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QUESTION 6 Which of the following is true about acquisitions? the value of the target company...

QUESTION 6

  1. Which of the following is true about acquisitions?

the value of the target company always goes up

the value of the acquiring company always goes up

the value of the acquiring company always goes down

none of the above

5 points   

QUESTION 7

  1. Financial ratios can be used

to compare company's performance with the rest of the industry

deterime the value of the company's assets

only to determine the company stock value

make projections for the future

5 points   

QUESTION 8

  1. Which is not true about the Euro-bond market?

the Euro-bond market is an external market, because it is outside the regulatory jurisdiction of any one country.

the bonds so issued are in unregistered form because the owner's name is not cited on the face of the bond itself

coupon payments are made semiannually rather than annually, as is the custom in the United States

the bonds are issued on an unsecured basis, which effectively limits the demand in this market to only the highest-quality issuers

5 points   

QUESTION 9

  1. Which of the following statements best defines exchange rate?

The price paid to borrow debt capital.

The actual rate charged on a loan that compensates investors for postponing consumption, inflation, and risk.

The number of units of a given currency that can be purchased for one unit of another currency.

The nominal, risk-adjusted rate of return that is actually published in financial publications.

The rate of interest that offsets inflation and provides the required real return on a riskless investment.

5 points   

QUESTION 10

  1. Discounted cash flow analysis

can be used to determine the attractiveness of an investment project

should never be used to make assumptions about a planned investment project

can be used to rank the projects by inspecting the cash flows

a and c are correct

5 points   

QUESTION 11

  1. Which of the following is not a potential benefit of an IPO?

improved access to capital markets

guaranteed dividend payment

positive employee compensation incentives

increased liquidity

5 points   

QUESTION 12

  1. Which of the following is true about stocks?

they are always the best investment for a risk adverse investor

their price represents the present value of the expected future cash flows

they do not have any influence on the value of a company

a and b

5 points   

QUESTION 13

  1. In finance WACC means

weighted-asset cost of capital

weighted-average cost of capital

weighted-average capital cost

weighted-average consumption cost

5 points   

QUESTION 14

  1. The capital market can be segmented into the:

stock market

bond market

money markets

a, b and c

5 points   

QUESTION 15

  1. Which of the following is true?

high-dividend payout is always associated with high stock prices

high-dividend payout is never associated with high stock prices

the law requires high-dividend payout when stock prices are high

none of the above

Homework Answers

Answer #1
6- none of the above
7- to compare company's performance with the rest of the industry
8- the Euro-bond market is an external market, because it is outside the regulatory jurisdiction of any one country.
9- The number of units of a given currency that can be purchased for one unit of another currency.
10- a and c are correct
11- guaranteed dividend payment
12- they are always the best investment for a risk adverse investor
13- weighted-average cost of capital
14- A B & C
15- None of the above
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