Q&A Hero

Q: What is the holding period return to an investor who bought 100 shares of Charter Oil nine months ago for $36 per share, received two $50 dividend checks, and sold the stock today at $38 a share. a. 5.56% b. 8.33% c. 11.11% d. 6.94%

Q: If an investor purchased 100 shares of BGE for $30 per share, 6 months ago, and then sold the stock today for $33 per share, what was the investor's holding period return if a total of $1 per share in dividends was received over the 6 month period? a. 10% b. 27.1% c. 17.1% d. None of the above

Q: Christy purchased 100 shares of General Data for $48 last year. Yesterday she sold the stock for $45. If she received $4 in dividends during the time she held the security, what is her holding period return? a. 2.08% b. 8.30% c. -6.30% d. 14.60%

Q: Bell South pays a quarterly dividend of $0.70, has a P/E ratio of 14 and closed yesterday at $48.25. What is the dividend yield? a. 5.45% b. 1.45% c. 5.8% d. 7.25%

Q: What is the current value of the common stock of The Limited if you know the current dividend yield is 6.14%, the P/E is 16, and the annual dividend is $1.35? a. $21.60 b. $21.99 c. $8.29 d. $98.24

Q: In stock quotations, the last column - showing the net change - indicates the net change in a. a share's price during the day b. the dividend yield c. the closing price from the previous day's close d. a share's high price during the day

Q: The P/E ratio indicates a. how much investors are willing to pay for $1 of current earnings b. the current yield c. the current price d. how risky the stock is

Q: From the following stock quotation, what is AT&T's dividend yield? ATT 0.95 4.4 8 65529 21.49 0.62 a. 0.95% b. 12% c. 4.4% d. 21.49%

Q: The following bond quotation indicates that the holder expects to receive ____ in interest annually: PAC 11s09 a. $90 b. $116 c. $1,000 d. $110

Q: The following is from a bond quotation from The Wall Street Journal: General Motors 8.375 coupon; Last price 117.260; Yield 6.986 If the bond has a face (par) value of $1000, what was the market price? a. $8,375 b. $1,172.60 c. $1,000 d. $6,986

Q: With semistrong-form market efficiency, no investor can expect to earn excess returns based on an investment strategy using any ____ information. a. past market price b. market value c. publicly available d. private

Q: The fact that no investor can expect to earn excess returns based on an investment strategy using only historical stock price or return information is an example of ____ market efficiency. a. strong-form b. weak-form c. semiweak-form d. semistrong-form

Q: Ex post returns differ from ____ returns in that they represent ____ values rather than ____ values. a. ex ante; estimated; actual b. ex post; accounting; economic c. ex ante; actual; estimated d. ex ante; economic; accounting

Q: The U.S. financial markets are said to be highly informationally efficient. This means a. they process stock trades accurately and quickly b. the market provides quick access to a firm's financial statements c. they quickly reflect information relevant to determining stock value d. accurate stock quotes are quickly available to all investors

Q: Insider trading is defined as a. an individual using proper trading rules b. an individual buying or selling using non-SEC disclosure rules c. an individual buying or selling on the basis of material nonpublic information d. a zero-plus game

Q: The Dow Jones Industrial Average is calculated using the a. total market value of 30 stocks b. price of 30 stocks c. a weighted index of 30 stocks d. industrial, railroad, financial, and utility stocks

Q: When an investor purchases shares in a no-load common stock mutual fund, she is using a(n) a. primary intermediary b. financial intermediary c. over-the-counter market d. broker

Q: Finance companies obtain a significant amount of their funds by a. issuing their own equity securities b. accepting both demand and time deposits c. issuing their own debt securities d. none of the above

Q: Money markets deal in securities having maturities of ____; capital market securities have maturities ____. a. less than 18 months, greater than 18 months b. one year or less, greater than one year c. less than 9 months, greater than 9 months d. less than 6 months, greater than 6 months

Q: Financial intermediaries a. issue secondary claims to the lender b. are compensated for their services by fixed fees c. include both brokers and dealers d. issue primary claims to the lender

Q: A savings and loan association is an example of which type of financial intermediary? a. commercial bank b. investment company c. finance company d. thrift institution

Q: In the ____ market, the firm receives the proceeds from the sale of its securities. a. over-the-counter b. secondary c. fully integrated d. none of the above

