Reference no: EM133121966

Question 1. The dividend-payout ratio in a firm is calculated by:

a. Dividing dividends paid to common shareholders by Net Income or NOPAT (Net Operating Profit after Taxes).

b. Dividing dividends paid to common shareholders by Retained Earnings.

c. Dividing dividends paid to common shareholders by interest expenses.

d. Dividing dividends paid to common shareholders by Earnings before Interest and Taxes (EBIT).

Question 2: In corporate finance, the core body of knowledge is :

a. Derived solely from Mathematical Statistics

b. Derived solely from Economic Theory

c. Inter-disciplinary

d. Primary

Question 3: The principal-agent model governs the interaction between:

a. Stockholders and bondholders.

b. Management and the government

c. Management and bond-holders.

d. Stockholders and management.

Question 4: Operating Income (EBIT) is calculated on the basis of:

a. Adjustments to amortization expenses.

b. Adjustments to Gross Profit.

c. Adjustments to interest expenses.

d. Adjustments to Net Income.

Question 5: Weak-form efficiency, in terms of the Efficient Market Hypothesis of Eugene Fama and Paul Samuelson , refers to:

a. The completely random behaviour of asset prices.

b. The possibility of earning excess profit through technical analysis rules.

c. The possibility of insider trading.

d. The partially random behaviour of asset prices.

Question 6: Using private informaton to make windfall gains or arbitrage is a possibility for:

a. Neither semi-strong form nor weak-form efficiency.

b. Weak-form efficiency.

c. Semi-strong from efficiency.

d. Strong-form efficiency.

Question 7: Among other things, shareholder-managerial conflicts of interest often arise as a result of:

a. The proclivity of managers to maximize their own perquisite consumption.

b. The tendency of bondholders to monitor managerial activities.

c. The tendency of shareholders to dictate terms to bondholders.

d. The government's favouritism toward powerful Boards of Directors in MNCs.

Question 8: In terms of market efficiency, long-run value maximization for a firm implies:

a. A negative NPV.

b. A positive NPV.

c. A zero NPV.

d. An indeterminate NPV.