IF YOU WORK FOR A CORPORATION, WHO IS/ARE YOUR ULTIMATE BOSS(ES)? SHAREHOLDERS T
ID: 2623706 • Letter: I
Question
IF YOU WORK FOR A CORPORATION, WHO IS/ARE YOUR ULTIMATE BOSS(ES)?
SHAREHOLDERS
THE CHIEF EXECUTIVE OFFICER
THE CHIEF OPERATING OFFICER
NONE OF THE ANSWERS PROVIDED IS CORRECT
SUPPOSE YOUR INVESTMENT OF $50,000 GROWS TO $350,000 IN 20 YEARS. WHAT AVERAGE ANNUAL RATE OF RETURN HAVE YOU REALIZED?
10.22%
38.92%
12.39%
8.52%
THE FIN 301 CORPORATION HAD SALES OF $2,000,000 IN 2010 AND ITS GROSS PROFIT MARGIN WAS .45. IF THE FIRM'S ENDING INVENTORY THAT YEAR WAS $100,000, ITS INVENTORY TURNOVER RATIO MUST HAVE BEEN _______.
11
13
12
10
HOW MUCH WILL YOU HAVE AT THE END OF 10 YEARS IF YOU DEPOSIT $50,000 INTO THE FIRST NATIONAL BANK OF JSU AND EARN 4% COMPOUNDED MONTHLY?
$82,106.27
$74,541.63
$68,295.15
$91,207.18
THE ROE AND THE RETENTION RATIO OF THE JSU CORPORATION JUST FELL. ACCORDING TO THE CONSTANT GROWTH MODEL, THIS MUST MEAN JSU'S STOCK PRICE JUST________.
ROSE
NEITHER THE ROE NOR THE RETENTION RATIO AFFECT A STOCK'S PRICE ACCORDING THE CONSTANT GROWTH MODEL.
STAYED THE SAME
FELL
AS THE INTEREST OR DISCOUNT RATE RISES, ________ FALL AND _______ RISE.
I. FUTURE VALUES; PRESENT VALUES
II. PRESENT VALUES; FUTURE VALUES
III. FUTURE VALUE OF AN ANNUITY; PRESENT VALUE OF AN ANNUITY
IV. PRESENT VALUE OF AN ANNUITY; FUTURE VALUE OF AN ANNUITY
I AND III
I ONLY
II AND IV
III ONLY
THE MARKET RISK PREMIUM JUST ROSE. THIS MEANS ________.
I. THE SECURITY MARKET LINE SHIFTED DOWN AND TO THE RIGHT
II. THE SECURITY MARKET LINE'S SLOPE STEEPENED
III. THE PRICE OF COMMON STOCKS JUST FELL
IV. THE PRICE OF COMMON STOCKS JUST ROSE
IV ONLY
I AND IV
II AND III
I ONLY
THE FIN 301 CORPORATION HAS A DEBT RATIO OF .75 AND AN ROA OF 5%. THE FIRM'S ROE MUST BE _______
25%
15%
30%
20%
THE FIRST NATIONAL BANK OF FIN 301 OFFERS 3% COMPOUNDED DAILY ON A ONE-YEAR CERTIFICATE OF DEPOSIT. THE EFFECTIVE ANNUAL RATE ON THIS INVESTMENT IS _____
3.027%
3.038%
3.0682%
3.045%
CONSIDER THE INFORMATION IN THE FOLLOWING TABLE FOR MUTUALLY EXCLUSIVE PROJECTS A AND B:
ACCORDING TO THIS INFORMATION, ________.
I. THE NPV PROFILES OF PROJECTS A AND B CROSS
II. THE NPV PROFILES OF PROJECTS A AND B DO NOT CROSS
III. THE INTERNAL RATE OF RETURN METHOD CAN BE USED REGARDLESS OF THE DISCOUNT RATE
IV. THE INTERNAL RATE OF RETURN METHOD SHOULD NOT BE USED IF THE DISCOUNT RATE IS
LESS THAN THE CROSS-OVER RATE
II ONLY
I AND IV
II AND III
III ONLY
THE JSU CORPORATION JUST PAID A $1 DIVIDEND TO ITS COMMON SHAREHOLDERS. DIVIDENDS ARE EXPECTED TO GROW AT A CONSTANT RATE OF 5% FOREVER. IF THE RISK-FREE RATE OF INTEREST IS 4% AND THE STOCK'S SECURITY RISK PREMIUM IS 8%, THEN, ACCORDING TO THE CONSTANT GROWTH MODEL, THIS STOCK SHOULD SELL FOR _______.
$12
$14
$15
$13
A PERPETUAL ANNUITY HAS A PRESENT VALUE OF $307.69 WHEN THE DISCOUNT RATE IS 13%. WHAT MUST THE EQUAL ANNUAL PAYMENTS BE?
$40
$55
$35
$30
AN INCREASE IN THE INFLATION RATE WILL CAUSE
I. STOCK BETAS TO RISE
II. AN INCREASE IN STOCK SECURITY RISK PREMIA
III. AN INCREASE IN THE MARKET RISK PREMIUM
IV. AN INCREASE IN THE REQUIRED RETURN ON STOCKS
V. AN INCREASE IN BOND YIELDS
VI. AN INCREASE IN BOND PRICES
IV AND V
VI ONLY
I AND VI
II, III AND VI
DREW BARRYMORE DECIDES TO SELL YOU HER HOME IN PALM BEACH, FLORIDA FOR $20,000,000. THE FIRST NATIONAL BANK OF PALM BEACH AGREES TO LEND YOU 80% OF THIS AMOUNT USING A 30-YEAR, FIXED-RATE LOAN HAVING AN INTEREST RATE OF 7%. THE MONTHLY PAYMENT ON THIS LOAN WILL BE _______.
$728,638.15
$125,927.10
$582,910.52
$106,448.40
SHAREHOLDERS
THE CHIEF EXECUTIVE OFFICER
THE CHIEF OPERATING OFFICER
NONE OF THE ANSWERS PROVIDED IS CORRECT
Explanation / Answer
1) B) Chief Excecutive Officer
2) A) 10.22%
3) A) 11
4) $74541.63
5) D) Fell
6) C) II AND IV
7) C) II AND III
8) D) 20%
9) D) 3.045%
10) B) I AND IV
11) C) $15
12) A) $40
13)A) IV AND V
14) D) $106,448.40