ExaminationProblemsforFundamentalsofFinancialManagement2004-2005(PaperB)I.MultipleChoice(20points)(Pleasewriteyouranswerinthefollowingtable)題號1234567891011121314151617181920選項1.(

)isconcernedwiththeacquisition,financing,andmanagementofassetswithsomeoverallgoalinmind.A.Financialmanagement

B.Profitmaximization

C.Agencytheory

D.Socialresponsibilitymajordisadvantageofthecorporateformoforganizationisthe(

).A.doubletaxationofdividendsB.inabilityofthefirmtoraiselargesumsofadditionalcapitalC.limitedliabilityofshareholdersD.limitedlifeofthecorporateform.3.Interestpaid(earned)onboththeoriginalprincipalborrowed(lent)andpreviousinterestearnedisoftenreferredtoas(

).A.presentvalue

B.simpleinterest

C.futurevalue

D.compoundinterest4.Iftheintrinsicvalueofashareofcommonstockislessthanitsmarketvalue,whichofthefollowingisthemostreasonableconclusionA.Thestockhasalowlevelofrisk.B.Thestockoffersahighdividendpayoutratio.C.Themarketisundervaluingthestock.D.Themarketisovervaluingthestock.5.A250facevalueshareofpreferredstock,paysa20annualdividendandinvestorsrequirea7%returnonthisinvestment.Ifthesecurityiscurrentlysellingfor276,whatisthedifference(overvaluation)betweenitsintrinsicandmarketvalue(roundedtothenearestwholedollar)A.approximately26

B.approximately10

C.approximately6

D.approximately16.FeltonFarmSupplies,Inc.,hasan8percentreturnontotalassetsof300,000andanetprofitmarginof5percent.WhatareitssalesA.3,750,000

B.480,000

C.300,000

D.1,500,0007.Acompanycanimprove(lower)itsdebt-to-totalassetratiobydoingwhichofthefollowingA.Borrowmore.

B.Shiftshort-termtolong-termdebt.

C.Shiftlong-termtoshort-termdebt.

D.isssuecommonstock.8.TheDuPontApproachbreaksdowntheearningpoweronshareholders'bookvalue(ROE)asfollows:ROE=(

).A.Netprofitmargin×Totalassetturnover×EquitymultiplierB.Totalassetturnover×Grossprofitmargin×DebtratioC.Totalassetturnover×NetprofitmarginD.Totalassetturnover×Grossprofitmargin×Equitymultiplier9.Whichofthefollowingitemsconcernsfinancingdecision(

)A.salesforecasting

B.bondissuing

C.receivablescollection

D.investmentprojectselection10.Whichofthefollowingitemsisthefunctionofatreasurer(

)A.costaccounting

B.internalcontrol

C.capitalbudgeting

D.generalledger11.Forfinancialinstruments,(

)isjudgedinrelationtotheabilitytosellasignificantvolumeofsecuritiesinashortperiodoftimewithoutsignificantpriceconcession.A.maturity

B.marketability

C.default

D.inflation12.(

)isthevalueatsomefuturetimeofapresentamountofmoney,oraseriesofpayments,evaluatedatagiveninterestrate.A.futurevalue

B.presentvalue

C.intrinsicvalue

D.marketvalue13.EllesmereCorporationissues1million$1parvaluebonds.Thestatedinterestrateis6%peryearandtheinterestispaidtwiceayear.Whatistherealinterestrateofthebond(

)A.6%

%

C.12%

D.(16%/2)2-114.AssumethatdividendsofacommonstockwillbemaintainedatDforever,andtherequiredreturnofthestockholderisr,theparvalueofthestockism,thevalueofthestockis(

)A.m

B.mD

C.mD/r

D.D/r15.Whichofthefollowingitemshasthemostrisk(

)A.treasurybill

B.corporatebond

C.preferredstock

D.commonstock16.(

)equalsthegrossprofitdividedbynetsalesofafirm.A.grossprofitmargin

B.netprofitmargin

C.returnoninvestment

D.returnonequity17.(A

)istheratiosthatmeasureafirm’sabilitytomeetshort-termobligationsA.liquidityratios

B.leverageratios

c.coverageratios

D.activityratios18.(

A

)istheresultofNetProfitMargin×totalassetturnover×(totalassets/shareholders’equity)A.Returnonequity

B.returnoninvestment

C.currentratio

D.quickratio19.Governmenttaxlawadjustmentis(

A

)toafirm.A.generaleconomicrisk

B.inflationanddeflationrisk

C.firm-specificrisk

D.internationalrisk20(

A

)equalsthegrossprofitdividedbynetsalesofafirm.A.grossprofitmargin

B.netprofitmargin

C.returnoninvestment

D.returnonequityII.Statementjudgement(10Points)(Pleasewriteyouranswerinthefollowingtable)題號12345678910√或×1.Untilaroundthefirsthalfofthe1900s,financialmanagersprimarilyraisedfundsandmanagedtheirfirm’scashpositions.(

)2.Ingeneral,thehigherthemarketabilityofasecurity,thegreatertheyieldnecessarytoattractinvestors(

)3.DiscountRateistheinterestrateusedtoconvertfuturevaluestopresentvalues.(

)4.Theexpectedreturnofaportfolioissimplyaweightedaverageoftheexpectedreturnofthesecuritiescomprisingthatportfolio(

)5.Thetypeofanalysisvariesaccordingtothespecificinterestsofthepartyinvolved(

)6.Inasoleproprietorship,theownerispersonallyresponsibleforallfinancialobligationsofthefirm.

