11072018 Chapter 4 TruetFaise Quiz Chapter 4: The Valuation of Long-Term Securities Just click on "True" or "False" and you'll get immediate feedback. Note: Your browser must support JavaScript in order to use this quiz. the liquidation value of a firm is based on its future cash flows. Tee omourc! o vravey thal wld Fe raced 4 thar wee ty come opratens ond sl 4 orb ie buiolde True | | Falses| 2. The book value of a firm is equal to the common stock equity account on its balance sheet. True | Fase | us The book value of a firm and the market value of a firm are generally identical. Creamy ty orth 4. In valuing a security, we only need to know what the future cash flows will be. | True | False | 5: Long-term debt securities and bonds are equivalent terms. True | False htpesweb.utk odu/jwachowiguizt.html 42511002018 Chapter 4 TuelFalse Quiz 6. The amount a bond actually sells for may be higher or lower than the value printed on it ~ its face value. [Tne | | False 77. common stocks that pay no dividends are generally priced lower than dividend-paying stocks. True | False & There is more uncertainty associated with the future returns of common stocks than with the returns of bonds and preferred stock. [True | False Q.. winen interest rates go up, the market price of a bond goes up. (ewe) [Ea] 10. the yield on common stock comes from two sources: the dividend yield and the capital gains yield. (i [Fase E Retake Quiz ‘True/False Quiz statements/answers are Copyright © by Pearson Education Limited. Used by permission. All rights reserved. #4 previous Quiz | Back to Main Index | Next Quiz hitps:web.utk edu/wachowitiuiit4. himsro2018 Chapter 5 TeuelFalse Quiz True/False Quiz 4 Previous Quiz | *Back to Main Index | Next Quiz” Chapter 5: Risk and Return Just click on “True" or "False" and you'll get immediate feedback. Note: Your browser must support JavaScript in order to use this quiz. .. Buying common stock is no more risky than buying a U.S. Treasury bill. (True | | False) 2. The one-period return on common stock is a combination of income paid to the shareholder plus any appreciation in stock price, divided by the beginning price. [tue | False 3. combining securities that are not perfectly positively correlated helps to reduce the risk of a portfolio. [True || False , the expected return on a risk-free security is zero. 5. You can reduce systematic risk by adding more common stocks to your portfolio. True | [Faso ps web utk edu/-jwachowitquiat. nim 18san01s Chapter 5 TrueFalse Quiz 6. tnvestors can expect to be compensated with higher returns for bearing avoidable or unsystematic risk. True [Fase | a The opposite of "risk seeking" is "risk neutral”. True [Fase] 8. The one-period rate of return on a security that was bought a year ago for $50, that paid a dividend of $2 for the year, and is now selling at $55, is 14%. (ie) [Fae Q.. ‘he security market line (SML) describes the relationship between a security's expected return and systematic risk. (True | | False 10. seta is an index measure of systematic risk. (> ae 1. seta is the siope of a security's characteristic line. | True || False ie. There appears to be a tendency for measured betas of individual securities to revert toward the beta of the market portfolio or the beta of the industry of which the company is a part. ae) Z Retake Quiz True/False Quiz statements/answers are Copyright © by Pearson Education Limited. Used by permission. All rights reserved. hitps:web.utk edu~wachowiquit him 26sr02018 (Chapter 6 TrucFalse Quiz True False | 6. a firm's operating cycle is equal to its inventory tumover in days (ITD) plus its receivable turnover in days (RTD). [True | False 77. Ai companies should have at least a 1.5 to 1 current ratio, er) alse | True &. The shareholders’ equity figure on a balance sheet represents what the firm is worth to shareholders. True | False | Q,, mtigh inventory turnover would be more important to a dairy company than to a jewelry store. | True. | False | 10. 1» common-size balance sheet analysis compares the firm's performance with the consumer price index. True | False | The following item is NEW to the 13th edition, 11, the united states and a few European Union (EU) countries all adhere to US Generally Accepted Accounting Principles (US GAAP). | True | | False » Retake Quiz ‘True/False Quiz statements/answers are Copyright © by Pearson Education Limited, Used by permission. All rights reserved. htpssineb atk edu/-jwachowiquia. htm511012018 Chapter 8 TruefFalse Quiz True/False Quiz 4 previous Quiz | ®Back to Main Index | Next Quiz Chapter 6: Financial Statement Analysis Just click on "True" or "False" and you'll get immediate feedback. Note: Your browser must support JavaScript in order to use this quiz. 1. the income statement summarizes the