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考试样题.docx

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考试样题

CorporateFinance

SampleProblemsformidterm（conceptualproblems）

Ch1

36. （p. 11） Thefinancialgoalofacorporationisto:

a. Maximizeprofits

b. Maximizesales

C. Maximizethevalueofthefirmfortheshareholders

d. Maximizemanagers'benefits

Ch2

4. （p. 15） Therateofreturnisalsocalled:

I）discountrate;II）hurdlerate;III）opportunitycostofcapital 

a. Ionly

b. IandIIonly

C. I,II,andIII

d. Noneofthegivenones

 22. （p. 17） Whichofthefollowingstatementsregardingthenetpresentvalueruleandtherateofreturnruleisnottrue?

A. AcceptaprojectifNPV>costofinvestment

b. AcceptaprojectifNPVispositive

c. Acceptaprojectifreturnoninvestmentexceedstherateofreturnonanequivalentinvestmentinthefinancialmarket

d. RejectaprojectifNPVisnegative

26. （p. 18） Theopportunitycostofcapitalforariskyprojectis 

a. Theexpectedrateofreturnonagovernmentsecurityhavingthesamematurityastheproject

b. Theexpectedrateofreturnonawell-diversifiedportfolioofcommonstocks

C. Theexpectedrateofreturnonaportfolioofsecuritiesofsimilarrisksastheproject

d. Noneoftheabove

36. （p. 22） ThediscountrateisusedforcalculatingtheNPVis:

A. Determinedbythefinancialmarkets

b. Foundbythegovernment

c. FoundbytheCEO

d. Noneoftheabove

 37. （p. 23） Themanagersofafirmcanmaximizestockholderwealthby:

A. TakingallprojectswithpositiveNPVs

b. TakingallprojectswithNPVsgreaterthanthecostofinvestment

c. TakingallprojectswithNPVsgreaterthanpresentvalueofcashflow

d. Alloftheabove

 39. （p. 24） Managers'actionsaremonitoredby:

a. Theboardofdirectors

b. Commercialbanksthathaveloanedfundstothefirm

c. TheWallStreetanalysts

D. Alloftheabove

13. （p. 38） Whichofthefollowingisgenerallyconsideredanexampleofaperpetuity:

a. Interestpaymentsona10-yearbond

b. Interestpaymentsona30-yearbond

C. Consols

d. Noneoftheabove

19. （p. 38） Anannuityisdefinedas 

A. Equalcashflowsatequalintervalsoftimeforaspecifiedperiodoftime

b. Equalcashflowsatequalintervalsoftimeforever

c. Unequalcashflowsatequalintervalsoftimeforever

d. Noneoftheabove

43. （p. 43） Youareconsideringinvestinginaretirementfundthatrequiresyoutodeposit$5,000peryear,andyouwanttoknowhowmuchthefundwillbeworthwhenyouretire.Whatfinancialtechniqueshouldyouusetocalculatethisvalue?

a. Futurevalueofasinglepayment

B. Futurevalueofanannuity

c. Presentvalueofanannuity

d. Noneoftheabove

46. （p. 43） Whichofthefollowingstatementsistrue?

a. Presentvalueofanannuityisalwaysgreaterthanthepresentvalueofequivalentannuitydueforagiveninterestrate

B. Thefuturevalueofanannuitydueisalwaysgreaterthanthefuturevalueofanequivalentordinaryannuityatthesameinterestrate

c. BothAandBaretrue

d. BothAandBarefalse

52. （p. 46） Whichofthefollowingstatementsregardingsimpleinterestandcompoundinterestaretrue?

a. Problemsinfinancegenerallyusethesimpleinterestconcept

B. Problemsinfinancegenerallyusethecompoundinterestconcept

c. Itdoesnotreallymatterwhetheryouusesimpleinterestorcompoundinterestforsolvingproblemsinfinance

d. Noneoftheabove

Ch3

1. （p. 58） Thefollowingentitiesissuebondstoraiselong-termloansexcept:

a. Thefederalgovernment

b. Stateandlocalgovernments

c. Companies

D. Individuals

2. （p. 59） Thetypeofbondswheretheidentitiesofbonds'ownersarerecordedandthecouponinterestpaymentsaresentautomaticallyarecalled:

a. Bearerbonds

b. Governmentbonds

C. Registeredbonds

d. Noneoftheabove

 13. （p. 63） Whichofthefollowingstatementsabouttherelationshipbetweeninterestratesandbondpricesistrue?

I）ThereisaninverserelationshipbetweenbondpricesandinterestratesII）ThereisadirectrelationshipbetweenbondpricesandinterestratesIII）Thepriceofshort-termbondsfluctuatesmorethanthepriceoflong-termbondsforagivenchangeininterestrates.（Assumingthatcouponrateisthesameforboth）IV）Thepriceoflong-termbondsfluctuatesmorethanthepriceofshort-termbondsforagivenchangeininterestrates.（Assumingthatthecouponrateisthesameforboth） 

A. IandIVonly

b. IandIIIonly

c. IIandIIIonly

d. Noneofthegivenstatementsaretrue

21. （p. 65） Volatilityofabondisgivenby:

I）Duration/（1+yield）II）SlopeofthecurverelatingthebondpricetotheinterestrateIII）Yieldtomaturity 

a. Ionly

b. IIonly

c. IIIonly

D. IandIIonly

37. （p. 64） Thelongerabond'sdurationgreaterisitsvolatility. 

TRUE

38. （p. 67） Thetermstructureofinterestrateistherelationshipbetweenyieldtomaturityandmaturity. 

TRUE

41. （p. 71） Theexpectationstheoryimpliesthattheonlyreasonforadecliningtermstructureisthatinvestorsexpectspotinterestratestofall. 

