Examination Problems for Fundamentals of Financial Management 2004-2005 (Paper B)
I. Multiple Choice (20 points) (Please write your answer in the following table)
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选项
1. (    ) is concerned with the acquisition, financing, and management of assets with some overall goal in mind.
A. Financial management  B. Profit maximization  C. Agency theory  D. Social responsibility
2.A major disadvantage of the corporate form of organization is the (    ).
A. double taxation of dividends
B. inability of the firm to raise large sums of additional capital
C. limited liability of shareholders
D. limited life of the corporate form.
3. Interest paid (earned) on both the original principal borrowed (lent) and previous interest earned is often referred to as (    ).
A. present value  B. simple interest  C. future value  D. compound interest
4. If the intrinsic value of a share of common stock is less than its market value, which of the following is the most reasonable conclusion?
A. The stock has a low level of risk.
B. The stock offers a high dividend payout ratio.
C. The market is undervaluing the stock.
D. The market is overvaluing the stock.
5. A 250 face value share of preferred stock, pays a 20 annual dividend and investors require a 7% return on this investment. If the security is currently selling for 276, what is the difference (overvaluation) between its intrinsic and market value (rounded to the nearest whole dollar)?
A. approximately 26  B. approximately 10  C. approximately 6  D. approximately 1
6. Felton Farm Supplies, Inc., has an 8 percent return on total assets of 300,000 and a net profit margin of 5 percent. What are its sales?
A. 3,750,000  B. 480,000  C. 300,000  D. 1,500,000
7. A company can improve (lower) its debt-to-total asset ratio by doing which of the following?
A. Borrow more.  B. Shift short-term to long-term debt.  C. Shift long-term to short-term debt.  D. isssue common stock.
8. The DuPont Approach breaks down the earning power on shareholders' book value (ROE) as follows: ROE = (    ).
A. Net profit margin × Total asset turnover × Equity multiplier
B. Total asset turnover × Gross profit margin × Debt ratio
C. Total asset turnover × Net profit margin
D. Total asset turnover × Gross profit margin × Equity multiplier
9. Which of the following items concerns financing decision? (    )
A. sales forecasting  B. bond issuing  C. receivables collection  D. investment project selection
10. Which of the following items is the function of a treasurer? (  )
A. cost accounting  B. internal control  C. capital budgeting  D. general ledger
11. For financial instruments, (    ) is judged in relation to the ability to sell a significant volume of securities in a short period of time without significant price concession.
A. maturity  B. marketability  C. default  D. inflation
12. (    ) is the value at some future time of a present amount of money, or a series of payments, evaluated at a given interest rate.
A. future value  B. present value  C. intrinsic value  D. market value
13. Ellesmere Corporation issues 1 million $1 par value bonds. The stated interest rate is 6% per year and the interest is paid twice a year. What is the real interest rate of the bond? (    )
A. 6%  B.3%  C. 12%  D. (1+6%/2)2-1
14. Assume that dividends of a common stock will be maintained at D forever, and the req
uired return of the stockholder is r, the par value of the stock is m, the value of the stock is (    )
A. m  B. m+D  C. m+D/r  D. D/r
15. Which of the following items has the most risk? (    )
A. treasury bill  B. corporate bond  C. preferred stock  D. common stock
16. (    ) equals the gross profit divided by net sales of a firm.
A. gross profit margin  B. net profit margin    C. return on investment  D. return on equity
17. ( A  ) is the ratios that measure a firm’s ability to meet short-term obligations
A. liquidity ratios    B. leverage ratios  c. coverage ratios  D. activity ratios
18. (  A  ) is the result of Net Profit Margin × total asset turnover × (total assets/shareholders’ equity)
A. Return on equity  B. return on investment  C. current ratio  D. quick ratio
19. Government tax law adjustment is (  A  ) to a firm.
A. general economic risk  B. inflation and deflation risk  C. firm-specific risk 

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