assets, liabilities and owners’ equity of a company at a moment in time. Tae | ES) 2: The current ratio is never larger than the quick ratio. [True || False | 3. assets are listed in order of increasing liquidity on the balance sheet. Tue | [Fae] 4, A problem with a balance sheet based on historical costs is that in a period of inflation a company with old fixed assets will show a much better return on investment than a similar firm with new fixed assets. (ime (rae iD: A short average collection period assures us that accounts receivable are being efficiently managed. htpsweb.utk edu/wachowttgult6. html 19si1012018 (Chapter 7 TrusfFalse Quiz i True/False Quiz Ss mY 4 previous Quiz | Back to Main Index | Next Quiz Chapter 7: Funds Analysis, Cash Flow Analysis, and Financial Planning Just click on “True" or "False" and you'll get immediate feedback. Note: Your browser must support JavaScript in order to use this quiz. iL, "Funds" (as in "flow of funds") always means cash and near-cash equivalents. (Tru | [tas] 2. A fiow of funds statement (showing sources and uses of funds) is no longer useful to financial managers. True | [False] 3. a major deficiency of the statement of cash flows is that it doesn't explicitly consider non-cash transactions. (True || False | 4. » company with profits which increase yearly is, by definition, successful. True | False | 5 An increase in an asset is a source of funds. “True | | False htips:eb.utkedu!~wachowitiguit7 him 12611072018 (Chapter 7 TruefFalse Quiz 6. Depreciation is a use of funds. (Tne | False 7. The statement of cash flows, in the US, is divided into three required categories: operating, investing, and financing activities. True || False | 8. A forecast balance sheet could be estimated based on a firm's past financial ratios. True | False 9. The cash budget is only as useful as the accuracy of the forecasts used in preparing it. U ue || False 10. The basic information needed to construct a flow of funds statement is found on the income statement. True | False | ‘True/False statements/answers are Copyright © by Pearson Education Limited. Used by permission. All rights reserved. 4 previous Quiz | Back to Main Index | Next Quiz hntps:iweb utkedu-jwachowitiquiat7 htm 22siorz018 ‘Chapter 8 TruetFaise Quiz True/False Quiz 4 previous Quiz | Back to Main Index | Next Quiz Chapter 8: Overview of Working Capital Management Just click on "True" or "False" and you'll get immediate feedback. Note: Your browser must support JavaScript in order to use this quiz. A. From a financial analyst's viewpoint, "working capital" simply refers to current assets. “True | False 2. the optimal level of working capital is that which provides a 2:1 ratio of current assets to current liabilities. [Tue False | 3. current liabilities (such as trade credit from suppliers) is an important source of financing for many small firms. (True | False 4. The hedging approach to financing involves matching maturities of debt with specific financing needs. [True | False ot In general, long-term debt costs less than short-term debt. True | False | htips:iweb tk edul-jwachowitfquiat. him! we571012018 (Chapter 8 TrucFalso Quiz 6. ail other things equal, reducing a firm's current assets will decrease profitability as measured by ROI. True || False) 7... in working capital management we find that profitability varies inversely with liquidity. True False 8. Generally, a greater margin of safety would be provided by more current assets and fewer True || False .. An agaressive working capital policy would have low liquidity, higher risk, and higher profitability potential. (True || False 10. permanent working capital includes fixed assets. | True || False | & Retake Quiz ‘True/False Quiz statements/answers are Copyright © by Pearson Education Limited. Used by permission. All rights reserved. 4 previous Quiz | * Back to Main Index | Next Quiz hupswob.utk edu jwachowintguiit 8. 225/10/2018 (Chapter 9 TrusfFalse Quiz True/False Quiz 4 previous Quiz | Back to Main Index | Next Quiz > Chapter 9: Cash and Marketable Securities Management Just click on "True" or "False" and you'll get immediate feedback. Note: Your browser must support JavaScript in order to use this quiz. L A firm should hold a cash balance roughly equal to its future need for cash. = One objective of cash management is to obtain reasonable interest income on any temporarily idle funds. Galle & A lock box is a post-office box maintained by a firm's bank that is used as a receiving point for customer remittances. (aa [Face] 4. "Playing the float" involves writing checks when there are no actual funds in the account but having the money available when the checks are presented for payment. (Tue [Fase 5. 