above Question 2 What is the model that is used to prepare a pro-forma statement? Question 3 Which of the following is a statement of semi-strong form efficiency? I) If the markets are efficient in the semi-strong form then prices will adjust immediately to public information II) If the markets are efficient in the semi-strong form then prices reflect all information III) If the markets are efficient in the semi-strong form then prices will adjust to newly published information after a long time delay A.I only B.II only C.II and III only D.III only Question 4 In order to calculate the tax shield effect of interest payment for a corporation, always use the: I) average corporate tax Week 8 REQUIRED Quiz https://edge.apus.edu/portal/tool/d61270c7-eb07-4c9e-9302-b89ed42735ed/jsf/select/selectIndex[8/29/2014 1:20:20 PM] rate II) marginal corporate tax rate III) state mandated tax rate A.I only B.II only C.III only D.I and III only Question 5 State the important differences between investment decisions and financing decisions. Question 6 In order to find the present value of the tax shields provided by debt, the discount rate used is the: A.cost of capital B.cost of equity C.cost of debt D.none of the above Question 7 Capital structure is irrelevant if: A.the capital markets are perfect B.each investor holds a fully diversified portfolio C.each investor holds the same proportion of debt and equity of the firm D.all of the above Question 8 The cash budget is the primary short-term financial planning tool. The key reasons a cash budget is created are: I) To estimate your investment in assets II) To estimate the size and timing of your new cash flows III) To prepare for potential financing needs A.I only B.II and III only C.II only D.III only Question 9 Which of the following is an example of leverage ratios? A.Debt-Equity ratio B.Quick ratio C.Payout ratio D.Return on equity Question 10 Briefly explain the information content of share repurchase. Question 11 The reason that MM Proposition I does not hold good in the presence of corporate taxes is because: A.Levered firms pay lower taxes when compared with identical unlevered firms B.Bondholders require higher rates of return compared with stockholders C.Earnings per share are no longer relevant with taxes D.Dividends are no longer relevant with taxes Question 12 Which of the following statement(s) is/are true if the efficient market hypothesis holds? I) It implies perfect forecasting ability II) It implies market is irrational III) It implies that prices follow a particular pattern IV) It implies that prices reflect all available information A.I only B.II only C.I and III only D.IV only Question 13 Given the following data: Sales = 3200 Cost of goods sold = 1600 Average total assets = 1600 Average inventory = 200 Calculate the asset turnover ratio: A.2.0 B.0.9375 C.1.33 D.None of the above Question 14 The after-tax weighted average cost of capital is determined by: A.Multiplying the weighted average after tax cost of debt by the weighted average cost of equity B.Adding the weighted average before tax cost of debt to the weighted average cost of equity C.Adding the weighted average after tax cost of debt to the weighted average cost of equity D.Dividing the weighted average before tax cost of debt to the weighted average cost of equity Question 15 Generally, a firm is able to find positive NPV opportunities with: I) Financing decisions II) Capital investment decisions III) Short-term borrowing decisions A.I only B.I and III only C.III only D.II only Week 8 REQUIRED Quiz https://edge.apus.edu/portal/tool/d61270c7-eb07-4c9e-9302-b89ed42
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