1) Using the DuPont system of analysis, holding other factors constant, an increase in financial leverage will result in -----
A. an increase in the retum on equity
B. a decrease in the gross profit margin
C. an increase in the gross profit margin
D. an increase in retained earnings
2) Key loputs to short-term financial planning are----
A) cash flow statements and income statement B. pro forma financial statements
C) sales forecasts, and operating and financial data
D) leverage analysis and pro forma income statement
3) Cash flows directly related to prodüction and sale of a firm's products and services are called------
A. cash flow from operating activities
B) cash flow from investment activities
C) cash flow from financing activities
D) cash flow from equity activities
4) Which of the following represents a way of coping with uncertainty in a cash budget?
A) careful estimation of cash budgets outputs
B) developing a pro forma income statement to forecast sales and then express the various income statement items as percentage of projected sales
C. always using the prior year's data for estimates
of the future
D) using scenario analysis, or "what if" approach, o analyze cash flows under a variety of ircumstances
5) Which of the following is true of annuities?
A. An ordinary annuity is an equal payment paid ceived at the beginning of each period.
B. annuity due is a payment paid or received beginning of each period that increases by an equal amount each period.
C. An annuity due is an equal Stream of cash flows that is paid ir received at the beginging of each period
D) An ordinary annuity is an equal payment poid or received at the end of each period that increases by an equal amount each period.
6) An annuity with en infinite life is called a(n)-----
A) perpetuity
B. primia
C) option
D) deep discount
7) Generally, an increase in risk will result in -----
A) a lower required return or interest rate
B) a higher required return or interest rate
Ca higher inflation premium
D) a lower real interest rate
8)------- is used to finance "rolling stock"- airplanes, trucks, boats, railroad cars.
A) Income bonds
B) Bequipment trust certificates
C) Collateral trust bonds
D) Subordinated debentures
9) A(n)----- is secured bu Real estate
A) income bond
B) debenture
C) mortgage bond
D) subordinated debenture
10) The------ feature allows bondholders to change each bond into stated number of shares of stock.
A) call
B) conversion
C) put
D) swap