Q: Which of the following, if any, are notfinancial intermediaries? a. commercial bank b. thrift institution c. securities broker d. all are financial intermediaries

Q: ____ markets deal in short-term securities having maturities of one year or less. a. Credit b. Money c. Capital d. a and b only

Q: ____ markets deal in long-term securities having maturities greater than one year. a. Credit b. Money c. Commodity futures d. Capital

Q: Financial intermediaries include a. securities brokers b. commercial banks c. securities dealers d. all of the above

Q: Securities not listed on exchanges are said to be traded a. on the AMEX b. as composite transactions c. over the counter d. on the regional exchanges

Q: The Standard and Poor's 500 Stock Price Index is a ____ index. a. price weighted b. market value weighted c. price average d. none of the above

Q: The following are listed security exchanges in the United Sates: a. New York Stock Exchange b. Pacific Exchange c. Cincinnati Exchange d. All the above are listed exchanges

Q: Financial intermediaries include a. securities brokers b. securities dealers c. investment bankers d. none of the above

Q: List some advantages that a sole proprietorship would have that a corporation would not.

Q: What is the problem with profit maximization as a primary goal of the firm?

Q: Which of the following statements is/are correct?I. The treasurer handles the financial functions of the firm.II. The treasurer is normally concerned with the local, state and federal taxes of the firm along with the data processing requirements.a. I onlyb. II onlyc. Both I and IId. Neither I nor II

Q: Methods of controlling the agency problem are all of the following EXCEPT: a. Give management an ownership stake in the success of the firm. b. The Board of Directors should be composed of former officers of the company. c. Market conditions, such as a takeover threat, can serve as a deterrent. d. Use stock options in executive compensation packages.

Q: Which of the following is not an advantage of the corporate form of business organization: a. unlimited life b. unlimited liability c. flexibility in ownership change d. ability to raise capital

Q: The advantages of the corporate form of organization over both sole proprietorships and partnerships include ____. a. limited liability b. permanency c. a and b d. none of the above

Q: In a limited partnership, the limited partners may limit their: a. tax liability b. liability c. tax write-off d. ability to attract new products

Q: A major disadvantage of a sole proprietorship is the fact that a. it is expensive to establish b. the owner has unlimited personal liability c. it is easy to finance growth d. the owner pays taxes on all the income

Q: Which of the following is not an advantage that the corporate form of business has over either the sole proprietorship or partnership? a. ability to raise capital b. ease of changing ownership c. limited liability d. elimination of double taxes

Q: A major advantage of the corporate form of business over both sole proprietorships and partnerships is the a. limited liability b. reduction in taxes c. ease of formation d. ability to maintain ownership

Q: ____ equals the number of shares outstanding times the market price per share. a. Book value b. Stakeholders wealth c. Total shareholder wealth d. Economic value

Q: Corporate officers normally include all the following except: a. Secretary b. Chief operating officer c. Treasurer d. Financial analyst

Q: ____ are important because the financial health of a firm depends on the firm being able to generate sufficient cash to pay its creditors, employees, suppliers, and owners. a. Cash sales b. Cash flows c. Cash profits d. Net profits

Q: The activities of the treasurer include all of the following except: a. financial planning b. tax preparation c. credit analysis d. pension fund management

Q: The existence of divergent objectives between owners and managers is one example of a class of problems arising from ____. a. social responsibility concerns b. age differences between managers and owners c. agency relationships d. none of the above

Q: There is often a divergence between the shareholder wealth maximization goal and the actual goals pursued by management. The primary reason for this is ____. a. geographical dispersion of shareholders b. separation of ownership and control c. age differences between managers and shareholders d. none of the above

Q: The major factors that determine the market value of a company's shares of stock include the ____. a. risk of its cash flows b. timing of its cash flows c. book value of its assets d. a and b

Q: The ____ has a goal of serving as a bridge between academic study of finance and the application of financial principles by financial managers. a. Financial Executives Institute b. Financial Management Association c. American Finance Association d. Institution of Financial Analysts

Q: The chief financial officer (CFO) of a corporation normally reports to the ____ of the company. a. chairman of the board of directors b. chief operating officer c. controller d. chief executive officer

Q: Shareholder wealth is measured by the ____. a. book value of the shareholders' common stock holdings b. market value of the shareholders' common stock holdings c. book value of the company's assets d. market value of the company's assets