(

)7.Whenastockgoes"ex-rights,"itsmarketpricetheoreticallydeclines.

(

)8.Themarketpriceofaparticularbondismuchgreatertodaythanitwasyesterday.Thecalculatedyieldtomaturity(YTM)basedontoday'smarketpricewould,therefore,begreaterthanthecalculatedYTMbasedonyesterday'smarketprice.

(

)9.Ashortaveragecollectionperiodassuresusthataccountsreceivablearebeingefficientlymanaged.

(

)10.Simpleinterestisinterestthatispaidononlytheoriginalamountborrowed(lent)(

)III.Questions(10points)(Pleasewriteyouranswerontheanswerpaper)1.Themethodofdepreciationdoesnotalterthetotalamountdeductedfromincomeduringthelifeofanasset.Whatdoesitalterandwhyisthatimportant(5)2.Whatisprimaryandsecondarymarket(5)IV.Problems(60Points)(Pleasewriteyouranswerontheanswerpaper)1.youneedtohave$100000attheendof10years.Toaccumulatethissum,youhavedecidedtosaveacertainamountattheendofeachnext10yearsanddeposititinthebank.Thebankpays8%interestcompoundedannuallyforlong-termdeposit.Howmuchwillyouhavetosaveeachyear(PVIF(8%,10)=,PVIFA(8%,10)=,FVIF(8%,10)=,FVIFA(8%,10)=today,BirdSeedCompany’scommonstockpaida$annualdividendpershareandhadaclosingpriceof$24.Assumethatthemarket’srequiredreturnforthisinvestmentis12%andthatdividendsareexpectedtogrowataconstantrateforever.a.calculatetheimpliedgrowthrateindividends.b.whatisexpecteddividendyieldandcapitalgainsyield3.Thedataforvariouscompaniesinthesameindustryareasfollows:(amountsareinmilliondollars)CompanyABCDEFSales101587612Totalassets8106459Netincome324233NetprofitmarginTotalassetsturnoverDeterminethetotalassetturnover,netprofitmargin,andwriteyourcomputationresultinthetable.4.Youexpecttodepositthefollowingcashflowsattheendofyears1through5,1,000;4,000;9,000;5,000;and2,000respectively.Alternatively,youcoulddepositasingleamounttodayatthebeginningofyear1(endofyear0).Howmuchisthesingledepositneededtobetodayifyoucanearn10%compoundedannually(10/)Ahasanexpectedgrowthrateof16%forthefirst3yearsand8%thereafter.

Eachshareofstockjustreceivedanannual

dividendpershare.Theappropriatediscountrateis15%.Whatisthevalueofthecommonstockunderthisscenario(10/)6.Thefollowingcommonstocksareavailableforinvestment:COMMONSTOCK(TICKERSYMBOL)

BETANanyangBusinessSystems(NBS)

YunnanGardenSupply,Inc.(YUWHO)

.80BirdNestSoupsCompany(SLURP)

.60!(WACHO)

ParkCityColaCompany(BURP)

OldiesRecords,Ltd.(SHABOOM)

.90a.

Ifyouinvest20percentofyourfundsineachofthefirstfoursecurities,and10percentineachofthelasttwo,whatisthebetaofyourportfolio(5/)b.

Iftherisk-freerateis8percentandtheexpectedreturnonthemarketportfoliois14percent,whatwillbetheportfolio'sexpectedreturn(5/)Solutions(B)I.MultipleChoice(20points)(Pleasewriteyouranswerinthefollowingtable)題號1234567891011121314151617181920選項AADDBBDABCBADDDAAAAAII.Statementjudgement(10Points)(Pleasewriteyouranswerinthefollowingtable)題號12345678910√或×√×√√√√√××√III.Questions(10points)(Pleasewriteyouranswerontheanswerpaper)1.Depreciationchangesthetimingoftaxpayments.Thelongerthesepaymentscanbedelayed,thebetteroffthebusinessis.2.Aprimarymarketisa“newissues”market.Here,fundsraisedthroughthesaleofnewsecuritiesflowfromultimatesaverstotheultimateinvestorsinrealassetsInasecondarymarket,existingsecuritiesareboughtandsold.TransactionsinthesealreadyexistingsecuritiesdonotprovideadditionalfundstofinancecapitalinvestmentIV.Problems(60Points)(Pleasewriteyouranswerontheanswerpaper)1.Answer:100000=AFVIF(8%,10)=

A=100000/=69032.Answer:a.24=(1g)/,g=b.dividendyield==,capitalgainsyield=3.Answer:CompanyABCDEFSales101587612Totalassets8106459Netincome324233NetprofitmarginTotalassetsturnover2244.1.(10/)Manydifferentmethodstoleadtoacorrectsolution.PVofthismixedflowsproblem=1,000(PVIF10%,1)4,000(PVIF10%,2)9,000(PVIF10%,3)5,000(PVIF10%,4)2,