Fin 571 Final Exam 3 Essay

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FIN 571 FINAL EXAM 3

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1) Whenever a firm splits itself into separate units, with each unit having limited liability with respect to its financing, the capital structure of each unit becomes __________

2) An investor's risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true?

3) An all-equity-financed firm would __________.

4) The capital budgeting process can be broken down into five steps. These steps include which of the following?

5) Projects can be classified into various categories. These include:

6) Boeing Corporation is a world leader in commercial aircraft. In the face of competition, Boeing
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The cost of capital is 10%.

38) Suppose you purchase a zero coupon bond for $214.55 with a face value of $1,000 maturing in twenty years. If the yield to maturity (YTM) on the bond is 8.00%, what will the price of the bond be at the end of five years from now?

39) A bond for J. Morris, Inc. a coupon rate of 6%. The yield to maturity is 7%. The bond has a remaining life of 20 years and makes semi-annual coupon payments? What is the present value of the bond’s face value?

40) You own a stock that will start paying $0.50 annually at the end of the year. It will then grow each year at a constant annual rate of 5%. If the required rate of return is 14%, what should you pay per share?

41) What is the present value of a zero coupon bond that will pay $1,000 in two years if the applicable discount rate equals 8 percent?

42) Some countries have __________ in which shareholders' returns are not fully taxed twice.

43) The Time Value of Money Principle says __________.

44) Conditional sales contracts __________.

45) You own a stock that is currently selling for $50. You expect a dividend of $1.50 next year and you require a 12% rate of return.. What is the dividend growth rate for your stock assuming constant growth?

46) The true risk of any investment is which of the following?

47) The capital asset pricing model .

48) The wholesale price for Captain John’s is $0.612 per loaf, and the variable cost of production is $0.387 per loaf. Captain

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