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FIN 370 Final Exam
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FIN 370 Final Exam (Newest)
1) Which financial statement reports the amounts of cash that the firm
generated and distributed during a particular time period?
statement of retained earnings
Income statement
Statement of cash flows
Balance sheet
2) We commonly measure the risk-return relationship using which of the
following?
Expected returns
Coefficient of variation
Correlation coefficient
Standard deviation
3) What's the current yield of a 6 percent coupon corporate bond quoted
at a price of 101.70?
6.1 percent
10.2 percent

6.0 percent
5.9 percent
4) Which financial statement reports a firm's assets, liabilities, and equity
at a particular point in time?
Statement of cash flows
Balance sheet
Statement of retained earnings
Income statement
5) As new capital budgeting projects arise, we must estimate__________.
the cost of the loan for the specific project
the cost of the stock being sold for the specific project
when such projects will require cash flows
the float costs for financing the project
6) Will's Wheels, Inc. reported a debt-to-equity ratio of 0.65 times at the
end of 2013. If the firm's total debt at year-end was $5 million, how
much equity does Will's Wheels have?
$3.25 million
$5 million
$7.69 million
$0.65 million
7) Which of these is the process of estimating expected future cash flows
of a project using only the relevant parts of the balance sheet and
income statements?
Cash flow analysis
Incremental cash flows

Substitutionary analysis
Pro forma analysis
8) Which of these is the term for portfolios with the highest return possible
for each risk level?
Total portfolios
Efficient portfolios
Modern portfolios
Optimal portfolios
9) Which financial statement shows the total revenues that a firm earns
and the total expenses the firm incurs to generate those revenues over a
specific period of time — generally one year?
Statement of cash flows
Statement of retained earnings
Balance sheet
Income statement
10) What are the tools available for the manager in financial planning?
Delaying disbursement of cash, reducing collection period, cash
management, and Increasing inventory turnover
Delaying disbursement of cash and cash management
Reducing collection period and delaying disbursement of cash
Increasing inventory turnover and reducing collection period

11) When firms use multiple sources of capital, they need to calculate
the appropriate discount rate for valuing their firm's cash flows
as__________.
they apply to each asset as they are purchased with their respective
forms of debt or equity
a sum of the capital components costs
a simple average of the capital components costs
a weighted average of the capital components costs
12) You are trying to pick the least-expensive machine for your
company. You have two choices: machine A, which will cost $50,000 to
purchase and which will have OCF of -$3,500 annually throughout the
machine's expected life of three years; and machine B, which will cost
$75,000 to purchase and which will have OCF of -$4,900 annually
throughout that machine's four-year life. Both machines will be
worthless at the end of their life. If you intend to replace whichever type
of machine you choose with the same thing when its life runs out, again
and again out into the foreseeable future, and if your business has a cost
of capital of 14 percent, which one should you choose?
Neither machine A nor B
Both machines A and B
Machine B
Machine A
13) Financial plans include which of the following?
All of the above
Pro forma Income Statement, Balance Sheet
Short Term and Long Term Plan
Schedule of Sales, Expenses, and Capital Expenditure

14) Which of these statements is true regarding divisional WACC?
Using a simple firmwide WACC to evaluate new projects would give an
unfair advantage to projects that present less risk than the firm's
average beta.
Using a divisional WACC versus a WACC for the firm's current operations
will result in quite a few incorrect decisions.
Using a simple firmwide WACC to evaluate new projects would give an
unfair advantage to projects that present more risk than the firm's
average beta.
Using a firmwide WACC to evaluate new projects would have no impact
on projects that present less risk than the firm's average beta.
15) Which of these provide a forum in which demanders of funds raise
funds by issuing new financial instruments, such as stocks and bonds?
Investment banks
Secondary markets
Primary markets
Money markets
16) What are reasons for the firm to go abroad?
Lower production cost
All of the above
Diversification
Access to raw materials
17) The top part of Mars, Inc.'s 2013 balance sheet is listed as follows
(in millions of dollars). What are Mars, Inc.'s current ratio, quick ratio,
and cash ratio for 2013?
4.2, 1.0, 0.2
2.3333, 0.5556, 0.1111

