Question details

FIN 534- WEEK 11 FINAL EXAM PART 2 | A+ work
$ 15.00

·  Question 1

2 out of 2 points

   

Correct

Which of the following is NOT normally regarded as being a barrier to hostile takeovers?

Answer

     
       

·  Question 2

2 out of 2 points

   
 

Which of the following is NOT normally regarded as being a good reason to establish an ESOP?

Answer

     

Selected Answer:

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To make it easier to grant stock options to employees.

Correct Answer:

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To make it easier to grant stock options to employees.

     

·  Question 3

2 out of 2 points

   

Correct

Which of the following statements is correct?

Answer

     

Selected Answer:

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Large stock repurchases financed by debt tend to increase earnings per share, but they also increase the firm's financial risk.

Correct Answer:

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Large stock repurchases financed by debt tend to increase earnings per share, but they also increase the firm's financial risk.

     

·  Question 4

2 out of 2 points

   

Correct

The capital budget of Creative Ventures Inc. is $1,000,000. The company wants to maintain a target capital structure that is 30% debt and 70% equity. The company forecasts that its net income this year will be $800,000. If the company follows a residual dividend policy, what will be its total dividend payment?

Answer

     

Selected Answer:

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$100,000

Correct Answer:

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$100,000

     

·  Question 5

2 out of 2 points

   

Correct

Which of the following statements is correct?

Answer

     
       

·  Question 6

2 out of 2 points

   

Correct

Which of the following statements is NOT correct?

Answer

     
       

·  Question 7

2 out of 2 points

   

Correct

Which of the following statements is correct?

Answer

     
       

·  Question 8

2 out of 2 points

   

Correct

Consider two very different firms, M and N. Firm M is a mature firm in a mature industry. Its annual net income and net cash flows are both consistently high and stable. However, M's growth prospects are quite limited, so its capital budget is small relative to its net income. Firm N is a relatively new firm in a new and growing industry. Its markets and products have not stabilized, so its annual operating income fluctuates considerably. However, N has substantial growth opportunities, and its capital budget is expected to be large relative to its net income for the foreseeable future. Which of the following statements is correct?

Answer

     
       

·  Question 9

2 out of 2 points

   

Correct

Poff Industries' stock currently sells for $120 a share. You own 100 shares of the stock. The company is contemplating a 2-for-1 stock split. Which of the following best describes what your position will be after such a split takes place?

Answer

     
       

·  Question 10

2 out of 2 points

   

Correct

Which of the following would increase the likelihood that a company would increase its debt ratio, other things held constant?

Answer

     
       

·  Question 11

2 out of 2 points

   

Correct

Two operationally similar companies, HD and LD, have the same total assets, operating income (EBIT), tax rate, and business risk. Company HD, however, has a much higher debt ratio than LD. Also HD's basic earning power (BEP) exceeds its cost of debt (rd). Which of the following statements is CORRECT?

Answer

     

Selected Answer:

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HD should have a higher return on equity (ROE) than LD, but its risk, as measured by the standard deviation of ROE, should also be higher than LD's.

Correct Answer:

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HD should have a higher return on equity (ROE) than LD, but its risk, as measured by the standard deviation of ROE, should also be higher than LD's.

     

·  Question 12

2 out of 2 points

   

Correct

Companies HD and LD have identical tax rates, total assets, and basic earning power ratios, and their basic earning power exceeds their before-tax cost of debt, rd. However, Company HD has a higher debt ratio and thus more interest expense than Company LD. Which of the following statements is CORRECT?

Answer

     

Selected Answer:

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Company HD has a lower ROA than Company LD.

Correct Answer:

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Company HD has a lower ROA than Company LD.

     

·  Question 13

2 out of 2 points

   

Correct

Based on the information below for Benson Corporation, what is the optimal capital structure?

Answer

     
       

·  Question 14

2 out of 2 points

   

Correct

Which of the following statements best describes the optimal capital structure? The optimal capital structure is the mix of debt, equity, and preferred stock that maximizes the company's ____.

Answer

     
       

·  Question 15

2 out of 2 points

   

Correct

Blueline Publishers is considering a recapitalization plan. It is currently 100% equity financed but under the plan it would issue long-term debt with a yield of 9% and use the proceeds to repurchase common stock. The recapitalization would not change the company's total assets, nor would it affect the firm's basic earning power, which is currently 15%. The CFO believes that this recapitalization would reduce the WACC and increase stock price. Which of the following would also be likely to occur if the company goes ahead with the recapitalization plan?

