Finance Question and Answers Essay - 3782 Words
Finance Question and Answers
Finance Question and Answers
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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Because common shareholders are entitled to the profits that remain after all of a corporation's 1) _______
other obligations have been met, common shareholders are known as A) debt owners.
B) temporary owners.
C) owners of last resort.
D) residual owners.
2) An individual who invested $100,000 in average stocks early in the year 2000 would have approximately how much money at the end of 2008?
A) $37,500
B) $96,400
C) $74,000
D) $137,500
2) _______
3) Over the long run, stocks have provided investors with annual returns of around A) 12% to 14%.
B) 6% to 8%.
C) 10% to 12%.
D) 8% to 10%.
3) _______
4) If stocks earn an average rate of return of 12 %, their value doubles every A) 8 years.
B) 6 years.
C) 4 years.
4) _______
D) 12 years.
5) Which one of the following statements about common stock is true? A) Common stocks generally have a negative rate of return over a ten-year period. B) Dividends generally provide the greatest rate of return on common stocks. C) The DJIA is the best indicator of the overall performance of common stocks. D) Common stock can provide attractive capital appreciation opportunities.
5) _______
6) When a company, working with an underwriter, offers the investing public a certain number of shares of its stock at a certain price, the company is making what is known as a A) stock spin-off.
B) public offering.
C) rights offering.
D) treasury offering.
6) _______
7) In a rights offering, the
A) total equity remains constant while the number of shares of common stock outstanding increases.
B) amount of debt in the capital structure increases by the amount of the rights offering. C) existing stockholders are given the first opportunity to purchase new shares in proportion to their current ownership position.
D) underwriter offers the investing public a certain number of shares at a certain price.
7) _______
8) Rob owns 300 shares of Blackwood common stock valued at $9 a share. Blackwood has declared a 3-for-1 stock split effective tomorrow. After the split, Rob will own A) 100 shares valued at about $27 a share.
B) 900 shares valued at about $27 a share.
C) 900 shares valued at about $3 a share.
D) 100 shares valued at about $3 a share.
8) _______
9) Engines, Inc. declares a 2-for-5 stock split. The stock currently sells for $3 a share. A shareholder who owned 100 shares of stock prior to the split will now own A) 250 shares valued at about $1.20 a share.
B) 250 shares valued at about $7.50 a share.
C) 40 shares valued at about $1.20 a share.
D) 40 shares valued at about $7.50 a share.
9) _______
10) When a corporation declares a stock split, it usually does so because A) there are too many shares of stock outstanding.
B) investors sometimes require nontaxable returns.
C) the firm's retained earnings are excessive.
10) ______
D) the stock price is too high.
11) Stock which has been issued and subsequently reacquired by the issuing corporation is called A) treasury stock.
B) book stock.
C) classified stock.
D) letter stock.
11) ______
12) Tiffany owned 1000 shares of GIA stock which was selling for $1.50 per share when the company declared a 1 for 10 reverse split. After the split, Tiffany owned A) 100 shares worth approximately $15 per share.
B) 10,000 shares worth approximately $1.50 per share.
C) 100 shares worth approximately $1.50 per share.
D) 10,000 shares worth approximately $0.15 per share.
12) ______
13) Wall Street Journal Stock quotations include
the highest and lowest price over the last 52 weeks
dividend and dividend yield
PE (price/earnings) ratio
the stock's beta
A) I and III only
B) I, III and IV only
C) I, II and III only
D) II and IV only
13) ______
14) A round lot consists of
A) 100 shares.
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...FIN 301 HW
Chapter 1 (Odds 1-17)
1. Define shareholder wealth. Explain how it is measured
Shareholder wealth is represented by the market price of a firm’s common stock. It is measured by the market value of the shareholders’ common stock holdings
2. Which type of corporation is more likely to be a shareholder wealth maximizer
-one with wide ownership and no owners directly involved in the firms management or one that is closely held.
A closely held corporation
3. It has been argued
that shareholder wealth maximization is not a realistic normative goal for the firm, given the social responsibility activities that the firm is “expected” to engage in (such as contributing to the arts, education, etc.). Explain why these social responsibility activities are not inconsistent with shareholder wealth maximization.
By increasing shareholder wealth, the net worth of the shareholders increase. This would allow them to contribute to their own social responsible activities because they will have additional funds to invest in their own communities.
4. Explain what is meant by agency relationships and agency costs
Agency relationships occur when one or more of the principals hire an agent to perform a service on behalf of the principals. Agency costs are costs incurred by the owners of a firm when others manage the firm.
5. What is the source of potential agency conflicts between owners and bondholders? Who is the agent and who is the principal in this relationship?
Bondholders...
