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1 | |
Retained earnings are: |
| | A) | The amount of cash that the firm has saved up |
| | B) | The difference between the net income earned and the dividends paid during a year |
| | C) | The difference between the market price of the stock and the book value |
| | D) | The amount of directly contributed equity capital in excess of par value |
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2 | |
Internally generated cash is calculated as: |
| | A) | Retained earnings plus interest payments |
| | B) | Retained earnings plus depreciation |
| | C) | Retained earnings minus depreciation |
| | D) | Dividends paid plus interest payments |
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3 | |
Generally, managers of corporations prefer internally generated cash to finance their capital expenditures because: |
| | A) | They can avoid the discipline of the security markets |
| | B) | The costs of issuing new securities are high |
| | C) | The announcement of new equity issue is usually bad news for investors |
| | D) | All of the above |
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4 | |
A firm has $100 million in current liabilities, $200 million in total long-term liabilities and $300 million in stockholders' equity, total assets of $600 million. Calculate the debt ratio for the firm. |
| | A) | 40% |
| | B) | 20% |
| | C) | 50% |
| | D) | None of the above |
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5 | |
Total capitalization is defined as: |
| | A) | Total long-term liabilities plus stockholders' equity |
| | B) | Total debt plus stockholders' equity |
| | C) | Total debt minus stockholders' equity |
| | D) | Current liabilities and stockholders' equity |
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6 | |
A stock certificate has a stated value on it. This amount is called the: |
| | A) | Book value |
| | B) | Par value |
| | C) | Liquidation value |
| | D) | None of the above |
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7 | |
Capital surplus usually refers to: |
| | A) | The stock's par value |
| | B) | The accumulated retained earnings during the life of the corporation |
| | C) | The amount of directly contributed equity capital in excess of par value |
| | D) | The amount of stock repurchased |
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8 | |
Shares of stock that have been repurchased by the corporation are called |
| | A) | Treasury stock |
| | B) | Repurchase agreements |
| | C) | Authorized shares |
| | D) | Retained equity |
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9 | |
The market value of equity is calculated as: |
| | A) | (Market price) x (# of shares outstanding) |
| | B) | (Market price) x (# of treasury shares) |
| | C) | (Market price) x (# of authorized shares) |
| | D) | (Par value) x (# of shares outstanding) |
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10 | |
The equity accounts of ABX Company is as follows:| Common Shares ($1.00 par value) | $2,000,000 | | Additional Paid-in-capital | $1,000,000 | | Retained Earnings | $4,000,000 | | Net Common Equity | $7,000,000 |
Suppose that the company sells 1,000,000 additional shares at a price of $5.00 per share, what is the new value of Common Shares account? |
| | A) | 4,000,000 |
| | B) | 3,000,000 |
| | C) | 2,000,000 |
| | D) | None of the above |
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11 | |
If you own 1,000 shares of stock and you can cast 5,000 votes for a particular director, then the stock features: |
| | A) | Cumulative voting |
| | B) | Straight voting |
| | C) | Majority voting |
| | D) | None of the above |
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12 | |
Suppose you own 500 shares of common stock of a firm and there are five directors being elected, what is the maximum number of shares you can cast for a particular director under majority voting? |
| | A) | 500 |
| | B) | 2,500 |
| | C) | 100 |
| | D) | None of the above |
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13 | |
A grant of authority allowing someone else to vote shares of stock that you own is called a: |
| | A) | Power of share authorization |
| | B) | Proxy voting |
| | C) | Restricted conveyance |
| | D) | None of the above |
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14 | |
A modification to the company charter that requires 75% shareholder approval for a merger is called a(n): |
| | A) | Majority voting amendment |
| | B) | Cumulative voting amendment |
| | C) | Proxy voting amendment |
| | D) | Supermajority amendment |
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15 | |
Long-term debt is often called: |
| | A) | Secured debt |
| | B) | Subordinated debt |
| | C) | Funded debt |
| | D) | Unfunded debt |
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