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Question
Which of the following statements is correct?
a. If a bank uses quarterly compounding for saving accounts, the simple rate will be greater than the effective annual rate.
b. The present value of a future sum increases as the simple interest rate increases or the number of discount periods per year decreases.
c. The present value of a future sum increases as either the simple interest rate or the number of discount periods per year increases.
d. The present value of a future sum decreases as either the simple interest rate or the number of discount periods per year increases.
e. All of the above statements are false.
Answer
This answer is hidden. It contains 1 characters.
Related questions
Q:
A protective feature on preferred stock that requires preferred dividends previously not paid to be disbursed before any common stock dividends can be paid is called what?
a. cumulative dividends
b. callable dividends
c. putable dividends
d. historical dividends
e. paid dividends
Q:
A(n) ____ is a bond that pays no annual interest but is sold at a discount below par, thus providing compensation to investors in the form of capital appreciation.
a. coupon bond
b. income bond
c. convertible bond
d. zero coupon bond
e. callable bond
Q:
An investor purchased a call option that allows her to purchase 100 shares of Dell Computer common stock for $45 per share any time during the next six months. The current market price of Dell's stock is $42.50. If the price of Dell increases to $50 and the investor decides to exercise it, what will be the gain or loss that results from the exercise? Ignore taxes and commissions.
a. $500 gain
b. $250 loss
c. $750 gain
d. $250 gain
e. None of the above.
Q:
Which of the following statements is false?
a. When a corporation's shares are owned by a few individuals who are associated with or are the firm's management, we say that the firm is "closely held."
b. A publicly owned corporation is simply a company whose shares are held by the investing public, which may include other corporations and institutions as well as individuals.
c. Going public establishes a true market value for the firm and ensures that a liquid market will always exist for the firm's shares.
d. When stock in a closely held corporation is offered to the public for the first time the transaction is called "going public" and the market for such stock is called the new issue market.
Q:
The terms and conditions to which a bond is subject are set forth in its
a. Debenture.
b. Underwriting agreement.
c. Indenture.
d. Restrictive covenants.
e. Call provision.
Q:
To achieve success in the financial services industry, one needs a knowledge of the factors that cause interest rates to rise and fall, the regulations to which financial institutions are subject, and the various types of financial instruments.
a. True
b. False
Q:
The three main functions in the investments area are sales, the decisions that firms make concerning their cash flows, and determining the optimal mix of securities for a given investor.
a. True
b. False
Q:
If you pursue a business career in a nonfinance profession you will not be exposed to finance concepts on the job.
a. True
b. False
Q:
Throughout the twentieth century, the banking industry has often been the subject of a great deal of regulation, much of which has placed banks at a competitive disadvantage compared with other financial institutions in the United States and other banks throughout the world.
a. True
b. False
Q:
Managerial finance refers to analysis and management of one's investment portfolio.
a. True
b. False
Q:
The study of finance consists of three areas⎯financial markets, investments, and managerial finance⎯that are basically independent of each other, because you can be an expert in one area without having knowledge of the other two.
a. True
b. False
Q:
What major factor(s) led to the U.S. economic woes which started in 2007?
a. U.S. overseas military engagements.
b. A decline in real estate values which resulted in increased mortgage defaults and foreclosures and a decline in financial markets.
c. The European economic crisis.
d. Inflation and manufacturing outsourcing.
e. None of the above.
Q:
Which of the following statements is correct?
a. In the text, depreciation is regarded as a use of cash because it reduces fixed assets, which then must be replaced.
b. If a company uses some of its cash to pay off short-term debt, then its current ratio will always decline, given the way the ratio is calculated, other things held constant.
c. During a recession, it is reasonable to think that most companies' inventory turnover ratios will change while their fixed asset turnover ratios will remain fairly constant.
d. During a recession, we can be confident that most companies' DSOs (or ACPs) will decline because their sales will probably decline.
e. Each of the above statements is false.
Q:
Which of the following actions will cause an increase in the quick ratio in the short run?
a. $1,000 worth of inventory is sold, and an account receivable is created. The receivable exceeds the inventory by the amount of profit on the sale, which is added to retained earnings.
b. A small subsidiary which was acquired for $100,000 two years ago and which was generating profits at the rate of 10 percent is sold for $100,000 cash. (Average company profits are 15 percent of assets.)
c. Marketable securities are sold at cost.
d. All of the above.
e. Answers a and b above.
Q:
A firm's current ratio has steadily increased over the past 5 years, from 1.9 five years ago to 3.8 today. What would a financial analyst be most justified in concluding?
a. The firm's fixed assets turnover probably has improved.
b. The firm's liquidity position probably has improved.
c. The firm's stock price probably has increased.
d. Each of the above is likely to have occurred.
e. The analyst would be unable to draw any conclusions from this information.
Q:
A stock split will cause a change in the total dollar amounts shown in which of the following balance sheet accounts?
a. Cash.
b. Common stock.
c. Paid-in capital.
d. Retained earnings.
e. None of the above.
Q:
Other things held constant, which of the following will not affect the current ratio, assuming an initial current ratio greater than 1.0?
a. Fixed assets are sold for cash.
b. Long-term debt is issued to pay off current liabilities.
c. Accounts receivable are collected.
d. Cash is used to pay off accounts payable.
e. A bank loan is obtained, and the proceeds are credited to the firm's checking account.
Q:
The book value of an asset is the market value less any accumulated depreciation.
a. True
b. False
Q:
The four basic financial statements included in the annual report are the balance sheet, the income statement, the statement of cash flows, and the statement of reported earnings.
a. True
b. False
Q:
Using the direct method to determine cash flows from operations, start with net income, then add back all expenses not paid in cash and subtract all revenues that do not provide cash.
a. True
b. False
Q:
Differences in cash flow cycles and variations in accounting methods among firms can invalidate financial comparisons between firms.
a. True
b. False
Q:
In order to accurately estimate cash flow from operations, depreciation must be added back to net income. The reason for this is that even though depreciation is deducted from revenue it is really a non-cash charge.
a. True
b. False
Q:
Determining whether a firm's financial position is improving or deteriorating requires analysis of more than one set of financial statements. Trend analysis is one method of measuring a firm's performance over time.
a. True
b. False
Q:
Market value ratios provide management with a current assessment of how investors in the market view the firm's past performance and future prospects.
a. True
b. False
Q:
Profitability ratios show the combined effects of liquidity, asset management, and debt management on operations.
a. True
b. False
Q:
The degree to which the managers of a firm attempt to magnify the returns to owners' capital through the use of financial leverage is captured in debt management ratios.
a. True
b. False
Q:
If a firm has high current and quick ratios, this always is a good indication that a firm is managing its liquidity position well.
a. True
b. False
Q:
Savings and loan associations were established to provide commercial real estate financing.
a. True
b. False
Q:
The Federal Deposit Insurance Corporation (FDIC) approves and charters all federal, or national, banks and many state banks.
a. True
b. False
Q:
Mutual savings banks are owned by depositors, as are mutual S&Ls.
a. True
b. False