Finansebi
Finances Mastery Quiz
Test your knowledge in finance with our comprehensive quiz designed to challenge your understanding of key financial concepts. Whether you're a student, a professional preparing for certification, or someone looking to brush up on your finance skills, this quiz is for you!
Key Features:
- 30 well-crafted questions
- Covers a wide range of finance topics
- Instant feedback on your answers
1) Which of the following would NOT improve the current ratio?
1. Borrow short term to finance additional fixed assets.
2. Issue long-term debt to buy inventory.
3. Sell common stock to reduce current liabilities.
4. Sell fixed assets to reduce accounts payable.
2) The gross profit margin is unchanged, but the net profit margin declined over the same period. This could have happened if
1. Cost of goods sold increased relative to sales.
2. Sales increased relative to expenses.
3. the U.S. Congress increased the tax rate.
4. Dividends were decreased.
3) A company can improve (lower) its debt-to-total assets ratio by doing which of the following?
1. Borrow more.
2. Shift short-term to long-term debt.
3. Shift long-term to short-term debt.
4. Sell common stock.
4) Which of the following statements (in general) is correct?
1. A low receivables turnover is desirable.
2. The lower the total debt-to-equity ratio, the lower the financial risk for a firm.
3. An increase in net profit margin with no change in sales or assets means a poor ROI.
4. The higher the tax rate for a firm, the lower the interest coverage ratio.
5) Retained earnings for the "base year" equals 100.0 percent. You must be looking at
1. A common-size balance sheet.
2. A common-size income statement.
3. An indexed balance sheet.
4. An indexed income statement.
6) A firm's operating cycle is equal to its inventory turnover in days (ITD)
1. Plus its receivable turnover in days (RTD).
2. Minus its RTD.
3. Plus its RTD minus its payable turnover in days (PTD).
4. Minus its RTD minus its PTD.
7) When doing an "index analysis," we should expect that changes in a number of the firm's current asset and liabilities accounts (e.g., cash, accounts receivable, and accounts payable) would move roughly together with for a normal, well-run company.
1. Net sales
2. Cost of goods sold
3. Earnings before interest and taxes (EBIT)
4. Earnings before taxes (EBT)
8) The process of convergence of accounting standards around the world aims to .
1. Narrow or remove national accounting differences
2. Move non-US accounting standards towards US Generally Accepted Accounting Principles (US GAAP)
3. Create one set of rules-based accounting standards for all countries
9) What's the value to you of a $1,000 face-value bond with an 8% coupon rate when your required rate of return is 15 percent?
9) What's the value to you of a $1,000 face-value bond with an 8% coupon rate when your required rate of return is 15 percent?
2. Less than its face value.
3. $1,000.
10) If the intrinsic value of a stock is greater than its market value, which of the following is a reasonable conclusion?
1. The stock has a low level of risk.
2. The stock offers a high dividend payout ratio.
3. The market is undervaluing the stock.
4. The market is overvaluing the stock.
11) When the market's required rate of return for a particular bond is much less than its coupon rate, the bond is selling at:
1. A premium.
2. A discount.
3. Cannot be determined without more information.
4. Face value.
12) If an investor may have to sell a bond prior to maturity and interest rates have risen since the bond was purchased, the investor is exposed to
1. The coupon effect.
2. Interest rate risk.
3. A perpetuity.
4. An indefinite maturity.
13) If a bond sells at a high premium, then which of the following relationships hold true? (P0 represents the price of a bond and YTM is the bond's yield to maturity.)
1. P0 < par and YTM > the coupon rate.
2. P0 > par and YTM > the coupon rate.
3. P0 > par and YTM < the coupon rate.
4. P0 < par and YTM < the coupon rate.
14) Interest rates and bond prices
1. Move in the same direction.
2. Move in opposite directions.
3. Sometimes move in the same direction, sometimes in opposite directions.
4. Have no relationship with each other (i.e., they are independent).
15) In the formula ke = (D1/P0) + g, what does g represent?
1. The expected price appreciation yield from a common stock.
2. The expected dividend yield from a common stock.
3. The dividend yield from a preferred stock.
4. The interest payment from a bond.
16) In the United States, most bonds pay interest a year, while many European bonds pay interest a year.
1. once; twice
2. twice; once
3. once; once
4. twice; twice
17) The expected rate of return on a bond if bought at its current market price and held to maturity.
1. Yield to maturity
2. Current yield
3. Coupon yield
4. Capital gains yield
18) In 3 years you are to receive $5,000. If the interest rate were to suddenly increase, the present value of that future amount to you would
1. fall.
2. rise.
3. Remain unchanged.
4. Cannot be determined without more information.
19) To increase a given present value, the discount rate should be adjusted
Upward
Downward
20) When n = 1, this interest factor equals one for any positive rate of interest.
1. PVIF
FVIF
PVIFA
FVIFA
21) (1 + i)n
PVIF
FVIF
PVIFA
FVIFA
22) You can use to roughly estimate how many years a given sum of money must earn at a given compound annual interest rate in order to double that initial amount .
1. Rule 415
2. the Rule of 72
3. the Rule of 78
4. Rule 144
23) In a typical loan amortization schedule, the dollar amount of interest paid each period .
1. Increases with each payment
2. Decreases with each payment
3. Remains constant with each payment
24) In a typical loan amortization schedule, the total dollar amount of money paid each period .
