Assessment I
Which of the following describes maximizing a company's value through good business decisions?
A. Corporate Finance
B. Corporate Bookkeeping
C. Mergers
D. Acquisitions
A. Corporate Finance
1. Which of the following describes the process of determining if a new project is worth pursuing?
A. Capital budgeting
B. Merger
C. Depreciation
D. Acquisition
A. Capital Budgeting
1. Which of the following describes markets for buying and selling equity and debt instruments?
A. Corporate bonds
B. Long-term debt
C. Capital markets
D. Shares
C. Capital Markets
1. The roof of a company’s building is damaged. The cost to repair the roof can be referred to as which of the following?
A. Replacement cost
B. Net present value (NPV)
C. Petty cash expense
D. Replacement ratio
A. Replacement Cost
Takeover of one company/entity by another
Acquisition
Which of the following is a report used to analyze the movement of cash during an accounting period?
A. Discounted cash flow
B. Operating cash flow
C. Cash flow statement
D. Terminal cash flow
C. Cash Flow Statement
2. A business should pursue a project or opportunity which does which of the following to shareholder value?
A. Decreases
B. Increases
C. Levels
D. Equals
B. Increases
2. Which of the following is the term used to describe a debt security issued by a corporation and sold to investors?
A. Bank loans
B. Equity
C. Line of credit
D. Corporate bond
D. Corporate Bond
2. Which of the following measures the amount of assets which are financed by the owner’s investments?
A. Accelerated ratio
B. Equity ratio
C. Debt ratio
D. Debt/equity ratio
B. Equity Ratio
Process of determining if a new project is worth pursuing for a company
Capital Budgeting
3. Which of the following is used to determine the profitability of an investment opportunity?
A. Discounted cash flow
B. Operating cash flow
C. Cash flow statement
D. Terminal cash flow
A. Discounted Cash Flow
3. Which of the following outlines the planned sales revenue, expenses and net income or loss for a time period?
A. Capital budgeting
B. Cash budgeting
C. Profit planning
D. Hostile takeover
C. Profit Planning
3. Which of the following is a method used to pay a company’s shareholders?
A. Corporate bonds
B. Dividends
C. Equity
D. Assets
B. Dividends
3. Which of the following terms is the interest rate at which the net present value of cash flow equals zero?
A. Internal rate of return (IRR)
B. Net present value (NPV)
C. Capital budgeting coefficient
D. Payback period
A. Internal Rate of Return (IRR)
Markets for buying and selling equity and debt instruments
Capital Markets
4. Which of the following is used in accounting to show how an asset’s expense can help a company earn income?
A. Discounted cash flow
B. Depreciation
C. Investment coefficient
D. Terminal cash flow
B. Depreciation
4. Which of the following is the process of determining the current worth of an asset of a company?
A. Corporate accounting
B. Valuation
C. Profit goals
D. Profit planning
B. Valuation
4. Which of the following types of mergers occur when a clothing company takes over a textile company?
A. Vertical
B. Horizontal
C. Concentric
D. Reverse
A. Vertical
4. Which of the following calculates depreciation based on the amount of usage or output of an asset?
A. Accelerated depreciation
B. Straight-line depreciation
C. Sum-of-year depreciation
D. Unit-of-production depreciation
D. Unit-of-Production Deprecation
When a company acquires or merges with another in the same value chain, producing or distributing the same goods and services
Vertical Merger
5. Which of the following assumes all investors analyze all available information in the same manner?
A. Straight-line depreciation
B. Accelerated depreciation
C. Capital market efficiency
D. Capital budgeting
C. Capital Market Efficiency
5. Which of the following presents financial projections for a specific time period?
A. Pro forma statement
B. Valuation
C. Expense statement
D. Acquisition
A. Pro Forma Statment
5. Which of the following is the cost to replace the assets or property of a company of the same or equal value?
A. Corporate bonds
B. Dividends
C. Replacement cost
D. Assets renewal fee
C. Replacement Cost
5. Jeremiah purchased 500 shares of common stock of a company with a par value of $3. How much money did he spend?
A. $16,000
B. $15,000
C. $1,600
D. $1,500
D. $1,500
Refers to the method of calculating corporate dividends; provides investors with dividends at a usual rate
Residual Dividends Policy