1p zero-batance account (ZBA) is one in which checks "bounce" due to insufficient funds available to cover checks presented. hitpsiweb atk edu/-wachowitqui29.him! 8si10/2018 Chapter 9 TruolFalse Quiz True || Fal 6. A problem with T-bils is that costs involved in selling them in the secondary market are quite high. True || False 7. Commercial paper offers a higher yield than Treasury securities of the same maturity. True || False 8. The Eurodollar is the official unit of currency of the European Union. True False Q. 1n general, the longer the maturity of a security, the less the yield. True | False | 10. ‘onger-term, less marketable securities can be an appropriate choice for the “ree cash segment (F$) of a firm's securities portfolio. 11. ‘there are several methods commonly used to calculate the yield on US Treasury bills including the Bond Equivalent Yield (BEY) method and the Effective Annual Yield (EAY) method. True || False The following items are NEW to the 13th edition. 12, substitute check" (also called an image replacement document (IRD)) is a paper copy of an electronic image of an original check, both front and back, including all endorsements. True || False | hnpe:iwed uk edu-jwachowitlquiat. hum 218511072018 ‘Chapter 10 TruefFalse Quiz True/False Quiz 8) 44 previous Quiz | ack to Main Index | Next Quiz > Chapter 10: Accounts Receivable and Inventory Management Just click on "True" or "False" and you'll get immediate feedback. Note: Your browser must support JavaScript in order to use this quiz. L The best credit standard policy is one that minimizes bad debt losses. True, Zi To accelerate the turnover of receivables, a firm may either shorten the discount period or increase the discount offered. 3. The tisk-return trade-off involved in a less strict credit policy means additional sales, but as a result the new customers tend to be slower in paying. True | False 4. te expression "3/10, net 45" means that the customers receive a 10 percent discount if they pay within 3 days; otherwise, they must pay within 45 days with no discount. | True | | False 5. first step in collecting past due receivables is to use the services of a collection agency. True | False hitpstwebutk.eduwachowiquit0.htm 12511012018 Chapter 10 TivelFalse Quiz 6. The carrying costs of inventory are those combined costs of storing, handling, and insurance and do not include the opportunity cost of funds. True | | False | ae The ABC method of inventory control was developed by a national television network of the same name. True | Flee | 8 The quality of Dun & Bradstreet credit reports is in large measure only as good as the willingness of the company being checked out to cooperate. [ie [Face Q.. Uncertainty in demand for inventory as well as in lead time creates the need for a safety stock, (Giie) [Fase 10: Determining the EQQ involves a trade-off between the economies of a large quantity per order and the costs of carrying a larger inventory. [True || False © Retake Quiz True/False statements/answers are Copyright © by Pearson Education Limited. Used by permission. All rights reserved, 4 previous Quiz | *Back to Main Index | Next Quiz npesiwob wk edul-jwachowitiquizit10.html 22sit0r2018 (Chapter 11 TrueFalse Quiz True/False Quiz ‘+ previous Quiz | *Back to Main Index | Next Quiz Chapter 11: Short-Term Financing Just click on "True" or "False" and you'll get immediate feedback. Note: Your browser must support JavaScript in order to use this quiz. Trade credits a system of barter or exchange of "credits" instead of cash. True || False 2. ‘fico wanting trade credit must pledge collateral. i 3. The most common type of spontaneous financing is a commercial bank loan. fue | Fase 4. More frequently than not, the effective cost of a secured short-term loan is higher than the effective cost of an unsecured short-term loan. Tr | [False | 5. is sales increase, labor costs and thus accrued wages generally increase almost proportionately. | True | | False hntpsAveb uk edul-jwachowitfquiztt nid 1.sir02018 (chapter 11 TreiFalse Quiz 6. Stretching accounts payable is a cost-free method of financing a business. 7 Money-market credit and short-term loans are forms of negotiated (or external) short-term financing. | True | False &. A cleanup provision is an environmental protection policy commitment often attached to a bank line of credit. True || False | 9. accounts payable and inventory are the principal assets used to secure short-term business loans. True | | False] 100. 1 secured loan provides the lender two sources of loan repayment: the cash-flow ability of the firm and the collateral value of the security. Z Retake Quiz “True/False Quiz statements/answers are Copyright © by Pearson Education Limited. Used by permission. All rights reserved. 4 previous Quiz | Back to Main Index | Next Quiz P Intpe:eb.utkedu/jwachowitqui2t him 22