FIN 534 Potential Instructors / tutorialrank.com

1. FIN 534 Potential Instructors / tutorialrank For more course Tutorials www.tutorialrank.com

2. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 1 Chapter 1 Solution STRAYER FIN 534 Entire Course (UOP Course) 1. Which of the following statements is CORRECT? a. One of the disadvantages of a sole proprietorship is that the proprietor is exposed to unlimited liability. b. It is generally easier to transfer one’s ownership interest in a partnership than in a corporation. c. One of the advantages of the corporate form of organization is that it avoids double taxation. d. One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights, i.e., “one person, one vote.” e. Corporations of all types are subject to the corporate income tax. STRAYER FIN 534 Week 1 Chapter 1 Solution STRAYER FIN 534 Week 1 Chapter 2 Solution STRAYER FIN 534 Week 2 Chapter 3 Solution STRAYER FIN 534 Week 3 Chapter 4 Solution STRAYER FIN 534 Week 3 Chapter 5 Solution STRAYER FIN 534 Week 4 Chapter 6 Solution STRAYER FIN 534 Week 4 Chapter 7 Solution STRAYER FIN 534 Week 5 Chapter 8 Solution STRAYER FIN 534 Week 5 Chapter 9 Solution

3. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 1 DQ 1 STRAYER FIN 534 Week 1 Chapter 2 Solution Imagine a startup company of your own and briefly trace its development from a sole proprietorship to a major corporation with a focus on how that development would be financed. 1.Which of the following statements is CORRECT? a. Typically, a firm’s DPS should exceed its EPS. b. Typically, a firm’s EBIT should exceed its EBITDA. c. If a firm is more profitable than average (e.g., Google), we would normally expect to see its stock price exceed its book value per share. d. If a firm is more profitable than most other firms, we would normally expect to see its book value per share exceed its stock price, especially after several years of high inflation.

4. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 1 Quiz 1 STRAYER FIN 534 Week 1 DQ 2 Question 1 You recently sold 100 shares of your new company, XYZ Corporation, to your brother at a family reunion.  At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates.  Which of the following statements best describes this transaction? Discuss ways that the basic concepts we have discussed in this chapter directly impact your life. Provide specific examples to support your response.

5. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 2 DQ 1 STRAYER FIN 534 Week 2 Chapter 3 Solution 1. Which of the following statements is CORRECT? a. The ratio of long-term debt to total capital is more likely to experience seasonal fluctuations than is either the DSO or the inventory turnover ratio. b. If two firms have the same ROA, the firm with the most debt can be expected to have the lower ROE. c. An increase in the DSO, other things held constant, could be expected to increase the total assets turnover ratio. Assume you are deciding whether or not to invest in a particular company. Discuss which elements of which financial statements you would want to carefully examine. Explain your rationale.

6. FIN 534 Potential Instructors / tutorialrank FIN 534 Week 4 Infrastructures and Natural Resources Paper (UOP) STRAYER FIN 534 Week 2 DQ 2 From the e-Activity, determine if the company you analyzed would be a good investment for you or not. Provide specific examples to support your response. 1. A $50,000 loan is to be amortized over 7 years, with annual end-of-year payments. Which of these statements is CORRECT? a. The annual payments would be larger if the interest rate were lower. b. If the loan were amortized over 10 years rather than 7 years, and if the interest rate were the same in either case, the first payment would include more dollars of interest under the 7-year amortization plan. c. The proportion of each payment that represents interest as opposed to repayment of principal would be lower if the interest rate were lower.

7. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 3 DQ 1 STRAYER FIN 534 Week 3 Chapter 5 Solution Starting with your current situation, describe what you must do to ensure an annual retirement income of $60,000 starting at age 65. 1 . Three $1,000 face value bonds that mature in 10 years have the same level of risk, hence their YTMs are equal. Bond A has an 8% annual coupon, Bond B has a 10% annual coupon, and Bond C has a 12% annual coupon. Bond B sells at par. Assuming interest rates remain constant for the next 10 years, which of the following statements is CORRECT? a. Bond A’s current yield will increase each year. b. Since the bonds have the same YTM, they should all have the same price, and since interest rates are not expected to change, their prices should all remain at their current levels until maturity.

8. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 3 Quiz 2 STRAYER FIN 534 Week 3 DQ 2 Question 1 Which of the following statements is CORRECT?  a. Since companies can deduct dividends paid but not interest paid, our tax system favors the use of equity financing over debt financing, and this causes companies’ debt ratios to be lower than they would be if interest and dividends were both deductible. b. Interest paid to an individual is counted as income for tax purposes and taxed at the individual’s regular tax rate, which in 2008 could go up to 35%, but dividends received were taxed at a maximum rate of 15%. Discuss the impact of Standard & Poor’s downgrading the U.S. credit rating in 2011. Address current and likely future impact on U.S. business, individuals, the global economy and current financial practices. Provide specific examples to support your response.

9. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 4 Chapter 7 Solution STRAYER FIN 534 Week 4 Chapter 6 Solution 1. Which of the following statements is CORRECT? a. The constant growth model takes into consideration the capital gains investors expect to earn on a stock. b. Two firms with the same expected dividend and growth rates must also have the same stock price. c. It is appropriate to use the constant growth model to estimate a stock's value even if its growth rate is never expected to become constant. Which of the following statements is CORRECT? a. If you add enough randomly selected stocks to a portfolio, you can completely eliminate all of the market risk from the portfolio. b. If you were restricted to investing in publicly traded common stocks, yet you wanted to minimize the riskiness of your portfolio as measured by its beta, then according to the CAPM theory you should invest an equal amount of money in each stock in the market. That is, if there were 10,000 traded stocks in the world, the least risky possible portfolio would include some shares of each one.

10. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 4 DQ 2 STRAYER FIN 534 Week 4 DQ 1 Discuss the non-rational factors that may have a role in the valuation of stocks and stock market equilibrium. Provide specific examples to support your response.  Information is the investor's best tool when it comes to investing wisely. Often, the lack of reliable, readily available, current information also opens the door to fraud. It is easier for the unscrupulous to spread false information and to manipulate a stock's price when accurate information about the company is scarce. Source: http://www.sec.gov/answers/infomatters.htm

11. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 5 Chapter 8 Solution STRAYER FIN 534 Week 4 Quiz 3 1. Which of the following statements is CORRECT? a. Put options give investors the right to buy a stock at a certain strike price before a specified date. b. Call options give investors the right to sell a stock at a certain strike price before a specified date. c. Options typically sell for less than their exercise value. d. LEAPS are very short-term options that were created relatively recently and now trade in the market. 1. Which of the following statements is CORRECT? 1)      A time line is not meaningful unless all cash flows occur annually 2)      Time lines are useful for visualizing complex problems prior to doing actual calculations 3)      Time lines cannot be constructed to deal with situations where some of the cash flows occur annually but others occur quarterly 4)      Time lines can only be constructed for annuities where the payments occur at the ends of the periods, i.e., for ordinary annuities

12. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 5 DQ 1 STRAYER FIN 534 Week 5 Chapter 9 Solution Based on what you discovered in the e-Activity, make at least two recommendations for regarding how your selected company should approach its capital budgeting. Explain the reasoning behind your recommendations. A capital budgeting analysis conducts a test to see if the benefits (i.e., cash inflows) are large enough to repay the company for three things:  (1) the cost of the asset, (2) the cost of financing the asset (e.g., interest, etc.), and (3) a rate of return (called a risk premium) that compensates the company for potential errors made when estimating cash flows that will occur in the distant future. 1. Bankston Corporation forecasts that if all of its existing financial policies are followed, its proposed capital budget would be so large that it would have to issue new common stock. Since new stock has a higher cost than retained earnings, Bankston would like to avoid issuing new stock. Which of the following actions would REDUCE its need to issue new common stock? a. Increase the dividend payout ratio for the upcoming year. b. Increase the percentage of debt in the target capital structure. c. Increase the proposed capital budget.

13. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 6 Chapter 10 Solution STRAYER FIN 534 Week 5 Quiz 4 1. Which of the following statements is CORRECT? a. The internal rate of return method (IRR) is generally regarded by academics as being the best single method for evaluating capital budgeting projects. b. The payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects. c. The discounted payback method is generally regarded by academics as being the best single method for evaluating capital budgeting projects. Question 1             Assume that in recent years both expected inflation and the market risk premium (rM − rRF) have declined.  Assume also that all stocks have positive betas.  Which of the following would be most likely to have occurred as a result of these changes? Answer                                Question 2 Assume that the risk-free rate is 5%.  Which of the following statements is CORRECT?

14. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 6 DQ 1 STRAYER FIN 534 Week 6 Chapter 11 Solution Analyze the concept of “stress test” as applied to financial institutions and create a better alternative for assessing the viability of a financial institution. 1. Which of the following statements is CORRECT? a. An externality is a situation where a project would have an adverse effect on some other part of the firm’s overall operations. If the project would have a favorable effect on other operations, then this is not an externality. b. An example of an externality is a situation where a bank opens a new office, and that new office causes deposits in the bank’s other offices to decline.

15. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 7 Chapter 12 Solution STRAYER FIN 534 Week 6 Quiz 5 1. Which of the following statements is CORRECT? a. Perhaps the most important step when developing forecasted financial statements is to determine the breakdown of common equity between common stock and retained earnings. b. The first, and perhaps the most critical, step in forecasting financial requirements is to forecast future sales. c. Forecasted financial statements, as discussed in the text, are used primarily as a part of the managerial compensation program, where management’s historical performance is evaluated. Question 1 Call options on XYZ Corporation’s common stock trade in the market.  Which of the following statements is most correct, holding other things constant?  Question 2  Other things held constant, the value of an option depends on the stock's price, the risk-free rate, and the  Question 3 Which of the following statements is CORRECT?

16. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 7 DQ 1 STRAYER FIN 534 Week 7 Chapter 13 Solution Analyze the process of forecasting financial statements and make at least one recommendation for improving the accuracy of forecasts. Provide specific examples to support your response. 1. Suppose Leonard, Nixon, & Shull Corporation’s projected free cash flow for next year is $100,000, and FCF is expected to grow at a constant rate of 6%. If the company’s weighted average cost of capital is 11%, what is the value of its operations? a. $1,714,750 b. $1,805,000 c. $1,900,000 d. $2,000,000 e. $2,100,000

17. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 7 Quiz 6 STRAYER FIN 534 Week 7 DQ 2 Question 1 Which of the following statements is CORRECT? Answer                                     Question 2 Which of the following statements is CORRECT?  Question 3 Assume that the economy is in a mild recession, and as a result interest rates and money costs generally are relatively low. The WACC for two mutually exclusive projects that are being considered is 8%.  Project S has an IRR of 20% while Project L's IRR is 15%. The projects have the same NPV at the 8% current WACC.  Drawing on what you discovered in the e-Activity, determine what additional steps can be taken in the valuation of a corporation to avoid instances like the one you researched from occurring in the future. Provide specific examples to support your response.

18. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 8 Chapter 15 Solution STRAYER FIN 534 Week 8 Chapter 14 Solution 1. Which of the following statements best describes the optimal capital structure? a. The optimal capital structure is the mix of debt, equity, and preferred stock that maximizes the company’s earnings per share (EPS). b. The optimal capital structure is the mix of debt, equity, and preferred stock that maximizes the company’s stock price. c. The optimal capital structure is the mix of debt, equity, and preferred stock that minimizes the company’s cost of equity. d. The optimal capital structure is the mix of debt, equity, and preferred stock that minimizes the company’s cost of debt. 1. Which of the following statements about dividend policies is CORRECT? a. Modigliani and Miller argue that investors prefer dividends to capital gains because dividends are more certain than capital gains. They call this the ―bird-in-the hand‖ effect. b. One reason that companies tend to avoid stock repurchases is that dividend payments are taxed at a lower rate than gains on stock repurchases.

19. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 8 DQ 2 STRAYER FIN 534 Week 8 DQ 1 Capital structure is the manner in which a firm’s assets are financed; that is, the right-hand side of the balance sheet. Capital structure is normally expressed as the percentage of each type of capital used by the firm--debt, preferred stock, and common equity. I examined PepsiCo to determine how it should address its free cash flow, either through distributions to shareholders or repurchasing of stock.

20. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 9 Chapter 16 Solution STRAYER FIN 534 Week 8 Quiz 7 This quiz consist of 30 multiple choice questions. The first 15 questions cover the material in Chapter 12. The second 15 questions cover the material in Chapter 13. Be sure you are in the correct Chapter when you take the quiz.  Question 1             Last year Godinho Corp. had $250 million of sales, and it had $75 million of fixed assets that were being operated at 80% of capacity.  In millions, how large could sales have been if the company had operated at full capacity? This quiz consist of 30 multiple choice questions. The first 15 questions cover the material in Chapter 12. The second 15 questions cover the material in Chapter 13. Be sure you are in the correct Chapter when you take the quiz.  Question 1             Last year Godinho Corp. had $250 million of sales, and it had $75 million of fixed assets that were being operated at 80% of capacity.  In millions, how large could sales have been if the company had operated at full capacity?

21. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 9 DQ 2 STRAYER FIN 534 Week 9 DQ 1 Create an idea for a startup venture and discuss the most viable way to raise the working capital to get the startup running. Explain your rationale. Based on the content of this chapter and what you discovered in the e-Activity, analyze cash management technology and make at least one recommendation for another technique that would enhance working capital management. Explain the reasoning behind your recommendation.

22. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 10 Chapter 17 Solution STRAYER FIN 534 Week 9 Quiz 8 1. In Japan, 90-day securities have a 4% annualized return and 180-day securities have a 5% annualized return. In the United States, 90-day securities have a 4% annualized return and 180-day securities have an annualized return of 4.5%. All securities are of equal risk, and Japanese securities are denominated in terms of the Japanese yen. Assuming that interest rate parity holds in all markets, which of the following statements is most CORRECT? a. The yen-dollar spot exchange rate equals the yen-dollar exchange rate in the 90-day forward market. b. The yen-dollar spot exchange rate equals the yen-dollar exchange rate in the 180-day forward market. Question 1  Which of the following statements about dividend policies is correct?  Question 2  If a firm adheres strictly to the residual dividend policy, the issuance of new common stock would suggest that  Question 3  Which of the following statements is correct? Answer                                     Correct Answer:          If a firm repurchases some of its stock in the open market, then shareholders who sell their stock for more than they paid for it will be subject to capital gains taxes.

23. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 10 DQ 2 STRAYER FIN 534 Week 10 DQ 1 Recommend three policy changes that would make the Federal Reserve’s job of controlling U.S. interest rates easier. Explain your reasoning Based on what you uncovered in the e-Activity, determine the most significant risk factors associated with investing in the company you selected when compared with investing in a domestic company. Provide specific examples to support your response.

24. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 11 DQ 1 STRAYER FIN 534 Week 10 Quiz 9 Reflect on the lessons learned during this class and discuss the most interesting or surprising thing you learned. Explain what made it so. Question 1 Which of the following statements is NOT CORRECT? Question 2 Which of the following statements is CORRECT? Question 3 Which of the following statements is CORRECT? Answer Question 4 Helena Furnishings wants to reduce its cash conversion cycle.  Which of the following actions should it take?

25. FIN 534 Potential Instructors / tutorialrank STRAYER FIN 534 Week 11 Quiz 10 STRAYER FIN 534 Week 11 DQ 2 Question 1             Suppose DeGraw Corporation, a U.S. exporter, sold a solar heating station to a Japanese customer at a price of 143.5 million yen, when the exchange rate was 140 yen per dollar.  In order to close the sale, DeGraw agreed to make the bill payable in yen, thus agreeing to take some exchange rate risk for the transaction.  The terms were net 6 months.  If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would DeGraw actually receive after it exchanged yen for U.S. dollars? Reflect on the lessons learned during this class and discuss the most interesting or surprising thing you learned. Explain what made it so.

26. FIN 534 Potential Instructors / tutorialrank For more course Tutorials www.tutorialrank.com