Reference no: EM132855148

Questions -

Q1) The preferred stock of Xue Enterprise has an expected return of 11.3 percent. The return on the market is 9.2 percent, the inflation rate is 2.5 percent, and the risk-free rate of return is 1.6 percent. What is the beta of this stock?

A) 1.23

B) 1.33

C) 1.41

D) 1.28

Q2) The preferred stock of XFY Sdn Bhd has a beta of 1.34 and an actual expected return of 11.25 percent. The risk-free rate of return is 2.1 percent and the market rate of return is 11.78 percent. Which one of the following statements is true given this information?

A) The stock is currently underpriced.

B) To be correctly priced according to CAPM, the stock should have an expected return of 13.56 percent.

C) The stock has less systematic risk than the overall market.

D) The actual expected stock return indicates the stock is currently overpriced.

Q3) Which one of the following stocks is correctly priced if the risk-free rate of return is 2.84 percent and the market rate of return is 10.63 percent?

A) Petron

B) Petronas

C) Coca Cola

D) DRB Hicom

Q4) Consider the following information: The market risk premium is 5.2 percent, and the risk-free rate is 2.4 percent. The beta of Stock XY is ________ and the beta of Stock ZZ is ________.

A) 1.47; 1.76

B) 1.21; 1.76

C) 1.47; 1.41

D) 1.94; 2.13

Q5) Which one of these activities represents a source of cash?

A) Increasing accounts receivable

B) Decreasing inventory

C) Increasing fixed assets

D) Decreasing common stock

Q6) The operating cycle is equal to the:

A) cash cycle plus the accounts receivable period.

B) inventory period plus the accounts receivable period.

C) inventory period plus the accounts payable period.

D) accounts payable period minus the cash cycle.

Q7) Which one of these affects the length of the cash cycle but not the operating cycle?

A) Inventory period

B) Accounts payable period

C) Both the accounts receivable and inventory periods

D) Both the accounts receivable and the accounts payable periods

Q8) Which one of these statements is correct? Assume all else held constant.

A) decrease in the accounts receivable turnover rate decreases the cash cycle.

B) The cash cycle is equal to the operating cycle minus the inventory period.

C) A negative cash cycle is preferable to a positive cash cycle.

D) A decrease in the accounts payable period shortens the cash cycle.

Q9) An increase in which one of the following is an indicator that an accounts receivable policy is becoming more restrictive?

A) Bad debts

B) Accounts receivable turnover rate

C) Accounts receivable period

D) Credit sales