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Search for more tutorials here - http://entire-courses.com/BUS-401-Week-4-Quiz-Version-c |
This pack of BUS 401 Week 4 Quiz Version c consists of: 1. Operating leverage refers to ________ 2. A firm that uses large amounts of debt financing in an industry characterized by a high degree of business risk would have ______ earnings per share fluctuations resulting from changes in levels of sales. 3. JB Corporation has a retained earnings balance of $1,000,000. The company reported net income of $200,000, sales of $2,000,000, and had 100,000 shares of common stock outstanding. The company announced a dividend of $ 1 per share. Therefore, the company |
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Search for more tutorials here - http://entire-courses.com/BUS-401-Week-4-Quiz-Version-c |
Business - General Business 1. Question : Investors will make an investment if: Student Answer: the historical rate of return exceeds the expected rate of return. the required rate of return exceeds the expected rate of return. the expected rate of return exceeds the actual rate of return. the expected rate of return exceeds the required rate of return. Instructor Explanation: The answer can be found in Section 9.1: The Building Blocks of the Required Return. Points Received: 1 of 1 Comments: 2. Question : Which of the following is true regarding market risk? Student Answer: It is measured by beta. It is also called nondiversifiable risk. It is also called systematic risk. all of the above Instructor Explanation: The answer can be found in Section 9.2: Risk and Return. Points Received: 1 of 1 Comments: 3. Question : Which of the following statements regarding the cost of equity is true? Student Answer: It can be estimated in three different ways. It is always estimated using the present value of future dividends approach. It is estimated by solving for the discount rate for a perpetuity. It is generally lower than the cost of debt because equity holders are paid after taxes are paid. Instructor Explanation: The answer can be found in Section 10.2: The Weighted Cost of Capital. Points Received: 1 of 1 Comments: 4. Question : The weighted average cost of capital is: Student Answer: the average return for the company’s stock over the past several years. the average cost, including commissions, for raising capital for the firm. an average required return for each of the sources of capital used by the firm to finance its projects, weighted by the amount contributed by each source. interest payments and dividends, divided by the price of bonds and stock, respectively. Instructor Explanation: The answer can be found in Section 10.2: The Weighted Cost of Capital. Points Received: 1 of 1 Comments: 5. Question : In the Capital Asset Pricing Model, the risk-free rate: Student Answer: links the CAPM to current market conditions. is the historic long-term average rate of government bonds. can be approximated by using yields on high-rated corporate bonds. is always the current yield on 30-year US government Treasury bonds. Instructor Explanation: The answer can be found in Section 9.2: Risk and Return. Points Received: 1 of 1 Comments: 6. Question : In the Capital Asset Pricing Model, the market risk premium can be thought of as: Student Answer: the return investors expect to earn for each unit of risk as measured by beta. the risk premium that any asset must pay above the risk-free rate. the expected return on the market portfolio (or a broad market index). a measure of risk of an asset. Instructor Explanation: The answer can be found in Section 9.2: Risk and Return. Points Received: 1 of 1 Comments: 7. Question : A bond pays semiannual coupon payments of $30 each. It matures in 20 years and is selling for $1,200. What is the firm’s cost of debt if the bond’s par value is $1,000? (Don’t forget this is a semiannual coupon.) Student Answer: 2.23% 4.48% 1.80% 3.60% Instructor Explanation: The answer can be found in Section 10.2: The Weighted Average Cost of Capital. Points Received: 1 of 1 Comments: 8. Question : Which of the following is beta is used for? Student Answer: estimating a regression line estimating a firm’s total risk to be used in the WACC estimating a firm’s market risk and used with the CAPM estimating the amount of leverage used by the firm Instructor Explanation: The answer can be found in Section 10.2: The Weighted Cost of Capital. Points Received: 1 of 1 Comments: 9. Question : The discount rate used in project evaluation should: Student Answer: be based on the firm’s overall risk. be based on each project’s risk. be estimated using the WACC for all projects. All of the above are correct. Instructor Explanation: The answer can be found in Section 10.3: Estimating the Discount Rate for Individual Projects. Points Received: 1 of 1 Comments: 10. Question : The financing mix reflected in the WACC should: Student Answer: reflect the desired mix and not necessarily the mix being used to finance a specific project. vary from project to project, depending on how they are financed. always reflect the firm’s current capital structure. None of these answers is correct. Instructor Explanation: The answer can be found in Section 10.2: The Weighted Cost of Capital. |
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Search for more tutorials here - http://entire-courses.com/BUS-401-Week-4-Quiz-Version-c |
Get plenty of sleep. It may be tempting to stay up all night "cramming" for exams, but this is not a good idea. It's been proven that students who get the proper amount of sleep do better on exams. This is because they are more alert and attentive when taking tests. |
