Quiz_3_-_Ch._5__6

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University of Fredericton *

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5015

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Finance

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Jan 9, 2024

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Started on Saturday, 14 January 2023, 10:45 AM State Finished Completed on Saturday, 14 January 2023, 11:13 AM Time taken 28 mins 17 secs Grade 10.00 out of 10.00 ( 100 %) Question 1 Correct Mark 1.00 out of 1.00 Working capital management is primarily concerned with the management and financing of. Select one: a. cash and inventory. b. current assets and current liabilities. c. dividends d. receivables and payables. Feedback The correct answer is: current assets and current liabilities. Question 2 Correct Mark 1.00 out of 1.00 The term "permanent current assets" implies. Select one: a. the same thing as capital assets. b. nonmarketable assets. c. some minimum level of current assets that is not self-liquidating. d. inventory Feedback The correct answer is: some minimum level of current assets that is not self-liquidating. Question 3 Correct Mark 1.00 out of 1.00 The break-even point can be calculated as: Select one:
a. variable costs divided by contribution margin. b. total costs divided by contribution margin. c. variable cost times contribution margin. d. fixed cost divided by contribution margin. Feedback The correct answer is: fixed cost divided by contribution margin. Question 4 Correct Mark 1.00 out of 1.00 If a firm has fixed costs of $30,000, a price of $4.00, and a break-even point of 15,000 units, the variable cost per unit is Select one: a. $5.00 b. $2.00 c. $0.50 d. $4.00 Feedback The correct answer is: $2.00 BE = FC / (P-VC) VC = FC / BE + P = (30,000/15,000) – 4 =2 Question 5 Correct Mark 1.00 out of 1.00 If the price per unit decreases because of competition but the cost structure remains the same Select one: a. the break-even point rises. b. the degree of combined leverage declines. c. the degree of financial leverage declines. d. all of the other answers are correct
Feedback The correct answer is: the break-even point rises. Question 6 Correct Mark 1.00 out of 1.00 The cash flow cycle has a major bearing on the firm's Select one: a. dividend policy. b. liquidity. c. cash management efficiency. d. risk. Feedback The correct answer is: liquidity. Question 7 Correct Mark 1.00 out of 1.00 Under normal conditions (80% probability), Financing Plan A will produce $25,000 higher return than Plan B. Under tight money conditions (20% probability), Plan A will produce $50,000 less than Plan B. What is the expected value of return for Plan A over Plan B? Select one: a. $25,000 b. $20,000 c. $15,000 d. $10,000 Feedback The correct answer is: $10,000 1. Normal conditions Expected higher return under Plan A vs. Plan B   Probability of normal conditions   Expected outcome $25,000 × 0.8 = $20,000 2. Tight money Expected lower return under Plan A vs. Plan B   Probability of   tight money   -$50,000 × 0.2 = -10,000
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        = $10,000 Question 8 Correct Mark 1.00 out of 1.00 The term structure of interest rates Select one: a. is an indication of investors' expectations about inflation and future interest rates. b. will be downward sloping if short-term interest rates are higher than long-term rates. c. will be upward sloping under normal conditions. d. all of the other answers are correct Feedback The correct answer is: all of the other answers are correct Question 9 Correct Mark 1.00 out of 1.00 The belief that investors require a higher return to entice them into holding long-term securities is the viewpoint of the Select one: a. the expectations hypothesis. b. segmentation theory. c. the liquidity premium theory. d. market credit crunch theory Feedback The correct answer is: the liquidity premium theory. Question 10 Correct Mark 1.00 out of 1.00 Which of the following techniques allows explicit consideration of more than one possible outcome? Select one:
a. operating leverage b. present value c. least-squares regression d. expected value Feedback The correct answer is: expected value