Fin 310 Final Exam Questions 100% Solved.
Which of the following statements is false?
a. the book value of equity is the residual difference between assets and libiliities
b. the book value of equity increase when a company pays dividends
c. the ultimate goal of financial managers its ti maximi...
d. none of the above statements is false. - answer✔d. none of the above statements is false.
rank the stakeholders by priority: suppliers, owners, government, creditors, customers, and
employees - answer✔customers are first
You have a buddy who recently opened a Robinhood account to buy and sell stocks. He conducts
some research on Ford and Tesla and makes the comment to you "I think I am going to buy Ford
because it's share price is only $9.41 compared to Tesla's $245.87 and there's no way that Tesla
is 26x more valuable." Can you tell him what's wrong with that statement? - answer✔He's wrong
because the share price is partly due to how many share's outstanding the company has. For
example, Ford has nearly 4 billion shares outstanding, while Tesla only has around 200 million -
which results in the vastly different share prices. To determine what the market value of a
company is, you should look at the market capitalization.
Tesla's earnings per share is negative. Why do you think investors are willing to pay for a
company that has negative net income? - answer✔people are willing to invest money in a
company that is not CURRENTLY making a profit if they believe it will make a profit in the
FUTURE. In future chapters, we will talk more about how to value companies - many of which
lose money during their early growth phase.
Between these two companies, which one would you invest in? - answer✔No correct answer
here! That's the beauty of the stock market. You take risks with the hope that it pays off. In my
opinion (Tate speaking here), I think you should invest in companies that you feel are making a
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