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F. Naz, Bachelor's Degree
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1. A company has an EPS of $1.30, a cash flow per share of

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1. A company has an EPS of $1.30, a cash flow per share of $3.35, and a price/cash flow ratio of 5.0. What is its P/E ratio? Round your answer to two decimal places. ___

2. Which of the following statements is CORRECT?
a.Bondholders are generally more willing than stockholders to have managers invest in risky projects with high potential returns as opposed to safer projects with lower expected returns.
b.Relative to sole proprietorships, corporations generally face fewer regulations, and this makes it easier for corporations to raise capital.
c.Stockholders are generally more willing than bondholders to have managers invest in risky projects with high potential returns as opposed to safer projects with lower expected returns.
d.There is no good reason to expect a firm's stockholders and bondholders to react differently to the types of new asset investments a firm makes.
e.One disadvantage of operating as a corporation rather than as a partnership is that corporate shareholders are exposed to more personal liability than partners.

3. Which of the following statements is CORRECT?
a.Options typically sell for less than their exercise value.
b.An option holder is not entitled to receive dividends unless he or she exercises their option before the stock goes ex dividend.
c.Call options give investors the right to sell a stock at a certain strike price before a specified date.
d.LEAPS are very short-term options that were created relatively recently and now trade in the market.
e.Put options give investors the right to buy a stock at a certain strike price before a specified date.

4. Greene Sisters has a DSO of 38 days. The company's average daily sales are $36,000. What is the level of its accounts receivable? Assume there are 365 days in a year. ____$

5. Which of the following statements is CORRECT?
a. The income statement gives us a picture of the firm's financial position at a point in time.
b. The balance sheet gives us a picture of the firm's financial position at a point in time.
c. The statement of cash flows tells us how much cash the firm has in the form of currency and demand deposits.
d. The statement of cash needs tells us how much cash the firm will require during some future period, generally a month or a year.
e. The four most important financial statements provided in the annual report are the balance sheet, income statement, cash budget, and the statement of stockholders' equity.

6. A Treasury bond that matures in 10 years has a yield of 4%. A 10-year corporate bond has a yield of 9%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. ___ %

7. Companies E and P each reported the same earnings per share (EPS), but Company E's stock trades at a higher price. Which of the following statements is CORRECT?
a.Company E must have a higher market-to-book ratio.
b.Company E must pay a lower dividend.
c.Company E probably has fewer growth opportunities.
d.Company E trades at a higher P/E ratio.
e.Company E is probably judged by investors to be riskier.

8. Other things held constant, which of the following alternatives would increase a company's cash flow for the current year?
a.Increase the number of years over which fixed assets are depreciated for tax purposes.
b.Pay down the accounts payables.
c.Reduce the days' sales outstanding (DSO) without affecting sales or operating costs.
d.Pay workers more frequently to decrease the accrued wages balance.
e.Reduce the inventory turnover ratio without affecting sales or operating costs.

9. Winston Washers's stock price is $70 per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt, and $6 billion in common equity. It has 750 million shares of common stock outstanding. What is Winston's market/book ratio? Round your answer to two decimal places. ____

10. Which of the following statements is CORRECT?
a.Hedge funds are legal in the United States, but they are not permitted to operate in Europe or Asia.
b.Hedge funds have more in common with investment banks than with any other type of financial institution.
c.The justification for the "light" regulation of hedge funds is that only "sophisticated" investors with high net worths and high incomes are permitted to invest in these funds, and such investors supposedly can do the necessary "due diligence" on their own rather than have it done by the SEC or some other regulator.
d.Hedge funds have more in common with commercial banks than with any other type of financial institution.
e.Hedge funds are legal in Europe and Asia, but they are not permitted to operate in the United States.

11. Assume that the risk-free rate is 6.5% and that the expected return on the market is 10%. What is the required rate of return on a stock that has a beta of 1.2? ___%
Submitted: 2 years ago.
Category: Business and Finance Homework
Expert:  F. Naz replied 2 years ago.

. A company has an EPS of $1.30, a cash flow per share of $3.35, and a price/cash flow ratio of 5.0. What is its P/E ratio? Round your answer to two decimal places. ___12.89

2. Which of the following statements is CORRECT?
d.There is no good reason to expect a firm's stockholders and bondholders to react differently to the types of new asset investments a firm makes.

3. Which of the following statements is CORRECT?

b.An option holder is not entitled to receive dividends unless he or she exercises their option before the stock goes ex dividend.

4. Greene Sisters has a DSO of 38 days. The company's average daily sales are $36,000. What is the level of its accounts receivable? Assume there are 365 days in a year. $(NNN) NNN-NNNNbr/>
5. Which of the following statements is CORRECT?

b. The balance sheet gives us a picture of the firm's financial position at a point in time.

6. A Treasury bond that matures in 10 years has a yield of 4%. A 10-year corporate bond has a yield of 9%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the corporate bond? Round your answer to two decimal places. 4.5 %

7. Companies E and P each reported the same earnings per share (EPS), but Company E's stock trades at a higher price. Which of the following statements is CORRECT?
d.Company E trades at a higher P/E ratio.

8. Other things held constant, which of the following alternatives would increase a company's cash flow for the current year?
c.Reduce the days' sales outstanding (DSO) without affecting sales or operating costs.

9. Winston Washers's stock price is $70 per share. Winston has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt, and $6 billion in common equity. It has 750 million shares of common stock outstanding. What is Winston's market/book ratio? Round your answer to two decimal places. 8.75

 

10. Which of the following statements is CORRECT?
c.The justification for the "light" regulation of hedge funds is that only "sophisticated" investors with high net worths and high incomes are permitted to invest in these funds, and such investors supposedly can do the necessary "due diligence" on their own rather than have it done by the SEC or some other regulator.

11. Assume that the risk-free rate is 6.5% and that the expected return on the market is 10%. What is the required rate of return on a stock that has a beta of 1.2? 10.7%

 

 

 

F. Naz, Bachelor's Degree
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Experience: Have completed B.COM and CA Finalist
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