Answer

     
       

·  Question 16

2 out of 2 points

   

Correct

Barette Consulting currently has no debt in its capital structure, has $500 million of total assets, and its basic earning power is 15%. The CFO is contemplating a recapitalization where it will issue debt at a cost of 10% and use the proceeds to buy back shares of the company's common stock, paying book value. If the company proceeds with the recapitalization, its operating income, total assets, and tax rate will remain unchanged. Which of the following is most likely to occur as a result of the recapitalization?

Answer

     
       

·  Question 17

2 out of 2 points

   

Correct

Other things held constant, which of the following would tend to reduce the cash conversion cycle?

Answer

     
       

·  Question 18

2 out of 2 points

   
 

A lockbox plan is

Answer

     

Selected Answer:

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used to speed up the collection of checks received.

Correct Answer:

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used to speed up the collection of checks received.

     

·  Question 19

2 out of 2 points

   
 

Which of the following will cause an increase in net working capital, other things held constant?

Answer

     
       

·  Question 20

2 out of 2 points

   

Correct

Which of the following actions should Reece Windows take if it wants to reduce its cash conversion cycle?

Answer

     
       

·  Question 21

2 out of 2 points

   

Correct

Which of the following is NOT commonly regarded as being a credit policy variable?

Answer

     
       

·  Question 22

2 out of 2 points

   

Correct

Which of the following items should a company report directly in its monthly cash budget?

Answer

     
       

·  Question 23

2 out of 2 points

   

Correct

Suppose Yates Inc., a U.S. exporter, sold a consignment of antique American muscle-cars to a Japanese customer at a price of 143.5 million yen, when the exchange rate was 140 yen per dollar. In order to close the sale, Yates agreed to make the bill payable in yen, thus agreeing to take some exchange rate risk for the transaction. The terms were net 6 months. If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would Yates actually receive after it exchanged yen for U.S. dollars?

Answer

     
       

·  Question 24

2 out of 2 points

   

Correct

Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.41 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.64 euros. What is the cross-rate of Swiss francs to euros?

Answer

     

Selected Answer:

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0.86

Correct Answer:

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0.86

     

·  Question 25

2 out of 2 points

   

Correct

If the inflation rate in the United States is greater than the inflation rate in Britain, other things held constant, the British pound will

Answer

     

Selected Answer:

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Appreciate against the U.S. dollar.

Correct Answer:

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Appreciate against the U.S. dollar.

     

·  Question 26

2 out of 2 points

   

Correct

Which of the following is NOT a reason why companies move into international operations?

Answer

     
       

·  Question 27

2 out of 2 points

   
 

If it takes $0.71 U.S. dollars to purchase one Swiss franc, how many Swiss francs can one U.S. dollar buy?

Answer

     
       

·  Question 28

2 out of 2 points

   

Correct

If 1.64 Canadian dollars can purchase one U.S. dollar, how many U.S. dollars can you purchase for one Canadian dollar?

Answer

     
       

·  Question 29

2 out of 2 points

   

Correct

Suppose it takes 1.82 U.S. dollars today to purchase one British pound in the foreign exchange market, and currency forecasters predict that the U.S. dollar will depreciate by 12.0% against the pound over the next 30 days. How many dollars will a pound buy in 30 days?

Answer

     
       

·  Question 30

2 out of 2 points

   

Correct

Which of the following statements is NOT CORRECT?

Answer

     
       

Test

Week 11 Final Exam Part 2

Started

3/15/16 8:34 PM

Submitted

3/15/16 10:01 PM

Due Date

3/21/16 9:00 AM

Status

Completed

Attempt Score

60 out of 60 points  

Time Elapsed

1 hour, 26 minutes out of 3 hours

Instructions

This exam consist of 30 multiple choice questions and covers the material in Chapters 13 through 17.

Results Displayed

Submitted Answers, Correct Answers, Feedback

             

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 1

2 out of 2 points

 

 
 

Which of the following is NOT normally regarded as being a barrier to hostile takeovers?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 2

2 out of 2 points

 

 
 

Which of the following is NOT normally regarded as being a good reason to establish an ESOP?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 3

2 out of 2 points

 

 
 

Which of the following statements is correct?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 4

2 out of 2 points

 

 
 

In the real world, dividends

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 5

2 out of 2 points

 

 
 

Which of the following actions will best enable a company to raise additional equity capital?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 6

2 out of 2 points

 

 
 

Consider two very different firms, M and N. Firm M is a mature firm in a mature industry. Its annual net income and net cash flows are both consistently high and stable. However, M's growth prospects are quite limited, so its capital budget is small relative to its net income. Firm N is a relatively new firm in a new and growing industry. Its markets and products have not stabilized, so its annual operating income fluctuates considerably. However, N has substantial growth opportunities, and its capital budget is expected to be large relative to its net income for the foreseeable future. Which of the following statements is correct?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 7

