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Homework answers / question archive / University of Texas, Arlington - FINA MISC 1)A project's net present value profile is a graph that plots a project's NPV for various discount rates

University of Texas, Arlington - FINA MISC 1)A project's net present value profile is a graph that plots a project's NPV for various discount rates

Finance

University of Texas, Arlington - FINA MISC

1)A project's net present value profile is a graph that plots a project's NPV for various discount rates.

 

  1. Treasury stock results from the :
  2. The attempt by a nonmanagement group to gain control of the management of a firm by soliciting a sufficient number of proxy votes is called a   .

 

 

  1. The over the counter (OTC) market is a market for trading smaller and unlisted securities.
  2. The Modified Accelerated Cost Recovery System (MACRS) is a depreciation method used for   

purposes.

 

 

  1. In an inefficient market, securities are typically in equilibrium, which means that they are fairly priced and that their expected returns equal their required returns.
  2. If the expected return is less than the required return, investors will sell the asset, because it isnot expected to earn a return commensurate with its risk.
  3. If the expected return were above the required return, investors would buy the asset, drivingits price up and its expected return down.
  4. The purpose of nonvoting common stock is to          .
  5. Assuming that economic conditions remain stable, any management action that would cause current and prospective stockholders to raise their dividend expectations should decrease a firm's value.

 

  1. The amount of leverage in a firm's capital structure—the mix of long-term debt and equity maintained by the firm—can significantly affect its value by affecting return and risk.

 

 

  1. The weighted average cost that reflects the interrelationship of financing decisions can be obtained by weighing the cost of each source of financing by the target proportion in a firm's capital structure.
  2. The primary goal of a financial manager is            .

 

  1. The lower risk nature of long-term debt in a firm's capital structure is due to the fact that

               .

 

  1. Which of the following is considered in designing a dividend policy that is favorable to wealthy owners?

 

  1. The cost of preferred stock is typically lower than the cost of long-term debt (i.e., bonds) because the preferred stock dividend payments are tax deductible.

 

  1. The cost of preferred stock is typically higher than the cost of long-term debt (bonds) because the cost of long-term debt (interest) is tax deductible.

 

  1. The                 measures the activity, or liquidity, of a firm's stock of goods.

 

  1. The cost of capital of each source of financing is the after-tax cost of obtaining the financing using the historically based cost reflected by the existing financing on the firm's books.

 

  1. As debt is substituted for equity in the capital structure and the debt ratio increases, the behavior of the overall cost of capital is partially explained by                .

 

  1. Beginning with a zero-leverage company, as debt is substituted for equity in the capital structure

               .

 

  1. Projects that compete with one another, so that the acceptance of one eliminates the others from further consideration are called            .

 

 

  1. Ratios merely direct an analyst to potential areas of concern and it does not provide conclusive evidence as to the existence of a problem.

 

  1. Incremental cash flows represent the additional cash flows expected as a direct result of the proposed project.

 

 

  1. The purpose of a stock split is to              .

 

 

  1. The Federal Deposit Insurance Corporation (FDIC)              .

 

  1. The primary purpose of a stock split is to             .

 

  1. 15) The future value of an ordinary annuity of $2,000 each year for 10 years, deposited at 12 percent, is               .

 

  1. Rita borrows $4,500 from the bank at 9 percent annually compounded interest to be repaid in three equal annual installments. The interest paid in the third year is         .

 

  1. Net present value is considered a superior capital budgeting technique relative to payback since it gives explicit consideration to the time value of money.

 

  1. The                 is used by financial managers as a structure for dissecting a firm's financial statements to assess its financial condition.

 

 

  1. The amount of leverage in a firm's capital structure—the mix of long-term debt and equity maintained by the firm—can significantly affect its value by affecting return and risk.

 

 

 

 

  1. A project's net present value profile is a graph that plots a project's NPV for various discount rates.

 

 

  1. Operating financial plans are planned short-term financial actions and the anticipated financial impact of those actions.

 

 

  1. The future value of an annuity of $1,000 each quarter for 10 years, deposited at 12 percent compounded quarterly is              .

 

  1. A bond rated Aaa according to Moody's, is considered            .

 

  1. Two frequently cited ratios of profitability that can be read directly from the common-size income statement are             .

 

  1. Which of the following is a difference between common stock and bonds?

 

 

 

 

  1. The Sarbanes-Oxley Act of 2002 established the Public Company Accounting Oversight Board (PCAOB) which is a not-for-profit corporation that oversees auditors of public corporations.

 

 

  1. The IRR is the discount rate that equates the NPV of an investment opportunity with $0.

 

 

 

  1. A(n)                  is useful in evaluating credit policies.

 

  1. For calculating payback period for an annuity, all cash flows must be adjusted for time value of money.

 

 

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