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Midterm Practice Finance 351

48 Questions  I  By Kosdaisy
Finance Quizzes & Trivia
Corporate Finance midterm practice for chapters 1-10 in Finance Applications & Theory, by Cornett.

  
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1.  Monitors inside a public firm are
A.
B.
C.
D.
E.
2.  The firms highest level financial manager is usually the
A.
B.
C.
D.
E.
3.  What type of retirement plan do most companies offer to their employees?
A.
B.
C.
D.
E.
4.  The process of monitoring managers and aligning their interests and incentives with shareholders is called
A.
B.
C.
D.
E.
5.  Finance managers goal or objective is
A.
B.
C.
D.
6.  All of the followinf are subareas osf finance listed in the textbook except
A.
B.
C.
D.
E.
7.  If we're discussing business investment (business projects) such as construction of a new assembly line we are most likely describing
A.
B.
C.
D.
E.
8.  The often difficult effort to get managers to align their interests with shareholders is
A.
B.
C.
D.
E.
9.  These types of analysts examine a firm's financial strength for debt holders
A.
B.
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D.
E.
10.  A firm has net sales of $1,500,000, Cost of Goods Sold is $700,000, depreciation expense of $100,000, selling and administrative expenses of $200,000, interest expense of $100,000, and an average tax rate of 40%. What is the firm's net income?
A.
B.
C.
D.
E.
11.  A firm has net sales of $1,500,000, Cost of Goods Sold is $700,000, depreciation expense of $100,000, selling and administrative expenses of $200,000, interest expense of $100,000, and an average tax rate of 40%. What is the firm's operating margin?
A.
B.
C.
D.
E.
12.  A firm has net sales of $1,500,000, Cost of Goods Sold is $700,000, depreciation expense of $100,000, selling and administrative expenses of $200,000, interest expense of $100,000, and an average tax rate of 40%. What is the firm's gross profit margin?
A.
B.
C.
D.
E.
13.  In a standard cash flow statement dividends paid are included in cash flows from
A.
B.
C.
D.
E.
14.  A decrease in a current liability account is considered a(n)
A.
B.
C.
D.
E.
15.  The balance sheet identity states
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B.
C.
D.
E.
16.  Power's Mold Removal's year-end 2009 balance sheet lists current assets of $325,000, fixed assets of $550,000, current liabilities of $290,000, and long-term debt of $260,000. Calculate Power's total stockholders' equity.
A.
B.
C.
D.
E.
17.  Chapman's Home Inspection, Inc.'s 2009 income statement lists the following income and expenses: EBIT = $750,000, Interest expense of $115,000, and taxes of $190,000. Chapman's has no preferred stock outstanding and 200,000 shares of common stock outstanding. Calculate the 2009 earnings per share.
A.
B.
C.
D.
E.
18.  Financial Leverage is best described as
A.
B.
C.
D.
E.
19.  A firm has net sales of $5,000,000, cost of goods sold is $3,000,000, depreciation expense of $300,000, selling and administrative expenses of $600,000, interest expense of $200,000, and an average tax rate of 20%. The firm's net income is
A.
B.
C.
D.
E.
20.  A firm has net sales of $5,000,000, cost of goods sold is $3,000,000, depreciation expense of $300,000, selling and administrative expenses of $600,000, interest expense of $200,000, and an average tax rate of 20%. The firm's operating margin is
A.
B.
C.
D.
E.
21.  A firm has net sales of $5,000,000, cost of goods sold is $3,000,000, depreciation expense of $300,000, selling and administrative expenses of $600,000, interest expense of $200,000, and an average tax rate of 20%.The firm's gross profit margin is
A.
B.
C.
D.
E.
22.  A firm has net sales of $5,000,000, cost of goods sold is $3,000,000, depreciation expense of $300,000, selling and administrative expenses of $600,000, interest expense of $200,000, and an average tax rate of 20%. The firm's taxable income is
A.
B.
C.
D.
E.
23.  A firm has a gross profit of $1,000,000, selling and administrative expenses of $500,000, depreciation of $100,000 and interest expense of $200,000. What is its operating profit?
A.
B.
C.
D.
E.
24.  In a standard cash flow statement, cash flows are separated into all of the following efforts except
A.
B.
C.
D.
25.  An increase in a current liability account is considered a(n)
A.
B.
C.
D.
E.
