Question

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

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