Grand Canyon University > FINANCE > FIN 515 Final Exam (GRADE A)

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FIN 515 Final Exam Question 1.1. (TCO A) In the United States, which of the following types of organization has the greatest revenue in total? (Points : 5) Sole proprietorship C... corporation S corporation Limited partnership Question 2.2. (TCO A) The one thing that makes a corporation different from the other forms of business ownership is (Points : 5) legally, the corporation is the same as its owners. it requires all owners to share liability equally. it is a legally defined entity, completely separate from its owners. it protects small shareholders, allocating most of any liability to those who own more stock. Question 3.3. (TCO B) Which of the following would cause the present value of an annuity to increase? (Points : 5) Reducing the number of payments. Increasing the interest rate. Decreasing the interest rate. Decreasing the liquidity of the payments. Question 4.4. (TCO B) In a TVM calculation, if incoming cash flows are positive, outgoing cash flows must be (Points : 5) positive. negative. either positive or negative. It really doesn’t matter. stated in time units that are different from the time units in which the interest rates are stated. Question 5.5. (TCO G) If you were a manager of a company, which of the three right side components of the DuPont Identity would you want to increase and which would you want to decrease, other things being equal? Give a specific example for how to do that for each of the three. (Points : 20) Question 6.6. (TCO D) A stock has just paid a dividend and has declared an annual dividend of $2.00 to be paid one year from today. The dividend is not expected to grow. The return on equity for similar stocks is 12%. What is P0? (Points : 20) Question 7.7. (TCO D) A stock has just paid a dividend and has declared an annual dividend of $2.00 to be paid one year from today. The dividend is expected to grow at a 5% annual rate. The return on equity for similar stocks is 12%. What is P0? (Points : 20) Question 8.8. (TCO D) A bond has 5 years to maturity and has a YTM of 8%. Its par value is $1,000. Its semiannual coupons are $50. What is the bonds current market price? (Points : 10) Question 9.9. (TCO D) A bond currently sells for $1,000 and has a par of $1,000. It was issued two years ago and had a maturity of 10 years. The coupon rate is 7% and the interest payments are made semiannually. What is its YTM? (Points : 10) Question 10.10. (TCO D) Explain thoroughly how stock portfolios affect the risk to an investor. (Points : 30) Question 11.11. (TCO E) A company has 100 million shares outstanding trading for $8 per share. It also has $900 million in outstanding debt. If its equity cost of capital is 15%, and its debt cost of capital is 12%, and its effective corporate tax rate is 40%, what is its weighted average cost of capital? (Points : 30) Question 12.12. (TCO A) What is the difference between capital structure and capital budgeting? Explain and give an example of a capital structure decision and an example of a capital budgeting decision. (Points : 25) Question 13.13. (TCO H) Other things being equal, would a firm prefer a longer or shorter Cash Conversion Cycle? What are some examples of ways a firm could attain this? (Points : 30) [Show More]

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