26.  An industrial park and office complex is available for sale in Berea. Cash flows from rent amount to $1,000,000 per year, every year for the next ten years. Financing arrangements are made to borrow at 8.25%. Calculate the value of the property.
A.
B.
C.
D.
E.
27.  A five year, zero coupon bond with a $1,000 face value sells at auction for $774.26. Calculate the bonds yield to maturity
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B.
C.
D.
E.
28.  Keybank is offering a savings product that pays 6.37% and compounds daily. Calculate the effective rate of return (EAY)
A.
B.
C.
D.
E.
29.  The value of any asset is
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B.
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30.  Umberto Fidele holds a special bond that will pay him $100 per year evert year for the next five years. If Umberto uses a discount rate of 7.5% what is the present value of the bond?
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B.
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D.
E.
31.   Ms. Patel deposits $200 per month every month for the next 20 years. She uses an account that expects to pay 7.63% compounded monthly. What will be the balance in Ms. Patel's account in 20 years?
A.
B.
C.
D.
E.
32.  You will receive $5,000 per year every year for the next for years beginning at the end of this year. If you use 6% as your discount rate, calculate the present value of this annuity.
A.
B.
C.
D.
E.
33.  You will receive $5,000 per year every year for the next for years beginning at the end of this year. If you use 6% as your discount rate, calculate the present value of this annuity. This is an example of a(n)
A.
B.
C.
D.
E.
34.  An investor deposits $5,750 in a certificate of deposti which pays 7.35% and compounds weekly. What will be the balance in seven years?
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B.
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D.
E.
35.  This ratio measures liquidity
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36.  Penowski Corp. reported COGS for 2009 for $23,000,000. The balance sheet showed $5.6 Million in inventory. Using a 365 day year, how many days did Penowski's inventory stay on the premises.
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B.
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E.
37.  A provision in a bond contract that gives the issuer the right to pay-off the bond prior to normal maturity is a
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38.  A corporate bond has an original maturity of ten years, face value of $1,000,000, coupon rate of 4.25%, annual payments, and seven years to maturity. Current yields on similar risk are 6.25%. Value this bond.
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B.
C.
D.
39.  Viewed from a firm;s operating statement the priority of payments is
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B.
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D.
40.  Firm specific risk is often referred to as
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D.
41.  An investor purchases a stock on March 4, 2009 for $1,000 and sells it one year later at a price of $1,450. During the period, the investor receives one dividend payment of $35. The investor
A.
B.
C.
D.
42.  Jonathan Printing Inc. purchases an industrial paper shredder for $10,000. It is expected to generate cash flows of $2,000 every year for the next 10 years. What is the expected dollar return per year and percent return (yield) on this investment?
A.
B.
C.
D.
43.  A client invests $500 at the end of each month for 25 years beginning one month from today. The account is expected to earn 7.25% interest compounded monthly. What will the balance be in 25 years?
A.
B.
C.
D.
44.  A client invests $500 at the end of each month for 25 years beginning one month from today. The account is expected to earn 7.25% interest compounded monthly. What will the balance be in 25 years? If inflation is expected to be 5% over the next 25 years, using the real rate of interest, (nominal minus inflation) recalculate the balance, which reflect the FVA's purchasing power in 2008 dollars.
A.
B.
C.
D.
45.  BTR and BTS generated the following investment returns over the last five years:                     BTR                 BTC2005             35%                   27%2006             13%                   28%2007             3%                     25%2008             9%                     5%2009             115%                  2%Calculate the expected return for 2009 (arithmetic mean average) for BTR
A.
B.
C.
D.
46.  BTR and BTS generated the following investment returns over the last five years:                      BTR                 BTC 2005             35%                   27% 2006             13%                   28% 2007             3%                     25% 2008             9%                     5% 2009             115%                  2%Calculate the sample standard deviation for BTR
A.
B.
C.
D.
47.  A bond with a $10,000 par has a 7.25% annual coupon rate. It will mature in 8 years with semi-annual coupon payments. Present annual yields on similar bonds are 6.23%. What should the current price be? Round your answer to the nearest penny.
48.  A stock most revently paid a dividend of $1.60 and had a dividend growth rate of 7% over the last few years. If an investor plans to hold the stock through the next three years and estimates the stock price to be $53 at the end of the three years what is the value of the stock with a required rate of return of 10%? Round your answer to the nearest penny.
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