FINC 306 FINAL Exam Questions And Answers Guaranteed Solutions.
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Course
FINC.
Institution
FINC.
If you are doing an NPV analysis and using the WACC as the discount rate, how do you account for interest paid to bondholders? - correct answer through the cost of debt portion of the WACC
When estimating the WACC, which is the best measure of the f...
FINC 306 FINAL
If you are doing an NPV analysis and using the WACC as the discount rate, how do you account for interest paid to bondholders? - correct answer through the cost of debt portion of the WACC
When estimating the WACC, which is the best measure of the firm's cost of debt - correct answer the YTM for its bonds
When estimating the WACC, which is the best measure of the firm's cost of equity - correct answer the stock's expected return according to the CAPM
When computing NPV, how do you account for the fact that bond interest is tax deductible? - correct answer multiply the cost of debt by (1-t)
What does EBIT stand for? - correct answer earnings before interest and taxes
how should you handle an interest payment on debt when computing incremental cash flow? - correct answer ignore it
how should you handle depreciation when computing incremental cash flow? - correct answer subtract it just like on an income statement, but add it back after computing taxes
an increase in net working capital represents - correct answer a cash outflow
what is the goal of the financial manager? - correct answer maximize shareholder wealth
which best describes NPV - correct answer the present value of all expected inflows net of the present value of all expected outflows which series of cash flows represents a "normal" project? - correct answer CF0= -100; CF1 = 200; CF3 = !00; CF4 = 200
all else equal, which will result in a LOWER NPV for a normal project - correct answer higher discount rate
a bonds entire value is typically repaid at maturity - correct answer true
selling a stock is equivalent to selling the rights to all of the stock's future dividends - correct answer true
all else equal, a coupon -paying bond has a greater interest risk than a zero-coupon bond - correct answer true
if a bonds coupon rate is less than its yield to maturity it sells at premium - correct answer false
if you submit an order through an online broker to purchase 10 shares of zoom, how much money would zoom receive - correct answer nothing
which of the following is most likely to change during the life of a bond - correct answer yield to maturity
you purchase a stock for $35. At the end of one year, the stock pays a cash dividend of $2. After receiving the dividend, you sell the stock for $36. On which of the following gains do you owe taxes? - correct answer both the $1 capital gain and the $2 dividend
suppose a bond sells at a premium to par value. This implies - correct answer the bond has as built in capital loss.
the typical correlation between two randomly selected US stocks is -1 - correct answer False
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