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Multiple Choice Questions - finance practice quiz

** See ATTACHED file(s) for complete details ** Question 1 The Underhill plant has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows: Maintenance $180,000 Inspection 380,000 The plant currently applies overhead using direct labor hour

Finance: Mutual Funds

Capital Allocation Consider the following capital market: a risk-free asset yielding 3.00% per year and a mutual fund consisting of 65% stocks and 35% bonds. The expected return on stocks is 12.00% per year and the expected return on bonds is 5.50% per year. The standard deviation of stock returns is 30.00% and the standard d

Global Financial Markets - Risks and Challenges

During the past two decades, financial markets around the world have become increasingly interrelated. Although globalization has brought considerable benefits to national economies and investors, what new risks and challenges has this created for market participants and policymakers?

Advantage and disadvantages of using student loans

I am conducting a detail study on the advantage and disadvantages of university students using student loans. Please tell me the backgrounds/objectives of student loans? Such as since when student loans become commonly used? What was the purpose of student loans? (Preferably based in the UK) Is student loan really a convenien

Expansion and leverage - DeSoto Tools, Inc.

Can you help get me started on this?? ********************** DeSoto Tools, Inc. is planning to expand production. The expansion will cost $300,000, which can be financed either by bonds at an interest rate of 14 percent or by selling 10,000 shares of common stock at $30 per share. The current income statement before expansi

Compute Break-even analysis for Jailer Shoe Company

Jailer Shoe Company produces shoes that sell for 40 dollars each and have a variable cost of $39.50. Fixed costs are 37,000 dollars. Compute the break-even points in units. Find the sales (in units ) needed to earn a profit of $25,000.

Compare online sources of financial data

Speaking of financial research, What is important is being able to extrapolate all that data, and there is a lot of data out there, into a usable form for you to make wise investment decisions. And, with all the various ratios we've been discussing in class, we also now have the means to utilize some of those formulas and con

Compare Cost of Preventative Maintenance policies for fire department oxygen masks

The fire department has a number of failures with its oxygen masks and is evaluating the possibility of outsourcing the preventive maintenance to the manufacturer. Because of the risk associated with a failure the cost of each failure is estimated at $2,000. The current maintenance policy (with station employees performing mai

Description of Basic Concepts in Finance

1. A company is attempting to raise $5,000,000 in new equity with a rights offering. The subscription price will be $40 per share. The stock currently sells for $50 per share and there are 250,000 shares outstanding. How many rights are needed to buy a new share? 2. What's the duration of a 2 year annual 10% bond that is sel

Carver Lawrence, LLC: Prepare a financial plan.

See attachment for details. Prepare proforma Financial statements (Balance Sheet, Income Statement, Cash Flow Statement) Discussion about financial findings and what plays a role in the success and/or failure of the business (healthy, environment, customers, etc.) What would you project your ability to be if you wante

Business Valuation Earnings After Tax

See attached for better formatting... Business Valuation Year-End December 31, xxxx (Dollars in Millions) Comcast Pfizer Travelers Earnings After Tax $ 609 $ 7,788 $ 1,065 Cash Flow = EAT + Dep Expense $ 1,820 $ 8,648 $ 1,137 Book value of Equity $ 38,329 $ 18,293 $ 10, 686 Outstandin

Estimate the price of another company's stock

1. You have the following information on Target and Wal-Mart: Target: P-E (which is Price/EPS) = 14.87 Wal-Mart: EPS = 15.42 a. Using Target as a comparable, estimate Wal-Mart's price b. The current price of Wal-Mart is about $54 per share. How does your estimate compare to the current price (high, low or about the same)

Veil Piercing

You have just inherited $ 10 million. Rather than kicking back and avoiding all work, you are contemplating starting and operating a landscaping business with a friend that would require each of you to invest $5,000 for equipment. Your friend suggests that the business be formed as a corporation so that you won't have to buy a l

Rate of Return in Investment

If an investor buys shares in a closed-end investment company for $46 and the net asset value is $53, what is the discount? If the company distributes $1, the net asset value rises to $58, and the investor sells the shares for a premium of 5 percent over the net asset value, what is the percentage earned on the investment?

Investment in a Firm

A firm currently earns $1.00 per share. A financial analyst believes that earnings will grow annually at the rate of 10 percent for five years and then decline to 5 percent. What are the expected earnings after ten years?

Shares / margin

An investor bought on margin 100 shares of Copier Corp. for $85 a share. The firm paid an annual dividen of $4 a share; the margin requirement was 60 percent with an interest rate of 8 percent on borrowed funds, and commissions on the purchase and sale were $75. The price of the stock rose $120 in one year. a. What is the

Important information about Expected Return/Standard Deviation

Suppose you have invested in only two stocks, Y and Z. The returns on the two stocks depend on the following three states of the economy, which are equally likely to happen. State of Economy Return on Stock Y (%) Return on Stock Z (%) Recession 6.30 -3.70 Normal 10.50 6.40 Boom

Finance

Common stock A has an expected return of 10%, a standard deviation of future returns of 25%, and a beta of 1.25. Common stock B has an expected return of 12%, a standard deviation of future returns of 15%, and a beta of 1.50. Which stock is riskier. Explain.

The World of Finance

1. How are NYSE and NASDAQ similar, if at all? 2. How are the two exchanges different from one another, if at all? 3. What is The Public Company Accounting and Investor Protection Act of 2002? Describe the law in your own words. 4. What other information can you provide these students that will one day help them in t

Finance

1. Buck Inc. is considering an expansion project that requires an investment of $90 million in machinery. This is expected to produce sales of $140 million in year 1 and $150 million in year 2. The machinery will be depreciated over two years on a straight-line basis to a zero book value. The machinery will be

Present Value Finance Problem

You put $800 into an investment that pays $70 in year 1, $70 in year 2, $190 in year 3 and $680 in year 4. The cost of capital is 9%. Answer the following questions. a) Find the net present value of the investment b) Find the internal rate of return for the investment c) Should you make the investment? Explain.

Hedge Funds

A hedge is a position established in one market in an attempt to offset exposure to price fluctuations in some opposite position in another market with the goal of minimizing one's exposure to unwanted risk. To put it simple, hedge means that a buy some asset in one market and sell that same asset (or similar assets, gold and si

Corporate finance

1.What is the future value of $1,000, placed in a saving account for four years if the account pays 8%, compounded quarterly? 2..Your brother, who is 6 years old, just received a trust fund that will be worth $25,000 when he is 21 years old. If the fund earns 10 percent interest compounded annually, what is the value of the

Price of Stock Range of Variables

Need help determining stock values based on a range of variables... Consulting Inc. is presently enjoying relatively high growth because of a surge in the demand for its new services. Management expects earnings and dividends to grow at a rate of 25% for the next 4 years, after which competition will probably reduce the gr

Finance Case

CASE-75M Student Version 12/9/2010 Federal Finance Bank Going Public Note: Only questions 1, 2, 5, 6, 7, 8 and 9 are addressed. This model was developed using Microsoft Excel 5.0 for windows. If you are using the student version of the model, some of the cells have been blanked