Introduction - Types Of Financial Institutions And Their Roles
A financial institution is an establishment that conducts financial transactions such as investments, loans and deposits. Almost everyone deals with financial institutions on a regular basis. Everything from depositing money to taking out loans and exchanging currencies must be done through financial institutions. Here is an overview of some of the major categories of financial institutions and their roles in the financial
mercial BanksCommercial banks accept deposits and provide security and convenience to their customers. Part of the original purpose of banks was to offer customers safe keeping for their money. By keeping physical cash at home or in a wallet, there are risks of loss due to theft and accidents, not to mention the loss of possible income from interest. With banks, consumers no longer need to keep large amounts transactions can be handled with checks, debit cards or credit cards, mercial banks also make loans that individuals and businesses use to buy goods or expand business operations, which in turn leads to more deposited funds that make their way to banks. If banks can lend money at a higher interest rate than they have to pay for funds and operating costs, they make money.Banks also serve often under-appreciated roles as payment agents within a country and between nations. Not only do banks issue debit cards that allow account holders to pay for...
...number. You may omit explanations of the transactions.1. Stockholders invest $25,000 in cash in starting a real estate office operating as a corporation.2. Purchased $500 of supplies on credit.3. Purchased equipment for $15,000, paying $3,500 in cash and signed a 30-day, $11,500, note payable.4. Real estate commissions billed to clients amount to $4,000.5. Paid $700 in cash for the current month's rent.6. Paid $250 cash on account for office supplies purchased in transaction 2.7. Received
a bill for $800 for advertising for the current month.8. Paid $2,500 cash for office salaries.9. Paid $1,200 cash dividends to stockholders.10. Received a check for $2,000 from a client in payment on account for commissions billed in transaction 4.|
Answer Key
21.|(5 min.)1.|Interest Receivable
|||Interest Revenue||200| 2.|Property Taxes Expense | 900||||Property Taxes Payable || 900| 5.|Salaries Expense |600||||Salaries Payable ||600||
22.|(10 min.)1.|Depreciation Expense ||1,340||||Accumulated Depreciation—Equipment ||1,340| 2.|Interest Expense ||275||||Interest Payable ||275| 3.|Supplies Expense ||400||||Supplies ||400||||($550 – $150)| 4.|Rent Expense ||700||||Prepaid Rent ||700|5.|Salaries Expense ||900||||Salaries Payable ||900||
23.|1.|B|6.||H|2.|D|7.||C|3.|J|8.||F|4.|A|9.||I|5.|E|10.||G||
24.|(15...
...Chapter 2 Overview of Financial Reporting for State and Local Governments
True/False Questions
1. A Comprehensive Annual Financial Report (CAFR) would include an introductory section, management's discussion and analysis, basic financial statements, required supplementary information other than MD&A, combining and individual fund statements, narrative explanations, and statistical section.
Answer: True
2. The three major sections of a CAFR are
the Introductory, Financial, and statistical sections.
3. The introductory and statistical sections of a CAFR are not audited.
4. State and local governments are required to prepare a CAFR.
5. Combining statements are required whenever a non-major column is used in one of the fund financial statements.
6. A complete CAFR includes combining financial statements to reflect major funds.
In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental funds only.
8. In addition to the government-wide statements, governments are required to prepare fund financial statements for governmental, proprietary and fiduciary funds.
9. The General Fund is always considered to be a major fund when...
...T he Sisyphean Corporation
The Sisyphean Corporation is considering investing in a new cane manufacturing
machine that has an estimated life of three years. The cost of the machine is
$30,000 and the machine will be depreciated straight line over its three-year life to a
residual value of $0.
The cane manufacturing machine will result in sales of 2,000 canes in year 1. Sales
are estimated to grow by 10% per year each year through year three. The price per
cane that Sisyphean will
charge its customers is $18 each and is to remain constant.
The canes have a cost per unit to manufacture of $9 each.
Installation of the machine and the resulting increase in manufacturing capacity will
require an increase in various net working capital accounts. It is estimated that the
Sisyphean Corporation needs to hold 2% of its annual sales in cash, 4% of its annual
sales in accounts receivable, 9% of its annual sales in inventory, and 5% of its annual
sales in accounts payable. The firm is in the 35% tax bracket, and has a cost of
capital of 10%.
Calculate the total Free Cash Flows for each of the three years for the Sisyphean
Corporation's new project.
I ncremental Earnings
Sales (units × $18)
Cost of Good Sold (units × $9)
Gross Profit
Depreciation ($30,000 / 3)
Income tax at 35%
Unlevered net income
Add back Depreciation
Cash Flows from Operations
...Question 1
The rapid growth in the international trade has also increased the risk of exchange rate uncertainty for the various firms, specially involved in the international business. As compared to other macroeconomic factors like interest rate and inflation rate, foreign exchange rate exposure is four times and ten times as volatile as interest rate and inflation rate respectively (Jorion, 1990). This type of risk has forced the firms to pay more attention to the effect
of exchange rate exposure on the firm transactions and its value. Exchange rate exposure can affect the value of firm’s assets and liabilities that are denominated in the foreign currencies. Therefore, exchange rate movement also affects the stock price of the firm (Chen, Naylor and Lu, 2004). Transaction based exchange rate exposure affect the competitive position, the inputs and outputs, the supply and demand chains of the international firms.
