C214 Financial Management Overview Concept Quiz Answers, Exams of Nursing

Download C214 Financial Management Overview Concept Quiz Answers and more Exams Nursing in PDF only on Docsity! C214 Financial Management Overview Concept Quiz Answers C214 Financial Management Overview Concept Questions & Answers (74 Terms) A+ Score Solution 2023-2024. C214 Financial Management Overview Concept Quiz Answers 1. The goal of the corporation is to: a. Maximize profits b. Maximize market share c. Maximize stock price d. Minimize risk - Answers: c. Maximize stock price 2. Risk premium is best described as a. Return on risky securities b. Compensation for risk-taking c. Return on stocks d. Expected return on securities - Answers: b. Compensation for risk- taking 3. What is the relationship between risk and required return? a. The two are independent b. Higher required return causes lower risk c. Higher risk causes higher required return d. None of the above - Answers: c. Higher risk causes higher required return 4. The value of money depends upon a. The timing of the receipt C214 Financial Management Overview Concept Quiz Answers a. Taxes b. Depreciation expense c. Dividends paid d. None of the above - Answers: b. Depreciation expense 12. Which represents cash earned by producing and selling the product a. Cash flow operations b. Cash flow financing c. Cash flow investing d. None of the above - Answers: a. Cash flow operations 13. Which ratio reflects a firm's reliance on debt financing? a. Quick ratio b. Net Margin c. financial leverage d. Asset turnover - Answers: c. financial leverage 14. If two firms use different inventory valuation methods, it is called: a. Timing issue b. Seasonal effect c. Cross industry effect d. accounting difference - Answers: d. accounting difference C214 Financial Management Overview Concept Quiz Answers 15. What affects the required return on a security? a. Perceived riskiness of the security b. Degree of investor risk aversion c. Trading in financial markets d. All of the above - Answers: d. All of the above 16. Which is the most frequent type of transaction in financial markets? a. IPO's b. Secondary market trades c. Primary market trades d. Venture capitalist trades - Answers: b. Secondary market trades 17. Which of the 5 white financial function keys represents a series of cash disbursements? a. N b. PV c. I/Y d. PMT - Answers: d. PMT 18. If payments are made semi-annually, which key inputs must be adjusted? C214 Financial Management Overview Concept Quiz Answers a. PMT b. I/Y c. N d. All of the above - Answers: d. All of the above 19. Which can be defined as "change in value of cash over time"? a. Interest rate b. Yield c. Expected return d. All of the above - Answers: d. All of the above 20. Which signifies a need to change the calculator to Begin mode? a. Cash deposited at the beginning of the year b. Recurring payments made at the beginning of each year c. Payments are made more frequently than annually d. None of the above - Answers: b. Recurring payments made at the beginning of each year 21. Why is an annuity due more valuable than an ordinary annuity? a. Payments are received earlier b. Interest is compounded c. It is not more valuable; they are the same C214 Financial Management Overview Concept Quiz Answers d. Never - Answers: b. At par price 30. For a semi-annual pay bond, which inputs must be adjusted? a. N and I/Y b. N and PMT c. N, I/Y, and PMT d. PV and FV - Answers: c. N, I/Y, and PMT 31. Which describes the relationship between price and yield a. Both change in the same direction b. Price increases cause yield decreases c. The two are independent d. Indenture sets yield; trading sets price - Answers: b. Price increases cause yield decreases 32. Which does not affect a bond's required yield? a. Treasury yields b. Earnings per share c. Term to maturity d. Firm riskiness - Answers: b. Earnings per share 33. A bond's duration causes: C214 Financial Management Overview Concept Quiz Answers a. Default risk b. Market risk c. Credit risk d. Event risk - Answers: b. Market risk 34. If a bond's price is at a discount, then a. Bond yield is less that coupon rate b. Bond yield is equal to the coupon rate c. Bond yield is more than the coupon rate d. Insufficient information - Answers: c. Bond yield is more than the coupon rate 35. What is the difference between common and preferred stock? a. Preferred stock has a maturity date b. Preferred stock dividends are fixed c. Common stock has priority of claims in bankruptcy d. Preferred stock cannot be bought back - Answers: b. Preferred stock dividends are fixed 36. If rating agencies downgrade a bond from AAA to BBB, what happens? a. The bond's price decreases C214 Financial Management Overview Concept Quiz Answers b. Firm must re-purchase the bond c. The firm reduces the bond value on its balance sheet d. Both a and c - Answers: a. The bond's price decreases 37. What are the two sources