Q: The controller normally has responsibility for all ____ related activities, while the treasurer is normally concerned with ____. a. acquisition, data processing b. tax, cost accounting c. tax, financial accounting d. accounting, expenditure of funds

Q: The chief financial officer (CFO) normally has responsibility for all the following except: a. advertising strategy b. managing interest rate risk c. trading foreign currencies d. accounting functions

Q: All of the following are problems with the microeconomic profit maximization model except: a. the absence of a time dimension b. offers financial managers insights to a wide range of problems c. does not consider the risk of alternative decisions d. the problem of defining profits

Q: ____ arise from the divergent objectives between owners and managers. a. Shareholder relationships b. Stakeholder problems c. Creditor problems d. Agency problems

Q: Giving top management ____ is one method that ensures managers will act in the interest of shareholders in merger decisions. a. stock options b. excellent pay c. executive perks d. job security

Q: The primary reason for the divergence between the shareholder wealth maximization goal and the actual goals pursued by management has been attributed to a. separation of social responsibility and stakeholders' concerns b. separation of ownership and control c. separation of personal welfare and long-run profit goals d. the granting of "golden parachute" contracts

Q: A major advantage of using the maximization of shareholder wealth as the primary goal of the firm is that this goal considers a. the timing and the risk of the expected benefits to be received b. the investor's consumption utility c. the value of closely held partnerships d. all the above

Q: The ____ the risk of receiving future cash flows, the ____ will be the present value of those cash flows. a. greater, greater b. greater, lower c. lower, lower d. none of the above

Q: The most widely accepted objective of the firm is to a. minimize risk b. maximize profits c. maximize shareholder wealth d. maximize earnings per share

Q: The two most important disciplines on which financial management relies are a. accounting and production b. accounting and marketing c. economics and marketing d. accounting and economics

Q: The objective of maximizing shareholder wealth, as measured by the market value of the firm's stock a. does not consider the timing of the benefits received b. provides a way to consider the risk of the returns being offered c. benefits only certain stockholders d. a and b only

Q: Shareholder wealth is measured by the ____ of the shareholders' common stock holdings. a. Book value b. Market value c. Historic value d. Compound value

Q: The limitations of the profit maximization goal include: a. It lacks a time dimension (i.e., it is static) b. It fails to consider risk c. The definition of profit is ambiguous d. All the above are limitations

Q: The primary objective of the firm is: a. Shareholder wealth maximization b. Social responsibility c. Long run survival d. Profit maximization

Q: According to Stephen Covey, what can small businesses do to provide job-related training without actually establishing expensive formal training programs?

Q: What are the basic elements and steps involved in a manual HR system? What are the benefits of using an automated HR system?

Q: You are the owner of a small business and feel overwhelmed by the paperwork. You have decided to use a PEO. What are the issues you must address to determine which PEO is best for your company?

Q: What work-life benefits are offered by small firms that are not available with large firms? If given a choice, would you rather work for a small or a large firm? Use specific details to support your argument.

Q: In a brief essay, discuss the Wonderlic Personnel Test, the Predictive Index, and work sampling methods for screening employees. What are the advantages and disadvantages of each for small businesses?

Q: How has the Internet changed how small businesses compete with large businesses in regards to HR-related issues?

Q: What risks are faced by most small business owners regarding laws, litigation, and safety? What government tools are available to assist small businesses with these risks?

Q: What types of HR-related risks are faced by most small businesses? How can PEOs help small firms with these risks?

Q: What are the personal strengths of most successful entrepreneurs? What are the strengths of small businesses? How can small businesses use these strengths to improve their HRM practices?

Q: How does HR management differ in small and large firms? How do HR systems differ in small and large firms?

Q: When using the four-step training process, the first step involves developing a task analysis record form.

Q: Compressed work weeks, flexible work schedules, and occasional free meals are work-life benefits that small firms use to retain good employees.

Q: With an intranet-based HRIS, employees can access the benefits home page and find information about their firm's medical and dental plans.

Q: A small firm usually begins with a manual human resource management system before shifting to an automated system.

Q: PEOs enable small businesses to attain insurance and other benefits at lower costs because the PEO absorbs the small company's employees into a larger insurable group.

Q: In most cases, a PEO shares liability with its clients, which encourages the PEO to ensure that its clients comply with COBRA, Title VII, and OSHA.