Concept Quiz on Financial Management, Exams of Nursing

Download Concept Quiz on Financial Management and more Exams Nursing in PDF only on Docsity! C214 OVERVIEW CONCEPT QUIZ The goal of the corporation is to: a. Maximize profits b. Maximize the stock price c. Maximize market share d. Minimize risk - CORRECT ANSWER -Maximize stock price Which of the following is not a requirement for an efficient market? a. Competitive market b. Well-managed firms c. Transparency d. Liquidity - CORRECT ANSWER -Liquidity 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 -Higher risk causes higher required return The value of money depends upon: a. The timing of the receipt b. The certainty of receipt c. Riskiness of receipt d. All of the above - CORRECT ANSWER -All of the above What is the purpose of the SEC 10-K filing requirement? a. Prevent insider training b. Promote transparency and market efficiency c. Regulate securities sales practices d. Prevent monopolies - CORRECT ANSWER -Promote transparency and market efficiency Which line item is not part of networking capital? a. Inventory b. Bonds c. Accounts Payable d. Accrued expenses - CORRECT ANSWER -Bonds Which action causes a cash outflow? a. Increase in accounts payable b. Decrease in accounts receivable c. Increase in inventory d. None of the above - CORRECT ANSWER -Increase in inventory Which of the following is correct? a. Gross PPE equals Net PPE plus depreciation expense b. Gross PPE equals Net PPE plus accumulated depreciation c. Net PPE equals Gross PPE plus depreciation expense d. None of the above - CORRECT ANSWER -Gross PPE equals Net PPE plus accumulated depreciation Net Margin is defined as: c. I/Y d. PMT - CORRECT ANSWER -PMT 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 -All of the above Which can be defined as "change in value of cash over time"? a. Interest rate b. Inflation rate c. Discount rate d. All of the above - CORRECT ANSWER -All of the above Which signifies a need to change the calculator to the Begin mode? a. cash deposited at the beginning of the year b. Recurring payments made at the beginning of the year c. Payments are made more frequently that annually d. None of the above - CORRECT ANSWER -Recurring payments made at the beginning of the year 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 -Payments are received earlier Which is always larger? a. Future value b. Present value c. Payments d. Insufficient information to determine - CORRECT ANSWER -Future value If you wanted to create an annuity with annual adjustments for inflation, you would use: a. Annuity Due b. Ordinary Annuity c. Perpetual Annuity d. Perpetual Growth Annuity - CORRECT ANSWER -Perpetual Growth Annuity Which ratio will always be smaller? a. Gross margin b. Operating margin c. Net margin d. Insufficient information to determine - CORRECT ANSWER -Net margin If net working capital increases, it causes: a. A cash inflow b. A cash outflow c. Does not affect cash flow d. Depends upon accrual accounting - CORRECT ANSWER -A cash outflow What feature distinguishes stock from bonds? a. Requires a prospectus for issuance b. Periodic cash payments must be made to investors c. Capital gains can be realized by investors d. Both b & c - CORRECT ANSWER -Periodic cash payments must be made to investors Which bond feature is not a legal obligation cited in the Indenture? a. Face value b. Coupon Rate c. Maturity Date d. Price - CORRECT ANSWER -Price Yield on a bond can best be described as: a. Interest received by the investor b. The coupon rate c. Rate of increase in value of investment d. Cash return to the investor - CORRECT ANSWER -Rate of increase in value of investment When is the bond yield equal to the coupon rate? a. At premium price b. At par price c. At discount price d. Never - CORRECT ANSWER -At par price b. Required return on stock c. Excess return over risk free rate d. Beta - CORRECT ANSWER -Excess return over risk free rate What best describes Beta? a. measure of financial leverage b. Volatility of a stock's price c. Stock price volatility relative to market volatility d. Measure of stock's required return - CORRECT ANSWER -Stock price volatility relative to market volatility 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 -Buy a low beta stock The required return on stocks is derived from: a. Idiosyncratice risk b. Systematic risk c. Total risk d. Size of the portfolio - CORRECT ANSWER -Systematic risk A prudent investor would seek a. The lowest risk possible b. The highest return possible c. Maximum return for investor's risk tolerance d. Minimize the return-to-risk ration - CORRECT ANSWER -Maximum return for investor's risk tolerance A stock whose return is affected substantially by a recession is: a. Low beta stock b. High beta stock c. Low PE stock d. High PE stock - CORRECT ANSWER -High beta stock Which factor does not affect WACC a. Firm risk exposure b. Treasury yields c. Efficiency ratio d. Tax rate - CORRECT ANSWER -Efficiency ratio Which factor does not impact a stock's price? a. Risk free rate b. Expected dividend growth rate c. Beta d. Maturity Date - CORRECT ANSWER -Maturity Date If a firm believes that the market under-values its stock, it should a. Hold a press conference to express their view b. Buy back stock c. Issue more stock d. State that opinion in the Annual Report - CORRECT ANSWER -Buy back stock A firm is a good investment if a. Its PE is low b. Its price is less than intrinsic value c. Its ROE is high d. It has a great product - CORRECT ANSWER -Its price is less than intrinsic value Why does a firm calculate WACC? a. It is needed to calculate net income b. It is the cost of financing the firm Required input on SEC 10-K report d. Required by GAAP - CORRECT ANSWER -It is the cost of financing the firm Which is a difference between stocks and bonds? a. Price is determined by PV calculation b. Price is determined in market trading c. Increased required return always reduces price d. Required return reflect investor perception of risk - CORRECT ANSWER -Increased required return always reduce price Which is the correct order in terms of lowest to highest required return? a. Bonds, Common Stock, Preferred Stock b. Secured bonds, preferred stock, Common stock c. Subordinated bonds, bonds, common stock Why might a firm buy back stock? a. Increase leverage b. Reduce leverage c. Boost the stock price d. Both a and C - CORRECT ANSWER -Both a and c What are two ways corporations provide profits to stockholders a. Stock buy backs and bond buy backs b. Stock buy backs and dividends c. Stock issuance and dividends d. Reducing leverage - CORRECT ANSWER -Stock buy backs and dividends Which ratio might be used in working capital management a. ROE b. Quick Ratio c. Fixed asset turnover d. None of the above - CORRECT ANSWER -Quick ratio How might a firm incent customers to pay sooner? a. Larger discount b. Longer Credit Period c. Smaller discount d. None of the above - CORRECT ANSWER -Larger discount Which ratio is used to value a private firm? a. PE b. ROE c. Net Worth Ratio d. None of the above - CORRECT ANSWER -PE The SEC regulates financial markets to achieve what goal? a. Protect investors b. Increase transparency c. Increase market efficiency d. All of the above - CORRECT ANSWER -All of the above The Accredited Investor designation is used for a. Rule 144A b. Volker Rule c. Hedge funds d. Both a and c - CORRECT ANSWER -Both a and c FX hedging is used to a. Forcast FX changes b. Reduce FX risk c. Arbitrage currency exchange d. Promote exports - CORRECT ANSWER -Reduce FX risk A strong dollar has what effect? a. Increases international trade b. Increases exports c. Increases imports d. Increases interest rates - CORRECT ANSWER -Increases imports Relatively high interest rates in the U.S. has what effect? a. Strong dollar b. Weak dollar c. Bolsters export d. None of the above - CORRECT ANSWER -Strong dollar 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 -Profits are ore volatile as sales fluctuate Why would a company buy back outstanding stock? a. To boost the price of the stock b. To increase financial leverage c. Lack of investment opportunities d. All of the above - CORRECT ANSWER -All of the above Which can best be described as a present value problem? a. Valuation of bonds b. Valuation of stock