Quiz 1- Finance and Time Value of Money

Instructions

There are twenty questions. Each has one correct answer.

Topics include Financial Management, Time Value of Money and Accounting Ratios.
Question 5 pts
Which of the following items can be found on an income statement?
Accounts receivable
Long-term debt
Sales
Inventory

Question 5 pts
How do we calculate a company’s operating cash flow?
EBIT - taxes + depreciation
EBIT - taxes - depreciation
EBIT + taxes + depreciation
EBIT – Sales

Question 5 pts
If you only knew a company’s total assets and total debt, which item could you easily calculate?
Sales
Depreciation
Total equity
Inventory

Question 5 pts
Financial professionals prefer to focus on an accounting approach that emphasizes:
governmental accounting methods.
current and prospective cash flows.
economically based accruals.
international accrual accounting standards.

Question 5 pts
The balance sheet entry that represents the cumulative total of the earnings that a firm has reinvested
since its inception is
common stock.
paid-in-capital.
par value.
retained earnings.

Question 5 pts
If you can earn 5% (compounded annually) on an investment, how long does it take for your money to
triple?
14.40 years
22.52 years
19.48 years
29.29 years

Question 5 pts
Emma Corp. had credit sales of $300,000 last year and on average had $25,000 in its accounts receivable
during the year. What is its average collection period?
about 30 days
about 12 days
about 1 day
about 3 days

Question 5 pts
Import, Inc. has earnings available for common shareholders of $700 produced by sales of $10,000. It
also has total assets of $20,000 and an assets to equity ratio of 2.5. What is Import Inc.’s return on
assets?
14%
7%
3.5%
none of the above

Question 5 pts
As a result of an injury settlement with your insurance you have the choice between receiving $5,000
today or $6,500 in three years. If you could invest your money at 8% compounded annually, which
option should you pick?
$5,000 today because it has a higher PV.
You are indifferent between the two choices.
$6,500 in three years because it has a higher PV.
You do not have enough information to make that decision.

Question 5 pts
You want to buy a house in 4 years and expect to need $25,000 for a down payment. If you have
$15,000 to invest, how much interest do you have to earn (compounded annually) to reach your goal?
16.67%
13.62%
25.74%
21.53%

Question 5 pts
You are planning your retirement and you come to the conclusion that you need to have saved
$1,250,000 in 30 years. You can invest into an retirement account that guarantees you a 5% return. How
much do you have to put into your account at the end of every month to reach your retirement goal?
$1567.86
$1,501.94
$3,472.22
$2,526.27

Question 5 pts
The Springfield Crusaders just signed their quarterback to a 10 year $50 million contract. Is this contract
really worth $50 million? (assume r >0)
Yes, because the payments over time add up to $50 million.
No, it is worth more because he can invest the money.
No, it would only be worth $50 million if it were all paid out today.
Yes, because his agent told him so.

Question 5 pts
Shareholders can attempt to overcome agency problems by all BUT ONE of the following:
incurring costs to monitor managers
paying managers a good salary
relying on market forces to exert managerial discipline
paying the manager a proportion of the profits that the firm generates

Question 5 pts
In order to identify the amount of funds that a firm borrowed during the preceding year, what section is
the best source within the Statement of Cash Flows?
operating flows
investment flows
financing flows
total net cash flows

Question 5 pts
You set up a college fund in which you pay $2,000 each year at the end of the year. How much money
will you have accumulated in the fund after 18 years, if your fund earns 7% compounded annually?
$72,757.93
$67,998.07
$20,118.17
$28,339.25

Question 5 pts
When you retire you expect to live for another 30 years. During those 30 years you want to be able to
withdraw $45,000 at the BEGINNING of each year for living expenses. How much money do you have to
have in your retirement account to make this happen. Assume that you can earn 8% on your
investments.
$1,350,000.00
$506,600.25
$547,128.27
$723,745.49

Question 5 pts
Which of the following is a liquidity ratio?
Quick ratio
P/E- ratio
Inventory turnover
Equity multiplier

Question 5 pts
Which of the following is not a true capital-raising event for the firm?
primary market transaction
secondary market transaction
initial public offering
a corporate loan from a bank

Question 5 pts
Capital budgeting is the __.
process of planning for investments in long-term assets
preparation of the budget for operating expenses
process of evaluating the profitability of a business
process of making pricing decisions for products

Question 5 pts
What is the term applied to a firm that offers shares to the general public for the first time?
Initial Public Offering
Initial Placed Offering
Investment Plan Offer
Investment of Public Offers

QUIZ 2 Bond Valuation and Vocabulary

Quiz details
Quiz instructions:

After the MCQ, download, fill in and upload the Bond Vocabulary Puzzle.

You can also write the answers beside the clues.

Question 4 pts
A 15-year, 8%, $1000 face value bond is currently trading at $958. The yield to maturity of this bond
must be
Group of answer choices
less than 8%.
equal to 8%.
greater than 8%.
unknown.

Question 4 pts
What is the value of a 15-year 10% coupon bond with a face value of $1,000. The required return on the
bond is 12% and the bond makes SEMIANNUAL payments.
Group of answer choices
$862.35
$1,167.39
$925.76
$1,000

Question 4 pts
You have the choice between investing in a corporate bond with a yield of 8% or a municipal bond. If
your marginal tax rate is 28%, what should be the yield on the municipal bond in order to be
competitive?
Group of answer choices
8.00%
5.76%
11.11%
13.69%

Question 4 pts
Bond ratings:
Group of answer choices
have no impact on a bond’s price.
are based upon the bond rating agencies’ assessment of the borrower’s default risk
result in yield spreads between different quality bonds.
Both (b) and (c)
All of the above

Question 4 pts
Which of the following information cannot be found in a bond’s indenture?
Group of answer choices
The coupon rate.
The maturity of the bond.
The price of the bond.
None of the above.