2 out of 2 points

 

 
 

Which of the following statements is correct?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 8

2 out of 2 points

 

 
 

Rohter Galeano Inc. is considering how to set its dividend policy. It has a capital budget of $3,000,000. The company wants to maintain a target capital structure that is 15% debt and 85% equity. The company forecasts that its net income this year will be $3,500,000. If the company follows a residual dividend policy, what will be its total dividend payment?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 9

2 out of 2 points

 

 
 

Which of the following statements is NOT correct?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 10

2 out of 2 points

 

 
 

Which of the following statements is CORRECT?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 11

2 out of 2 points

 

 
 

Which of the following statements is CORRECT?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 12

2 out of 2 points

 

 
 

Which of the following events is likely to encourage a company to raise its target debt ratio, other things held constant?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 13

2 out of 2 points

 

 
 

Which of the following statements is CORRECT?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 14

2 out of 2 points

 

 
 

Daylight Solutions is considering a recapitalization that would increase its debt ratio and increase its interest expense. The company would issue new bonds and use the proceeds to buy back shares of its common stock. The company's CFO thinks the plan will not change total assets or operating income, but that it will increase earnings per share (EPS). Assuming the CFO's estimates are correct, which of the following statements is CORRECT?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 15

2 out of 2 points

 

 
 

Which of the following statements is CORRECT?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 16

2 out of 2 points

 

 
 

Which of the following statements is CORRECT?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 17

2 out of 2 points

 

 
 

A lockbox plan is

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 18

2 out of 2 points

 

 
 

Which of the following is NOT directly reflected in the cash budget of a firm that is in the zero tax bracket?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 19

2 out of 2 points

 

 
 

Other things held constant, which of the following would tend to reduce the cash conversion cycle?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 20

2 out of 2 points

 

 
 

Which of the following statements is most consistent with efficient inventory management? The firm has a

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 21

2 out of 2 points

 

 
 

Which of the following is NOT commonly regarded as being a credit policy variable?

     

Selected Answer:

Correct

Payments deferral period.

Correct Answer:

Correct

Payments deferral period.

     

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 22

2 out of 2 points

 

 
 

A lockbox plan is most beneficial to firms that

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 23

2 out of 2 points

 

 
 

In 1985, a given Japanese imported automobile sold for 1,476,000 yen, or $8,200. If the car still sold for the same amount of yen today but the current exchange rate is 144 yen per dollar, what would the car be selling for today in U.S. dollars?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 24

2 out of 2 points

 

 
 

Suppose Yates Inc., a U.S. exporter, sold a consignment of antique American muscle-cars to a Japanese customer at a price of 143.5 million yen, when the exchange rate was 140 yen per dollar. In order to close the sale, Yates agreed to make the bill payable in yen, thus agreeing to take some exchange rate risk for the transaction. The terms were net 6 months. If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would Yates actually receive after it exchanged yen for U.S. dollars?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 25

2 out of 2 points

 

 
 

If 1.64 Canadian dollars can purchase one U.S. dollar, how many U.S. dollars can you purchase for one Canadian dollar?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 26

2 out of 2 points

 

 
 

Suppose it takes 1.82 U.S. dollars today to purchase one British pound in the foreign exchange market, and currency forecasters predict that the U.S. dollar will depreciate by 12.0% against the pound over the next 30 days. How many dollars will a pound buy in 30 days?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 27

2 out of 2 points

 

 
 

Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day) return. In the U.S., 90-day investments of similar risk have a 4% annualized return and a 1% quarterly (90-day) return. In the 90-day forward market, 1 British pound equals $1.65. If interest rate parity holds, what is the spot exchange rate?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 28

2 out of 2 points

 

 
 

If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.97 shekels per dollar, then the forward rate for the Israeli shekel is selling at a ____ to the spot rate.

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 29

2 out of 2 points

 

 
 

Suppose 1 U.S. dollar equals 1.60 Canadian dollars in the spot market. 6-month Canadian securities have an annualized return of 6% (and thus a 6-month periodic return of 3%). 6-month U.S. securities have an annualized return of 6.5% and a periodic return of 3.25%. If interest rate parity holds, what is the U.S. dollar-Canadian dollar exchange rate in the 180-day forward market?

     
       

https://blackboard.strayer.edu/images/ci/icons/generic_updown.gifQuestion 30

2 out of 2 points

 

 
 

Suppose one U.S. dollar can purchase 144 yen today in the foreign exchange market. If the yen depreciates by 8.0% tomorrow, how many yen could one U.S. dollar buy tomorrow?

     
       

 

Available solutions