1. Increases with each payment
2. Decreases with each payment
3. Remains constant with each payment
25) According to the accounting profession, which of the following would be considered a cash-flow item from an "investing" activity?
1. Cash inflow from interest income.
2. Cash inflow from dividend income.
3. Cash outflow to acquire fixed assets.
4. All of the above.
26) According to the Financial Accounting Standards Board (FASB), which of the following is a cash flow from a "financing" activity?
1. Cash outflow to the government for taxes.
2. Cash outflow to shareholders as dividends.
3. Cash outflow to lenders as interest.
4. Cash outflow to purchase bonds issued by another company.
27) Uses of funds include a (an):
1. Decrease in cash.
2. Increase in any liability.
3. Increase in fixed assets.
4. Tax refund.
28) Which of the following would be included in a cash budget?
1. Depreciation charges.
2. dividends.
3. goodwill
4. Patent amortization.
29) An examination of the sources and uses of funds statement is part of:
1. A forecasting technique.
2. A funds flow analysis.
3. A ratio analysis.
4. Calculations for preparing the balance sheet.
30) Which of the following is NOT a cash outflow for the firm?
1. depreciation.
2. dividends.
3. Interest payments.
4. taxes
31) Which of the following would be considered a use of funds?
1. A decrease in accounts receivable.
2. A decrease in cash.
3. An increase in account payable.
4. An increase in cash.
32) The cash flow statement in the United States is most likely to appear using
1. a "supplementary method."
1. a "supplementary method."
3. an "indirect method."
4. ua "flow of funds method."
33) For a profitable firm, total sources of funds will always total uses of funds.
1. Be equal to
2. Be greater than
3. Be less than
4. Have no consistent relationship to
34) Which of the following statements is correct?
1. If the NPV of a project is greater than 0, its PI will equal 0.
2. If the IRR of a project is 0%, its NPV, using a discount rate, k, greater than 0, will be 0.
3. If the PI of a project is less than 1, its NPV should be less than 0.
4. If the IRR of a project is greater than the discount rate, k, its PI will be less than 1 and its NPV will be greater than 0.
35) A project's profitability index is equal to the ratio of the ____ of a project's future cash flows to the project's _____ .
1. Present value; initial cash outlay
2. Net present value; initial cash outlay
3. Present value; depreciable basis
4. Net present value; depreciable basis
36) The discount rate at which two projects have identical _____ is referred to as Fisher's rate of intersection.
1. Present values
2. Net present values
3. IRRs
4. Profitability indexes
37) Two mutually exclusive investment proposals have "scale differences" (i.e., the cost of the projects differ). Ranking these projects on the basis of IRR, NPV, and PI methods give contradictory results.
1. Will never
2. Will always
3. may
4. Will generally
38) If capital is to be rationed for only the current period, a firm should probably first consider selecting projects by descending order of .
1. Net present value
2. Payback period
3. Internal rate of return
4. Profitability index
39) The method provides correct rankings of mutually exclusive projects, when the firm is not subject to capital rationing.
1. Net present value
2. Internal rate of return
3. Payback period
4. Profitability index
40) In an NPV sensitivity graph, a steep sensitivity line for a particular input variable means that a in that variable results in a in NPV.
1. Small percentage change; large change
2. Large percentage change; small change
41) One potential problem with sensitivity analysis is that it generally looks at sensitivity "one variable at a time." However, one way to judge the sensitivity of results to simultaneous changes in two variables, at least, is to construct an .
1. NPV profile
2. NPV sensitivity matrix
3. NPV sensitivity graph
42) All of the following influence capital budgeting cash flows EXCEPT:
42) All of the following influence capital budgeting cash flows EXCEPT:
2. Salvage value.
3. Tax rate changes.
4. Method of project financing used.
43) In proper capital budgeting analysis we evaluate incremental
1. Accounting income.
2. Cash flow.
3. earnings.
4. Operating profit.
44) The estimated benefits from a project are expressed as cash flows instead of income flows because:
1. It is simpler to calculate cash flows than income flows.
2. It is cash, not accounting income, that is central to the firm's capital budgeting decision.
3. This is required by the Internal Revenue Service.
4. This is required by the Securities and Exchange Commission.
45) In estimating "after-tax incremental operating cash flows" for a project, you should include all of the following EXCEPT:
1. Sunk costs.
2. Opportunity costs.
3. Changes in working capital resulting from the project, net of spontaneous changes in current liabilities.
4. Effects of inflation.
46) A capital investment is one that
1. Has the prospect of long-term benefits.
2. Has the prospect of short-term benefits.
3. Is only undertaken by large corporations.
4. Applies only to investment in fixed assets.
47) Taxing authorities allow the fully installed cost of an asset to be written off for tax purposes. This amount is called the asset's
1. Cost of capital.
2. Initial cash outlay.
3. Depreciable basis.
4. Sunk cost.
48) In general, if a depreciable asset used in business is sold for more than its depreciated (tax) book value, any amount realized in excess of book value but less than the asset's depreciable basis is considered a
1. "capital gain" and is taxed at the corporate capital gains tax.
2. "recapture of depreciation" and is taxed at the corporate capital gains rate.
3. "capital gain" and is taxed at a rate equal to the firm's ordinary tax rate, or a maximum of 35 percent.
4. "recapture of depreciation" and is taxed at the firm's ordinary income tax rate.
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