of profit to a stock investor? a. Dividends and redemption at maturity b. Dividends and capital gains c. Coupon payments and capital gains d. Interest and dividends - Answers: b. Dividends and capital gains 38. Which best describes the "market risk premium"? a. Expected return on stocks b. Required return on stock c. Excess return over risk free rate d. Beta - Answers: c. Excess return over risk free rate 39. What best describes Beta? a. A measure of financial leverage b. The market risk premium c. Relative riskiness of a stock d. Measure of stock's required return - Answers: c. Relative riskiness of a stock C214 Financial Management Overview Concept Quiz Answers 47. A firm is a good investment if a. Its PE is low b. Its price is less than intrinsic value c. It ROE is high d. It has a great product - Answers: b. Its price is less than intrinsic value 48. Why does a firm calculate WACC? a. It is needed to calculate net income b. It is the cost of financing the firm c. Required input on SEC 10-K report d. Required by GAAP - Answers: b. It is the cost of financing the firm 49. Which rule best described investor behavior? a. Maximize expected return b. Minimize risk c. Maximize the return-to-risk ratio d. Minimize the return-to-risk ratio - Answers: c. Maximize the return- to-risk ratio 50. A firm's stock price depends upon a. Its current earnings per share b. Its current dividend rate C214 Financial Management Overview Concept Quiz Answers c. Expected dividends in the future d. Its S&P rating - Answers: c. Expected dividends in the future 51. Which measures sales growth that can be financed internally? a. DFN b. CFO c. SGR d. DFN - Answers: c. SGR 52. Why are accurate sales forecast desirable? a. To plan resource acquisition b. To calculate price c. To reduce working capital d. Requirement for 10-K report - Answers: a. To plan resource acquisition 53. What components of ICF are included in Gross PPE a. Cost of asset b. Shipping & installation expense c. Increase in Net Working Capital d. Both a and b - Answers: d. Both a and b C214 Financial Management Overview Concept Quiz Answers 54. If an equipment salvage value is greater than book value, a. There is a tax cash refund b. There is a tax cash outflow c. Taxes are not affected d. Depends on the NWC recapture - Answers: b. There is a tax cash outflow 55. A potential project should be adopted if a. IRR is less than WACC b. NPV is positive using the required return on bonds as the discount rate c. IRR is greater than WACC d. IRR equals WACC and NPV is positive - Answers: c. IRR is greater than WACC 56. A firm will have volatile profits if a. It has high operating leverage b. It has high financial leverage c. It has high combined leverage d. All of the above - Answers: d. All of the above 57. Firms with high leverage C214 Financial Management Overview Concept Quiz Answers c. Time Value of Money d. Uncertainty - Answers: d. Uncertainty 65. Which Act addresses "too big to fail" banks? a. Sarbanes Oxley b. Securities Act of 1933 c. Dodd Frank d. FINRA - Answers: c. Dodd Frank 66. FX hedging is used to a. Forecast FX changes b. Reduce FX risk c. Arbitrage currency exchange d. Promote exports - Answers: b. Reduce FX risk 67. A strong dollar has what effect? a. Increases international trade b. Increases exports c. Increases imports d. Increases interest rates - Answers: c. Increases imports 68. Tariffs on imported goods have what effect? C214 Financial Management Overview Concept Quiz Answers a. More US jobs b. Less expensive consumer goods c. More expensive consumer goods d. Both a and c - Answers: d. Both a and c 69. If a firm's combined leverage is high, what is the implication? a. High equity ratio b. Profits are more volatile as sales fluctuate c. The firm is less profitable d. The two leverages offset each other - - neutral impact - Answers: b. Profits are more volatile as sales fluctuate 70. The mutual benefit of trade for US and China is explained by a. DFN b. WACC c. Comparative Advantage d. FX Hedging - Answers: c. Comparative Advantage 71. Which can best be described as a present value problem? a. Valuation of bonds b. Valuation of stock c. Evaluation of potential investment C214 Financial Management Overview Concept Quiz Answers d. All of the above. - Answers: d. All of the above. 72. What attributes of cash should be considered in evaluating investments? a. Size of cash flow b. Timing of the cash flow c. Risk of cash flows d. All of the above - Answers: d. All of the above 73. Firms use "sensitivity analysis" because: a. Required by the SEC b. To anticipate impact of erroneous forecasts c. To detect computer code errors d. To double check analyst calculations - Answers: b. To anticipate impact of erroneous forecasts 74. If IRR is greater than WACC, an adopted project, a. Decreases shareholder value b. Reduces Beta c. Increases shareholder value d. Increases leverage - Answers: c. Increases shareholder value