Advanced Financial Management Quiz
What is net new financing?
Building a model for long-term forecasting reveals points in the future where the firm will need _____ when retained earnings are not enough to fund planned future investments.
- Mergers
- Stock dividends
- External financing
- Dividend payments
When the projected liabilities and equity are greater than the assets, the firm can plan to _________.
- Retain extra cash
- Pay dividends
- Retire debt
- All of these
The market size for Loppins is 80 million units. IF SPI Inc. has a market share of 30% and the average sales price is $2 per Loppin, what is the dollar amount of sales of SPI?
- $42 million
- $48 million
- $40 million
- $45 million
A firm has $40 million in equity and $20 million of debt, it pays dividends of 20% of net income, and has a net income of $10 million. What is the firm’s internal growth rate?
- 2%
- 2%
- 3%
- 1%
Building a model for long-term forecasting reveals points in the future where the firm will have ______.
- Excess cash that can be used for dividends, debt repayment, or stock repurchases
- Cash needs that must be funded with external financing
- A need for expanding property, plant and equipment to meet increases capacity
- All of these
When making long term plans, any increases in ______________ and _____________ reflect capital structure decisions that require managers to actively raise capital
- Current ratio, equity
- Debt, equity
- Assets, equity
- Debt, assets
Calgary Doughnuts had sales of $100 million in 2007 its cost of sales were $70 million. IF sales are expected to grow at 20% in 2008, compute the forecasted costs using the percent of sales method.
- $80 million
- $84 million
- $88 million
- $96 million
What is common starting point for forecasting?
The market size for Loppins is 60 million units. If SPI Inc. has a market share of 20% and the average sales price is $3 per Loppin, what is the dollar amount of sales of SPI?
- $36 million
- $32 million
- $38 million
- $42 million
You have just landed in Paris with $750 in your wallet. At the foreign exchange booth, you see that euros are being quoted at $1.34/€. How many euros can you exchange for your $750?
- 56 euros
- 70 euros
- 1,005 euros
- 00 euros
Firms use forward foreign exchange contracts rather than a cash-and-carry strategy because________.
- Of lower transactions costs
- Of inability to borrow in different currencies
- Of higher interest costs if credit quality is poor
- All of these
A U.S. – based firm is planning to make an investment in Europe. The firm estimates that the project will generate cash flows of 200,000 euros after one year. If the one-year forward exchange rate is $1.40/euro and the dollar cost of capital is 9%. what is the present value (PV) of the project cash flows?
- $268,880
- $256,881
- $245,198
- $232,981
One British pound can be purchased for $1.90. What is the exchange rate in terms of pounds per dollar?
- £0.491
- £0.526
- £0.451
- £0.543
The _____________ rate is a price for a currency denominated in another currency.
- Reversion
- Interest
- Foreign exchange
- Marginal
A ___________ exchange rate is the rate that a firm can tie in for a future transaction date.
- Fixed
- Forward
- Floating
- None of these
One British pound can be purchased for $1.65. What is the exchange rate in terms of pounds per dollar?
- £0.551
- £0.626
- £0.645
- £0.606
The supply and demand for a currency is driven by _______________.
- Firms trading goods
- Investors trading securities
- Actions of central banks in each country
- All of these
A ____________ is written between a firm and a bank and it fixes the currency exchange rate for a transaction that will occur at a future date
- Currency put option
- Currency call option
- Currency forward contract
- Currency options contract
One British pound can be purchased for $1.80. What is the exchange rate in terms of pounds per dollar?
- £0.491
- £0.526
- £0.556
- £0.451