BFIN Final Exam UPDATED Questions and CORRECT Answers
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BFIN
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BFIN
BFIN Final Exam UPDATED Questions
and CORRECT Answers
Another name for EBITDA is - CORRECT ANSWER- pretax operating cash flow
Compared to identical projects with a lower proportion of fixed costs, a project with a higher
proportion of fixed costs will have - CORRECT ANSWER- a higher degree of...
BFIN Final Exam UPDATED Questions
and CORRECT Answers
Another name for EBITDA is - CORRECT ANSWER✔✔- pretax operating cash flow
Compared to identical projects with a lower proportion of fixed costs, a project with a higher
proportion of fixed costs will have - CORRECT ANSWER✔✔- a higher degree of
sensitivity of EBITDA to a change in revenues
If a firm is about to operate in an environment in which there will be a great deal of
variability in the level of revenues, then the firm - CORRECT ANSWER✔✔- should
structure its cost structure to have low fixed costs and consequently higher per unit variable
costs
___________ is a measure of the sensitivity of EBITDA or EBIT to changes in revenue -
CORRECT ANSWER✔✔- operating leverage
The economic break-even point is the number of units that must be sold each year over the
life of a project in order for the NPV of that project to equal to _________ - CORRECT
ANSWER✔✔- $0
An analytical method uses a computer to quickly examine a large number of scenarios and
obtain probability estimates for various values in a financial analysis is known as -
CORRECT ANSWER✔✔- simulation anlaysis
The three prinicipal ways in which venture capital firms exit venture-backed companies are -
CORRECT ANSWER✔✔- selling to a strategic buyer, selling to a financial buyer, and
offering stock to the public
Which of the following statements is true?
A) After the IPO, there is a less active secondary market for the firm's shares.
B) Only smaller amounts of capital can be raised through an IPO than the amount that can be
raised through private sources.
C) Publicly traded firms find it easier to attract top management talent.
, D) Going public can enable an entrepreneur to fund a growing business but not without
giving up control. - CORRECT ANSWER✔✔- C
All of the following about a firm-commitment underwriting is true EXCEPT
A) the investment banker guarantees the issuer a fixed amount of money from the stock sale.
B) the investment banker actually buys the stock from the firm.
C) the issuer bears the risk that the resale price might be lower than the price the underwriter
pays.
D) the underwriter bears the risk that the resale price might be lower than the price the
underwriter pays. - CORRECT ANSWER✔✔- C
Which of the following statements is NOT true?
A) Venture capitalists often require an entrepreneur to make a substantial personal investment
in the business.
B) Syndication occurs when the originating venture capitalist buys off other venture
capitalists involved in the venture.
C) Another factor that reduces risk is the venture capitalist's in-depth knowledge of the
industry and technology.
D) The key idea behind staged funding is that each funding stage gives the venture capitalist
an opportunity to reassess the management team and the firm's financial performance. -
CORRECT ANSWER✔✔- A
A firms capital structure is the mix of financial securities used to finance its activities and can
include all of the following except:
A) common stock
B) bonds
C) equity options
D) preffered stock - CORRECT ANSWER✔✔- C
The optimal structure of a firm
A) minimizes the cost of financing the firms projects
B) minmizes interest payments to creditors
C) maximizes overall value of the firm
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