Reference no: EM133239467

Questions

1. _________ is NOT one of the major factors that influence the equilibrium interest rate.

Education

Inflation

Risk

Liquidity Preference

2. Net working capital is defined as

A ratio measure of liquidity best used in cross-sectional analysis

The portion of the firm's assets financed with short-term funds

Current liabilities minus current assets

Current assets minus current liabilities

3. BillyGame Ltd. uses debt, preferred stock, and common stock to raise capital. The firm's capital structure is 30% debt, 20% preferred stock and 50% common stock. If the cost of debt is 7.6%, preferred stock costs 10.5%, and common stock costs 8.8%, calculate the weighted average cost of capital (WACC).

8.78%

9.07%

9.29%

8.54%

4. "Company C paid the following dividends in recent years $1.00 (2016), $1.05 (2017), $1.12 (2018), $1.20 (2019), $1.29 (2020). Find out what is the historical annual growth rate of dividends for Company C."

6.6%

7.3%

5.9%

29.0%

5. Your personal financial statements include the following EXCEPT:

Bank statements

Balance sheet

Income and expenditure statement

Cash budget

6. In developing financial planning, it is beneficial to work out different plans for different goals. Which of the following goals would lead to the developing of investment plan?

Acquire financial assets

Control expenses

Meet target expenditures

Manage cost of borrowings

7. PetHeaven Ltd. paid a dividend of $4.80 per share per year for the last 8 years. The company expects to pay the same amount of dividend for the foreseeable future. The current required return for the stock is 6%. Calculate the value of the common stock.

$80.00

$84.80

$8.00

$2.30

8. The value of a bond is the present value of the

Dividends and maturity value

Interest and dividend payments.

Maturity value.

Interest payments and maturity value.

9. The third step in personal financial planning is to:

Work out systematic financial plans

Determine current financial resources

Establish the financial goals

Implement the financial plans

10. Company C's common stock is currently $50 per share. The firm expects to pay a dividend of $3 at the end of the coming year. The dividends growth rate over the past few years has been 5%. Calculate Company C's cost of common equity.

11.0%

5.0%

6.0%

1.0%

11. Tasty Food, Inc. has issued a bond with par value of $1,000, a coupon rate of 9% that is paid semi-annually, and that matures in 10 years. The required return is 7%. What is the semi-annual coupon payment?

$90

$70

$45

None of the above