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Fin 571 final exam

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Fin 571 final exam

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Fin 571 final exam

  1. 1. FIN 571 Final Exam PLEASE DOWNLOAD THE ANSWERS HERE!!!1) Which of the following statements is true?2) Book value, or net book value, refers to3) Assume that the par value of a bond is $1,000. Consider a bond where the couponrate is 9% and the current yield is 10%. Which of the following statements is true?4) If the yield to maturity for a bond is less than the bonds coupon rate, the marketvalue of the bond is __________5) For investors, the proper measure of a stocks risk is its __________6) A company’s beta is -1.5. If the overall stock market decreases by 5%, what is theexpected change in the firms stock price?7) Which of these investments would you expect to have the highest rate of returnfor the next 20 years?8) Dimensions of risk include __________9) One problem with using negative values for the proportion invested in the risklessasset to represent a borrowed amount is that the implied borrowing rate of interestis the same as the __________.10) If you were willing to bet that the overall stock market was heading up on asustained basis, it would be logical to invest in11) Stony Products has an inventory conversion period (ICP) of about 70 days. Thereceivables collection period (RCP) is 30 days. The payables deferral period (PDP) isabout 40 days. What is Stonys cash conversion cycle (CCC)?12) The main source of short-term operating capital is _________13) An investor’s risky portfolio is made up of individual stocks. Which of thefollowing statements about this portfolio is true?14) An all-equity-financed firm would __________.15) If a firm wants to lower its weighted average cost of capital (WACC), one way todo so would be to
  2. 2. 16) Boeing® is a world leader in commercial aircraft. In the face of competition,Boeing® often faces a critical __________ decision: whether to develop a newgeneration of passenger aircraft17) Ideas for capital budgeting projects come from all levels within an organization.The bottom-up process results in ideas moving __________ through theorganization18) Which of the following statements is true?19) In practice, the __________ rule is the preferred criteria to accept or reject acapital investment project20) The Jerome Inc. western regional branch has been looking to install a newdistribution center. The analysts have run the numbers on the distribution centercosts and annual inflow from the investment. The project will cost $5 million at thebeginning of the first year. The project will generate $1 million in earnings beforeinterest and taxes at the end of each year. Jerome is in the 35% tax bracket andannual depreciation equates to $500,000 per year. The distribution center’s end ofthe fifth year’s salvage equals its book value, or $2,500,000. Compute the project’sNPV, assuming Jeromes WACC equals 12%.21) The __________ method breaks down when evaluating projects in which thesign of the cash flow changes22) Studies show systematic differences in capital structures across industries.These are due primarily to differences in __________23) Capital structure decisions refer to the24) Which of the following statements concerning preferred stock is true?25) Mortgage bonds are __________26) __________ says to calculate the net advantage of leasing based on theincremental after-tax benefits that leasing will provide27) From the lessee’s viewpoint, the relevant discount rate for evaluating a leaseversus buy decision is the __________28) The wholesale price for Captain John’s is $0.612 per loaf, and the variable cost ofproduction is $0.387 per loaf. Captain John’s expects that expansion will allow themto sell an additional 4.5 million loaves in the next 5 years. What additional revenuesminus expenses will be generated from expansion?29) Which of the following statements is true?
  3. 3. 30) In efficient markets, as in the United States, market prices are not expected tobe __________ FIN 571 Final Exam PLEASE DOWNLOAD THE ANSWERS HERE!!!