Details of this Paper

32 MCQ accounts

Description

solution


Question

Question;7.;TheGordonModelofestimatingthevalueofafirmisbestusedinconjunctionwith;(a);astart-up;company;(b);apublic;utility;(c) amanufacturingentity;c@Jlamature;companywithadividend-payinghistoryf3b6?;8.;TheFreeCash;FlowModelisbestusedinconjunctionwith;@astart-upcompany,(S'-\;(b);apublicutility;(c);amanufacturingentity;(d);amature;companywithadividend-payinghistory;9. Relativelyspeaking;commonstockisa costlymethod;offinancingthandebt.;Ccaj)more fl3(.,9;(b) less;10. Relativelyspeaking;commonstockisa costlymethod;offinancingthan preferred stock.;(a) more;@less;11. Whenthenetpresent;valueofaprojectispositive,therateofreturnis the;costofcapital.;(?illgreaterthan;(b);greaterthanorequal to;(c);lessthan;(d);equalto._@.Thecostofissuingnewcommonstockisgenerally thatofinternallygenerated'?efrunedearnings;becauseofflotation;costs.;@greaterthan;(b)lessthan;C@bequal to 3b'1;(d)notcomparableto;13. Iflong-termdebtconstitutes30%ofacompany'scapital;preferredstockconstitutes10%ofthecompany'scapitalandcommonstockconstitutes60%ofthecompany'scapital,andthe;after-taxcostofcapital;is6%forlong-termdebt,12%forpreferredstockand20%forcommonstock,thentheweighted;averagecostofcapitalforthecompanyis.;(a) 12%;(b) 12.67%;(c);20%;@15%;14.;Weighted;marginalcostofcapital------theweighted;averagecostofcapital. isthesameas;(b);isalwayslessthan;(c);shouldneverbecompared;with;(d) typicallydiffersfrom;15.;Abreakpointis;(a)thepointatwhichafombecomesbankrupt;Jiuthesameasafirm'sweightedmarginalcostofcapital;(.@theleveloftotalnewfinancingatwhichthecostofoneofthefinancingcomponentsrises;(d)thepointatwhichnomorefinancing;ispossible;16.;AttheOperatingBreakeven;Point;(a) afirm;hasreacheditsbreakpoint;@EBITequalszero ipSOLJ;(c);NetIncomeequalszero;(d);thefirm'sNetBookValueequalszero;"""?J7."Ifafomhasinvestedheavily in;technologythathasincreasedfixed costsrelativetoits;variablecosts;theresultis----;@anincreaseinoperating;leverage;(b)adecrease;inoperatingleverage;C(t}noeffectonoperatingleverage;(d) anincrease;in financialleverage;18.;Financialleverage;issaidtoriseasafirm'suseof mcreases.;(a);informationtechnology;(b);software-basedbusiness;models;(c);debt;@equity;19. Total Leveragecomprises;(a) risk;andreward;c:J:!D)operatingleverage;andfinancialleverage.p50<'.l;(c);both(a)and(b)arec01Tect;(d) noneoftheabove;20. Thetheoreticalbasisfromwhichtheconceptofriskadjusteddiscount;ratesisderived;is;(a)theGordonModel;the capitalassetpricingmodel(CAPM);(c);thebasiccostofmoney;(d);simulationtheory;21. Thefourbasicsourcesoflong-termfundsforabusinessfirmare;(a) currentliabilities,long-te1mdebt,commonstockandpreferredstock;(b);currentliabilities,long-termdebt,commonstockandretained;earnings;(c);long-termdebt,currentassets;commonstock andretained;earnings;long-termdebt,commonstock,preferredstockandretained;earnings r:::JdJ;22.;f;The isequaltotherateofreturnthatafirmmustearnonitsinvestmentsinprojects tomaintainthemarketvalueofitsstock.;netpresentvalue costofcapital;internalrateofreturn;(d);gross profitmargin;23.;isameasureofNetPresentValuethatallowsdecision;makersto comparealternativelong-term;projectsthatareofdifferent;durations.;(a)BookValue;J!:)InternalRateofReturn;LJ0AnnualizedNetPresentValue D!isci. weo-.).'"

 

Paper#41521 | Written in 18-Jul-2015

Price : $32
SiteLock