ACC498 MODULE 4 FIN QUIZ 2017 (100% ANSWER). QuestionQuestion 1Working capital is:Question 1 options:cash on hand.current assets minus current liabilities.property, plant, and equipment.money invested in short-term projects.Question 2In theory, the capital structure should be set to:Question 2 options:minimize risk.minimize the weighted average cost of capital.the industry standard.minimize the cost of equity.Question 3The ability of a firm to pay its short-term debts is measured by:Question 3 options:liquidity ratios.times-interest-earned.profitability ratios .ROE.Question 4How does an increase in the risk-free rate affect the required rate of return of common stocks?Question 4 options:DecreasesNo effectIncreasesUndetermined effectQuestion 5The future value of $100 today earning 6% for three years is:Question 5 options:$129.$119.$98.$108.Question 6In the U.S., what form of business organization generates a substantial majority of revenue and profits?Question 6 options:PartnershipsCorporationsSole proprietorshipsLimited partnershipsQuestion 7The amount of time it takes from the cash outlay for a purchase of raw materials to the cash inflow for the sale of a finished product is called the:Question 7 options:cash conversion cycle.accounts receivable.liquidity ratio.days inventory outstanding.Question 8A compensating balance:Question 8 options:raises the nominal interest rate.raises the effective interest rate.lowers the nominal interest rate.lowers the effective interest rate.Question 9According to the constant growth valuation (Gordon) model, the value of a share of common stock is equal to the:Question 9 options:future stock price discounted at the cost of equity.assets minus debts.present value of all expected future dividends.present value of all future cash flows.Question 10The portfolio that maximizes return for a given level of risk or minimizes risk for a given level of return is called the __________ portfolio.Question 10 options:frontierefficientrisk-freeinvestment bankerQuestion 11The __________ provides a snapshot of a firm’s financial position.Question 11 options:statement of cash flowsretained earnings statementincome statementbalance sheetQuestion 12What impact will an increase in risk usually have on the required rate of return on an investment?Question 12 options:No impactA decreaseAn increaseAn increase and then a decreaseQuestion 13Which of these is true?Question 13 options:The future value of a 10-year, $100 annuity due is always greater than the future value of a 10-year, $100 ordinary annuity with identical risk.The future value of a 10-year, $100 annuity due is always less than the future value of a 10-year, $100 ordinary annuity with identical risk.There is not enough information to compare these two annuities.The main difference between a 10-year, $100 annuity due and a 10-year, $100 ordinary annuity is the level of risk.Question 14The __________ summarizes a firm’s revenues, expenses, and profit during a specific period.Question 14 options:balance sheetstatement of cash flowsretained earnings statementincome statementQuestion 15If the exchange rate between the U.S. dollar and the Euro is $1.40 per Euro, how many Euros will be needed to purchase a $10,000 asset?Question 15 options:0.000110,00014,0007,143Question 16The beta of the market portfolio is:Question 16 options:changes yearly.1.greater than 1.0.Question 17What is the market value of a financial asset?Question 17 options:The present value of all future cash flowsThe present value of all future profitsThe future value of all future profitsThe future value of all future cash flowsQuestion 18Using the economic order quantity (EOQ):Question 18 options:minimizes total inventory costs.minimizes inventory carrying costs.minimizes inventory order quantities.minimizes inventory ordering costs.Question 19According to the DuPont analysis, return on assets (ROA) consists of:Question 19 options:profit margin x asset turnover.ROE x debt ratio.ROE / (1 – Debt/Assets).gross profits x equity margin.Question 20What is a characteristic of an efficient market?Question 20 options:Prices are unaffected by new information.Prices slowly adjust to reflect new information.Prices quickly adjust to reflect new information.Prices are unrelated to true value.