C214 Financial Management Overview Concept Quiz Answers for 2023-2024 and 2024-2025, Exams of Business Economics

Download C214 Financial Management Overview Concept Quiz Answers for 2023-2024 and 2024-2025 and more Exams Business Economics in PDF only on Docsity! C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 1. The goal of the corporation is to: a. Maximize profits b. Maximize market share c. Maximize stock price d. Minimize risk - Correct Answer 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 - Correct Answer 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 - Correct Answer 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 Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 b. The certainty of receipt c. The size of the receipt d. All of the above - Correct Answer d. All of the above 5. What is the purpose of the SEC 10-K filing requirement? a. Promote transparency and efficiency b. Prevent insider trading c. Regulate sales practices d. Prevent monopolies - Correct Answer a. Promote transparency and efficiency 6. Which line item is not part of net working capital? a. Inventory b. Bonds c. Accounts Payable d. Accrued expenses - Correct Answer b. Bonds 7. Which action causes a cash outflow? a. Increase in accounts payable b. Decrease in accounts receivable c. Increase in inventory C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 b. Seasonal effect c. Cross industry effect d. Accounting difference - Correct Answer d. Accounting difference 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 - Correct Answer 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 - Correct Answer 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 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 d. PMT - Correct Answer d. PMT 18. If payments are made semi-annually, which key inputs must be adjusted? a. PMT b. I/Y c. N d. All of the above - Correct Answer 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 - Correct Answer 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 - Correct Answer b. Recurring payments made at the beginning of each year C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 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 d. Use different interest rates. - Correct Answer a. Payments are received earlier 23. Which annuity provides increasing payments over time? a. Annuity Due b. Ordinary Annuity c. Perpetual Annuity d. Perpetual Growth Annuity - Correct Answer d. Perpetual Growth Annuity 24. What causes uncertainty in financial decisions? a. GAAP changes b. Erroneous future projections c. Computer error d. Both b and c - Correct Answer b. Erroneous future projections 25. An increase in net working causes C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 d. Indenture sets yield; trading sets price - Correct Answer 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 - Correct Answer b. Earnings per share 33. A bond's duration causes: a. Default risk b. Market risk c. Credit risk d. Event risk - Correct Answer 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 - Correct Answer c. Bond yield is more than the coupon rate C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 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 - Correct Answer 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 b. Firm must re-purchase the bond c. The firm reduces the bond value on its balance sheet d. Both a and c - Correct Answer 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 - Correct Answer b. Dividends and capital gains C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 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 - Correct Answer 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 - Correct Answer c. Relative riskiness of a stock 40. Which is not a means of eliminating idiosyncratic risk? a. A diversified portfolio b. Hold a portfolio with a Beta = 1.0 c. Buy a low beta stock d. Hold a portfolio of high beta stocks - Correct Answer c. Buy a low beta stock 41. The required return on stocks is derived from: a. Idiosyncratic risk C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 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 - Correct Answer 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 - Correct Answer 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 c. Expected dividends in the future d. Its S&P rating - Correct Answer c. Expected dividends in the future 51. Which measures sales growth that can be financed internally? a. DFN C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 b. CFO c. SGR d. DFN - Correct Answer 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 - Correct Answer 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 - Correct Answer d. Both a and b 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 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 d. Depends on the NWC recapture - Correct Answer 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 - Correct Answer 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 - Correct Answer d. All of the above 57. Firms with high leverage a. Have lower net income b. Have more volatile profits c. Have higher required returns d. Both b and c - Correct Answer d. Both b and c C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 d. Uncertainty - Correct Answer d. Uncertainty 65. Which Act addresses "too big to fail" banks? a. Sarbanes Oxley b. Securities Act of 1933 c. Dodd Frank d. FINRA - Correct Answer c. Dodd Frank 66. FX hedging is used to a. Forecast FX changes b. Reduce FX risk c. Arbitrage currency exchange d. Promote exports - Correct Answer 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 - Correct Answer c. Increases imports C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 68. Tariffs on imported goods have what effect? a. More US jobs b. Less expensive consumer goods c. More expensive consumer goods d. Both a and c - Correct Answer 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 - Correct Answer 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 - Correct Answer c. Comparative Advantage 71. Which can best be described as a present value problem? C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2024\2025 a. Valuation of bonds b. Valuation of stock c. Evaluation of potential investment d. All of the above. - Correct Answer 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 - Correct Answer 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 - Correct Answer b. To anticipate impact of erroneous forecasts 74. If IRR is greater than WACC, an adopted project, a. Decreases shareholder value C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024 C214 Financial Management Overview Concept Quiz Answers Guaranteed Success Latest Update 2023\2024