Finance 320|67 All Final Quiz Questions Correctly Solved|2024
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Course
Finance 320
Institution
Finance 320
A ___ is when a rich individual or organization purchases a large fraction of the stock of a poorly performing firm and in doing so gets enough votes to replace the board of directors and the CEO. - ️️hostile takeover
A company that produces drugs is preparing a balance sheet. Which of the fol...
A ___ is when a rich individual or organization purchases a large fraction of the stock of a poorly
performing firm and in doing so gets enough votes to replace the board of directors and the CEO. - ✔
✔ hostile takeover
A company that produces drugs is preparing a balance sheet. Which of the following would be most
likely to be considered a long-term asset on this balance sheet?
A) a patent for a drug held by the company
B) the cash reserves of the company
C) commercial paper held by the company
D) the inventory of chemicals used to produce the drugs made by the company - ✔ ✔ a patent for a
drug held by the company
A company's after-tax profits measured per unit of common stock are known as _____. - ✔ ✔
earnings per share
A consensus estimate of future earnings by individuals that are not employees of the firm is known as
_____. - ✔ ✔ Analysts's estimates
A corporate bond which receives a BBB rating from Standard and Poor's is considered
A) an investment grade bond.
B) a defaulted bond.
C) a high-yield bond.
D) a junk bond. - ✔ ✔ an investment grade bond.
A dollar today and a dollar in one year may be considered to be equivalent.
A) True
B) False - ✔ ✔ False
Allen Company bought a new copy machine to be depreciated straight line for three years for use by
sales personnel. Where would this purchase be reflected on the Statement of Cash Flows?
A) It would be an addition to property, plant and equipment, so it would be an investing activity. B) It
would be an addition to cash, so would be reflected in the change in cash.
, C) It would be an expense on the income statement, so it would be reflected in operating cash flows.
D) None of the above answers is correct. - ✔ ✔ It would be an addition to property, plant and
equipment, so it would be an investing activity.
Divisional costs of capital are more appropriate when evaluating a project for a line of business when
the types of business in a firm are - ✔ ✔ different
Earnings are an important measure to financial managers because investors use earnings to make
forecasts about a company's _________ and ultimately stock price. - ✔ ✔ Cash Flows
Given that the inflation rate in 2006 was about 3.24%, while a short-term municipal bond offered a rate
of 2.9%, which of the following statements is correct? - ✔ ✔ Investors in these bonds were able to
buy less at the end of the year than they could have purchased at the start of the year.
Historically, stocks have delivered a ________ return on average compared to Treasury bills but have
experienced ________ fluctuations in values.
A) higher, lower
B) lower, higher
C) higher, higher
D) lower, lower - ✔ ✔ higher, higher
Historically, why were high inflation rates associated with high nominal interest rates? - ✔ ✔ The
real interest rate needs to be high enough so that individuals can expect their savings to have greater
purchasing power in the future than in the present.
How does the capital budgeting process begin?
A) by analyzing alternate projects
B) by forecasting the future consequences for the firm of each potential project
C) by evaluating the net present value (NPV) of each project's cash flows
D) by compiling a list of potential projects - ✔ ✔ by compiling a list of potential projects
In general, it is possible to eliminate ________ risk by holding a large portfolio of assets.
A) systematic
B) unsystematic and systematic
C) unsystematic
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