Acc 561 Final Exam

Topics: Balance sheet, Investment, Bond Pages: 7 (1085 words) Published: August 16, 2012


1 # Which of the following is the process of planning and managing a firm’s long-term investments?
Select correct option:
Capital Structuring
Capital Rationing
Capital Budgeting
2 # A group of assets such as stocks and bonds held by an investor. Portfolio
Capital Structure
None of the above
3 # The difference between an investment’s market value and its cost is called the __________ of the investment.
Net present value
Economic value
Book value
Future value
4 # The average time between purchasing or acquiring inventory and receiving cash proceeds from its sale is called --------------.
Operating Cycle
Cash Cycle
Receivable period
Inventory period

5# If a firm has a net float less than zero, then which of the following statements is true about the firm.
The firm’s disbursement float is less than its collection float. The firm’s collection float is equal to zero.
The firm’s collection float is less than its disbursement float. None of the given options.
6 # ---------------- refers to the extent to which fixed-income securities (debt and preferred stock) are used in a firm's capital structure.
Financial risk
Portfolio risk
Operating risk
Market risk
7 # _______________ refers to the most valuable alternative that is given up if a particular investment is undertaken.
Sunk cost
Opportunity cost
Financing cost
All of the given options
PLEASE GET ANS 8 # ________________ is the group of assets such as stocks and bonds held by an investor. Portfolio
Stock Bundle
None of the given options
9 # _________ is a special case of annuity, where the stream of cash flows continues forever. Ordinary Annuity

10 # in the formula ke >= (D1/P0) + g, what does (D1/P0) represent? The expected capital gains yield from a common stock
The expected dividend yield from a common stock
The dividend yield from a preferred stock
The interest payment from a bond
11 # A project has an initial investment of $400,000. What would be the NPV for the project if it has a profitability index of 1.15?
12 # If you have a portfolio with $10,000 in asset A and $15,000 in another asset B then what will be the weight of Asset B in your portfolio? 0.30
14 # Which of the following set of cash flows represents the change in the firm’s totalcash flow that occurs as direct result of accepting the project? Relevant Cash Flows
Incremental Cash Flows
Negative Cash Flows
All of the given option

15 # Ann is interested in purchasing Ted's factory. Since Ann is a poor negotiator, she hires Mary to negotiate a purchase price. Identify the parties to this transaction from the given options, keeping in view the agency theory: Ann is the principal and Mary is the agent.

Mary is the principal and Ann is the agent.
Ted is the agent and Ann is the principal.
Mary is the principal and Ted is the agent.
16 # Which one of the given options is generally considered the most liquid asset?
accounts receivable
net fixed assets
intangible assets
17 # While making Common-Size statement, Balance Sheet items are shown as a percentage of :
Total Assets
Total Liabilities
Total Capital
Net Profit
18 # Which of the following item provides the important function of shielding part of income from taxes?
Select correct option:
19 # Which one of the following motives refers to the need for holding cash to satisfy normal disbursement and collection activities associated with a firm’s ongoing operations ? Select correct option:

Speculative motive
Transaction motive
Precautionary motive...
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