ETS MAJOR FIELD TEST MFT BUSINESS EXAM/ ACTUAL COMPLETE REAL EXAM /LATEST UPDATE .
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ETS MAJOR FIELD
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ETS MAJOR FIELD
ETS MAJOR FIELD TEST MFT BUSINESS EXAM/ ACTUAL
COMPLETE REAL EXAM /LATEST UPDATE .
stock is priced at $100, and the dividend next year is expected to be $4 with a constant
growth rate of 3%. What is the stock's price using the dividend discount model (DDM)? -
CORRECT ANSWERS-Stock Price = Divid...
ETS MAJOR FIELD TEST MFT BUSINESS EXAM/ ACTUAL
COMPLETE REAL EXAM /LATEST UPDATE 2024-2025.
stock is priced at $100, and the dividend next year is expected to be $4 with a constant
growth rate of 3%. What is the stock's price using the dividend discount model (DDM)? -
CORRECT ANSWERS-Stock Price = Dividend / (Required Rate of Return - Growth
Rate) Required Rate of Return = () + 3% = 7% Stock Price = $4 / (0.07 - 0.03) =
$100
Which of the following is a sunk cost?
a) The cost of raw materials for production
b) The cost of leasing new equipment
c) The amount already spent on research for a canceled project
d) Future payroll costs - CORRECT ANSWERS-c) The amount already spent on
research for a canceled project
T/F: A company's operating leverage increases when it has a higher proportion of fixed
costs relative to variable costs. - CORRECT ANSWERS-True
Which of the following factors would increase a company's working capital?
a) Increase in accounts payable
b) Increase in inventory
c) Decrease in accounts receivable
d) Paying off a long-term debt - CORRECT ANSWERS-b) Increase in inventory
If the inflation rate is 3% and the nominal interest rate is 5%, what is the real interest
rate? - CORRECT ANSWERS-Real Interest Rate = Nominal Interest Rate - Inflation
Rate Real Interest Rate = 5% - 3% = 2%
Calculate the weighted average cost of capital (WACC) if a company's equity makes up
60% of the capital structure with a cost of equity of 8%, and debt makes up 40% with a
cost of debt of 5%. Assume the corporate tax rate is 30%. - CORRECT ANSWERS-
WACC = (E/V × Re) + [(D/V × Rd) × (1 - Tax Rate)] WACC = (0.60 × 0.08) + [(0.40 ×
0.05) × (1 - 0.30)] = 7.1%
The ________ is the interest rate at which banks lend to one another overnight. -
CORRECT ANSWERS-Federal Funds Rate
Which of the following is an example of vertical integration?
a) A car manufacturer purchasing a steel mill
b) A software company acquiring a competitor
, c) A retail chain opening more stores
d) A restaurant starting a delivery service - CORRECT ANSWERS-a) A car
manufacturer purchasing a steel mill
T/F: The internal rate of return (IRR) is the discount rate that makes the net present
value (NPV) of a project zero. - CORRECT ANSWERS-True
The ________ is the portion of profit allocated to shareholders in the form of dividends.
- CORRECT ANSWERS-dividend payout ratio
Which of the following is considered an intangible asset?
a) Factory equipment
b) A patent
c) Inventory
d) Office furniture - CORRECT ANSWERS-b) A patent
T/F: A high current ratio indicates that a company has strong liquidity and can easily
meet short-term obligations. - CORRECT ANSWERS-True
Which of the following represents an indirect cost?
a) Factory worker wages
b) Office rent for the headquarters
c) Raw materials for production
d) Shipping costs for a product - CORRECT ANSWERS-b) Office rent for the
headquarters
Rank the following financing options from least risky to most risky for a company:
Issuing common stock
Taking a bank loan
Issuing corporate bonds
Retained earnings - CORRECT ANSWERS-Retained earnings (least risky)
Issuing common stock
Issuing corporate bonds
Taking a bank loan (most risky)
Which of the following actions would increase a company's cash flow?
a) Offering discounts to customers
b) Purchasing new equipment
c) Delaying payments to suppliers
d) Hiring additional employees - CORRECT ANSWERS-c) Delaying payments to
suppliers
You are a financial analyst reviewing a company's balance sheet. You notice that
accounts receivable have increased by 20%, while inventory has decreased by 10%.
What might these changes indicate about the company's financial health? - CORRECT
ANSWERS-The increase in accounts receivable might suggest the company is selling
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