TRUE

Ch4

5. （p. 98） ThedividendyieldreportedasYld.%inTheWallStreetJournalquotationiscalculatedasfollows:

a. （dividends/hi）

b. （dividends/lo）

C. （dividends/close）

d. Noneoftheabove

14. （p. 100） Thevalueofacommonstocktodaydependson:

a. Numberofsharesoutstandingandthenumberofshareholders

B. Theexpectedfuturedividendsandthediscountrate

c. TheWallStreetanalysts

d. Presentvalueofthefutureearningspershare

21. （p. 102） Theexpectedrateofreturnorthecostofequitycapitalisestimatedasfollows:

a. Dividendyield-expectedrateofgrowthindividends

B. Dividendyield+expectedrateofgrowthindividends

c. Dividendyield/expectedrateofgrowthindividends

d. （Dividendyield）*（expectedrateofgrowthindividends）

32. （p. 108） Thegrowthrateindividendsisafunctionoftworatios.Theyare:

a. ROAandROE

b. Dividendyieldandgrowthrateindividends

C. ROEandtheRetentionRatio

d. BookvaluepershareandEPS

35. （p. 109） Generallyhighgrowthstockspay:

A. Lowornodividends

b. Highdividends

c. Erraticdividends

d. BothAandC

48. （p. 99） Theonlypayofftotheownersofcommonstocksisintheformcashdividends. 

FALSE

49. （p. 102） Theconstantgrowthformulaforstockvaluationdoesnotworkforfirmswithnegativegrowth（declining）ratesindividends. 

FALSE

Ch5

1. （p. 121） Whichofthefollowinginvestmentrulesdoesnotusethetimevalueofthemoneyconcept?

a. Netpresentvalue

b. Internalrateofreturn

C. Thepaybackperiod

d. Alloftheaboveusethetimevalueconcept

3. （p. 121） Thefollowingaremeasuresusedbyfirmswhenmakingcapitalbudgetingdecisionsexcept:

a. Paybackperiod

b. Internalrateofreturn

C. P/Eratio

d. Netpresentvalue

9. （p. 124） YouaregivenajobtomakeadecisiononprojectX,whichiscomposedofthreeindependentprojectsA,B,andCwhichhaveNPVsof+$70,-$40and+$100,respectively.Howwouldyougoaboutmakingthedecisionaboutwhethertoacceptorrejecttheproject?

a. Acceptthefirm'sjointprojectasithasapositiveNPV

b. Rejectthejointproject

C. Breakuptheprojectintoitscomponents:

acceptAandCandrejectB

d. Noneoftheabove

11. （p. 124） Thenetpresentvalueofaprojectdependsupon:

a. Company'schoiceofaccountingmethod

b. Manager'stastesandpreferences

C. Project'scashflowsandopportunitycostofcapital

d. Alloftheabove

13. （p. 126） Thepaybackperiodrule:

a. Variesthecut-offpointwiththeinterestrate

b. Determinesacut-offpointsothatallprojectsacceptedbytheNPVrulewillbeacceptedbythepaybackperiodrule

C. Requiresanarbitrarychoiceofacut-offpoint

d. BothAandC

28. （p. 129） ThefollowingaresomeoftheshortcomingsoftheIRRmethodexcept:

A. IRRisconceptuallyeasytocommunicate

b. ProjectscanhavemultipleIRRs

c. IRRmethodcannotdistinguishbetweenaborrowingprojectandalendingproject

d. ItisverycumbersometoevaluatemutuallyexclusiveprojectsusingtheIRRmethod

Ch6

1. （p. 148） Importantpointstorememberwhileestimatingcashflowsofprojectsare:

I）OnlycashflowisrelevantII）AlwaysestimatecashflowsonanincrementalbasisIII）Beconsistentinthetreatmentofinflation 

a. Ionly

b. IandIIonly

c. IIandIIIonly

D. I,II,andIII

3. （p. 149） Whenafirmhastheopportunitytoaddaprojectthatwillutilizeexcessfactorycapacity（thatiscurrentlynotbeingused）,whichcostsshouldbeusedtodetermineiftheaddedprojectshouldbeundertaken?

a. Opportunitycost

b. Sunkcost

C. Incrementalcosts

d. Noneoftheabove

4. （p. 149） Areductioninthesalesofexistingproductscausedbytheintroductionofanewproductisanexampleof:

A. Incidentaleffects

b. Opportunitycost

c. Sunkcost

d. Noneoftheabove

7. （p. 150） NetWorkingCapitalisthe:

I）Short-termassetsII）ShorttermliabilitiesIII）Long-termassetsIV）Longtermliabilities 

a. Ionly

B. （I-II）

c. （III-I）

d. （III-IV）

11. （p. 150） Forexample,incaseofanelectriccarproject,thefollowingcashflowsshouldbetreatedasincrementalflowswhendecidingwhethertogoaheadwiththeprojectexcept:

a. Theconsequentreductioninsalesofthecompany'sexistinggasolinemodels（i.e.:

incidentaleffects）

B. Interestpaymentondebt

c. Thevalueoftoolsthatcanbetransferredfromthecompany'sexistingplants

d. Theexpenditureonnewplantsandequipment

13. （p. 150） Thevalueofapreviouslypurchasedmachinetobeusedbyaproposedprojectisanexampleof:

a. Sunkcost

B. Opportunitycost

c. Fixedcost

d. Noneoftheabove

Ch7

1. （p. 181） Whichofthefollowingportfolioshavetheleastrisk?

A. AportfolioofTreasurybills

b. Aportfoliooflong-termUnitedStat