Corporate Finance Exam Mba

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User| Long Yang|
Submitted| 9/8/11 6:45 PM|
Name| Midterm Exam I|
Status| Completed|
Score| 69 out of 75 points  |
Time Elapsed| 3 hours, 28 minutes, and 53 seconds out of 3 hours and 30 minutes allowed.| Instructions| Good luck!|
|
* Question 1
1 out of 1 points
| |
| Both New York Stock Exchange and NASDAQ are examples of secondary markets.Answer| | | | | Selected Answer:|  True|
Correct Answer:|  True|
| | | |
* Question 2
1 out of 1 points
| |
| Financial manger can create value for a firm by creating more cash flow for it than it uses. To do so, they should make investment decisions so that the firm may buy assets that generate more cash than they cost.Answer| | | | | Selected Answer:|  True|

Correct Answer:|  True|
| | | |
* Question 3
1 out of 1 points
| |
| The separation of ownership from management gives the corporation several advantages over other types of firms. One of them is the unlimited liability.Answer| | | | | Selected Answer:|  False|

Correct Answer:|  False|
| | | |
* Question 4
1 out of 1 points
| |
| Two important financing decisions for a corporate financial manager are debt policy decision and dividend policy decision. Debt policy asks what level of debt is best for the firm. The dividend policy asks what dividend payout ratio is best for the firm.Answer| | | | | Selected Answer:|  True|

Correct Answer:|  True|
| | | |
* Question 5
1 out of 1 points
| |
| In the statement of cash flows, a decrease in accounts receivable is classified as a source of cash from operations.Answer| | | | | Selected Answer:|  True|
Correct Answer:|  True|
| | | |
* Question 6
1 out of 1 points
| |
| If a firm total asset turnover is lower than the industry average, it indicates that the company is not generating a sufficient volume of business given its total asset investment.Answer| | | | | Selected Answer:|  True|

Correct Answer:|  True|
| | | |
* Question 7
1 out of 1 points
| |
| If other things remain the same, the return on equity (ROE) of a firm will go higher as the firm decreases its debt ratio.Answer| | | | | Selected Answer:|  False|
Correct Answer:|  False|
| | | |
* Question 8
1 out of 1 points
| |
| In general, firms with high P/E ratios tend to have high MV/BV ratios.Answer| | | | | Selected Answer:|  True|
Correct Answer:|  True|
| | | |
* Question 9
1 out of 1 points
| |
| The objective of the capital budgeting decision is to maximize the stock price of the company, and it is achieved by maximizing the present value of the growth opportunities.Answer| | | | | Selected Answer:|  True|

Correct Answer:|  True|
| | | |
* Question 10
1 out of 1 points
| |
| The payback period rule accepts all investment projects in which the payback period for the cash flows is greater than the cutoff point.Answer| | | | | Selected Answer:|  False|
Correct Answer:|  False|
| | | |
* Question 11
1 out of 1 points
| |
| A project may have more than one IRR if the cash flow pattern exhibits more than one sign changes.Answer| | | | | Selected Answer:|  True|
Correct Answer:|  True|
| | | |
* Question 12
1 out of 1 points
| |
| In a regular project with an initial cash outflow and subsequent cash inflows, the net present value is negative when the cost of capital is less than IRR.Answer| | | | | Selected Answer:|  False|

Correct Answer:|  False|
| | | |
* Question 13
1 out of 1 points
| |
| If the profitability ratio of a project is smaller than 1, it means the NPV of the project is negative.Answer| | | | | Selected Answer:|  True|
Correct Answer:|  True|
| | | |
* Question 14
1 out of 1 points
| |
| In a...
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