Transaction based exposure is the type of exchange rate risk that exists when firms engaged in the financial obligations due to be settled in foreign currencies. For example, a company that conduct import and export business may be due to be paid foreign currency in next 3 months for some goods exported. When they will receive the payment, they have to convert the foreign currency into their local currency. If during these three months, the value of local currency becomes stronger against the foreign currency, then the firm will receive fewer...
...Name: Yevgeniy Zhembrovskiy
Student ID:
Course: 44MBBUAD6VP1 (Part-time MBA Kazakhstan)
Module title: Macro-microeconomics
Assignment title: Macroeconomic analysis of Kazakhstan republic and Microeconomic analysis of Representative of Cisco Company in Kazakhstan
Number of page: 17
Word count (without contents and references): 4 980
Part 1. Macroeconomic analysis of Kazakhstan republic
Main economic indicators of the Kazakhstan
................................................................................1
Pest analysis……………………………………………………………………………………….4
Conclusions on result of PEST analysis ………………………………………………………….6
General conclusions on economic of Kazakhstan according to represented data ………………..7
Analysis of ICT sector of Kazakhstan…………………………………………………………….8
Part 2 .Micro economic analysis of representative of Cisco company in Kazakhstan
Portrait of the company………………………………………………………………………..…10
Human resources………………………………………………………………………………....12
Partner landscape……………………………………………………………………………..….12
SWOT analysis ……………………………………………………………………..…………...14
Conclusions on SWOT analysis and economic data……………………………………………16
Part 1. Macroeconomic analysis of Kazakhstan country
Main economic indicators of the country
The goal of the first part of my essay is to analyze current economic situation in Kazakhstan country, trends in changing main indicators in post-crisis period and to suggest ways for...
...Question 1
(5 points) In a world with no frictions (i.e., taxes, etc.), having debt is always better because it increases the value of the firm/project.
Your Answer
Explanation
Correct. You understand the irrelevance of financing.
5.00 / 5.00
Question Explanation
Fundamental question about value creation.
Question 2
(5 points) The return of equity is equal to
the return on debt of a project/firm
Your Answer
Explanation
Sometimes true.
Always true.
Never true.
Correct. Equity is always riskier.
5.00 / 5.00
Question Explanation
Financing's effects on equity.
Question 3
(10 points) Suppose the expected returns on equity of two firms, Macrosoft and Microsoft, that operate in the same industry are 10.50% and 12.60%, respectively. What is the return on assets in this business if Macrosoft has no debt? (No more than two decimals in the percentage interest rate, but do not enter the % sign.)
Answer for Question 3
You entered:
Your Answer
Explanation
Correct. You understand that return on assets in a business cannot vary for different forms.
10.00 / 10.00
Question Explanation
The effects of leverage on business risk.
Question 4...
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求翻译：number of shares includes number of treasury shares是什么意思？
number of shares includes number of treasury shares
问题补充：
股份数目包括库藏股数
数目的股份包括庫存股份的数目
份额的数字包括数字财宝份额
股份数目包括国库股数
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请输入您需要翻译的文本！Treasury Offering 是什么意思啊啊？_百度知道
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Treasury Offering 是什么意思啊啊？
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2, prices on 10-year Treasury notes soared,offering double-digit returns in an otherwise dismal year.在接下来的五周里.财政部计划在通用汽车举行首次公开募股后开始出售所持股权Treasury Offering 库存证券发行例句筛选1.Over the next five weeks.The Treasury plans to start selling its equity stake after GM launches aninitial public offering of stock，10年期美国国债价格飙升，实现两位数的回报率，扭转了今年的惨淡走势
采纳率：93%
Offering的翻译是库存证券发行，您所说的这个词语同学你好，很高兴为您解答！ Treasury&/c/gaodunzhidao" target="_blank">高顿企业知道。高顿祝您生活愉快，是属于CMA核心词汇的一个:///c/gaodunzhidao" title="http://zhidao，这个词的意义如下：一家公司利用库存证券发行新一级别的证券。 希望的回答能帮助您解决问题，更多财会问题欢迎提交给<a href="http
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treasury在审计里什么意思
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treasury英 [ˈtreʒəri]
美 [ˈtrɛʒəri]
国库，金库;（政府的）财政部;宝库，宝藏;贮藏所，库房
采纳率：83%
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USA Treasury offering $ 10 year bonds, the over subscription ratio of 2.52 times
The Treasury sold $ of 10 year bonds over
subscription ratio of 2.52 times.
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