Busn 602 Final Exam 100% Correct Answers Essay

986 Words Jul 15th, 2016 4 Pages
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Question 1
The security market line can be used to determine the expected return on a security if we know the:
A. risk-free rate
B. systematic risk of that security
C. market risk premium
D. all of the above Question 2
The constant dividend growth model assumes:
A. a constant annual dividend
B. a constant dividend growth rate for no more than the first 10 years
C. that the discount rate must be greater than the dividend
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A. rate where NPV is equal to zero
B. point where initial investment has been returned
C. marginal cost of capital
D. average book value Question 9
The estimate of how quickly a firm may grow by maintaining a constant mix of debt and equity is called:
A. the retention growth rate
B. dividend growth rate
C. sustainable growth rate
D. the internal growth rate Question 10
The primary purpose of the liquidity ratios is to determine:
A. the extent to which borrowed funds are used to finance assets
B. the ability of the firm to meet short-term obligations to creditors
C. the extent to which assets are used to support sales
D. none of the above Question 11
Firms issue more equities than bonds for the following reason(s).
A. it is cheaper to raise equity than to borrow
B. bonds have a maturity date making them pricier
C. both a and b are true
D. none of the above are true Question 12
All of the following accounts are considered to be current liabilities on the balance sheet except:
A. depreciation
B. accounts payable
C. accruals
D. notes payable
E. all of the above are current liabilities Question 13
On the balance sheet, total assets minus net fixed assets equals:
A. current assets
B. current liabilities
C. gross fixed assets
D. total assets
E. none of the above Question 14
If a person requires greater return when risk increases, that person is said to be:
A. risk seeking

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