10.5, 6.0, 1.0
0.1111, 0.5556, 0.2
18) The Rule of 72 is a simple mathematical approximation
for__________.
the future value required to double an investment
the present value required to double an investment
the payments required to double an investment
the number of years required to double an investment
19) Which of these ratios show the combined effects of liquidity, asset
management, and debt management on the overall operation results of
the firm?
Coverage
Financial
Liquidity
Profitability
20) The overall goal of the financial manager is to__________.
minimize total costs
maximize shareholder wealth
maximize net income
maximize earnings per share
21) Which of the following can create ethical dilemmas between
corporate managers and stockholders?
Board of directors
Auditors
Venture Capitalist
Agency relationship

22) Which of the following terms means that during periods when
interest rates change substantially, bondholders experience distinct
gains and losses in their bond investments?
Reinvestment rate risk
Credit quality risk
Interest rate risk
Liquidity rate risk
23) Which of these is used as a measure of the total amount of
available cash flow from a project?
Free cash flow
Investment in operating capital
Operating cash flow
Sunk cash flow
24) Suppose that Model Nails, Inc.'s capital structure features 60
percent equity, 40 percent debt, and that its before-tax cost of debt is 6
percent, while its cost of equity is 10 percent. If the appropriate
weighted average tax rate is 28 percent, what will be Model Nails'
WACC?
7.73 percent
16.00 percent
8.40 percent
8.00 percent
25) Which of these does NOT perform vital functions to securities
markets of all sorts by channeling funds from those with surplus funds to
those with shortages of funds?
Commercial banks
Insurance companies

Mutual funds
Secondary markets
26) Which of the following is a true statement?
If interest rates fall, U.S. Treasury bonds will have decreasing values.
If interest rates fall, no bonds will enjoy rising values.
If interest rates fall, corporate bonds will have decreasing values.
If interest rates fall, all bonds will enjoy rising values.
27) Five years ago, Jane invested $5,000 and locked in an 8 percent
annual interest rate for 25 years (ending 20 years from now). James can
make a 20-year investment today and lock in a 10 percent interest rate.
How much money should he invest now in order to have the same
amount of money in 20 years as Jane?
$7,346.64
$3,160.43
$5,089.91
$3,464.11
28) We call the process of earning interest on both the original
deposit and on the earlier interest payments:
compounding.
multiplying.
computing.
discounting.

29) We can estimate a stock's value by__________.
using the book value of the total assets divided by the number of shares
outstanding
using the book value of the total stockholder equity section
compounding the past dividends and past stock price appreciation
discounting the future dividends and future stock price appreciation
30) A firm is expected to pay a dividend of $2.00 next year and $2.14
the following year. Financial analysts believe the stock will be at their
target price of $75.00 in two years. Compute the value of this stock with
a required return of 10 percent.
$65.40
$65.57
$79.14
$66.67
FIN 370 Week 1 Complete
FIN 370 Week 1 DQ 1 | FIN 370 Week 1 DQ 2 | FIN 370 Week 1
Calculating Ratios | FIN 370 Week 1 Calculating Ratios Worksheet |
FIN 370 Week 1 Complete
FIN 370 Week 2 Complete
FIN 370 Week 2 DQ 1 | FIN 370 Week 2 DQ 2 | FIN 370 Week 2 Cash
Flow Problem Sets | FIN 370 Week 2 Financial Markets and
Institutions Report | FIN 370 Week 2 Complete

FIN 370 Week 3 Complete
FIN 370 Week 3 DQ 1 | FIN 370 Week 3 DQ 2 | FIN 370 Week 3
Precision Machines Part 1 | FIN 370 Week 3 Risk and Return
Problem Sets | FIN 370 Week 3 Risk and Return Analysis | FIN 370
Week 3 Complete
FIN 370 Week 4 Complete
FIN 370 Week 4 DQ 1 | FIN 370 Week 4 DQ 2 | FIN 370 Week 4 Cash
Flow Analysis | FIN 370 Week 4 Complete
FIN 370 Week 5 Complete
FIN 370 Week 5 Final Exam (Latest - A Graded) | FIN 370 Week 5 DQ
1 | FIN 370 Week 5 DQ 2 | FIN 370 Week 5 Precision Machines Part
2 | FIN 370 Week 5 Complete

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