Secondary markets also exist for mortgages, other types of loans, and other financial assets. The reason why it is called an unsecured bank loan is that no collateral is required by the individual or a business entity taking this loan. B This increases the liquidity of the bond market, because more people enter the market. Hedge funds have the ability to buy a controlling interest in any company they regard as being badly managed and thus undervalued and then change management 1. Also studied here are the financial institutions that supply capital to businesses.
B you buy the shares from another investor who decided to sell the shares. Looking at the amortization table, how much does this person owe the bank after he pays Payment 10? These forecasts are in turn used for company valuations and financial analysis. How much sales should be recorded on the pro forma? A The investor exercises the call option B The investor does not exercise the call option C Have no idea D This is a trick question; an investor cannot exercise a European option on the expiration date 138. Institutional money managers have to votes to replace a badly performing management team 4. Why issue bonds instead of new common stock? Why are stock market crashes so bad? A Over-the-counter market B Exchange market C Syndicates D The Dow Jones Industrial Average 112. What is a stock market crash? A If the firm takes on more debt, the debt becomes riskier and the cost of capital for the debt increases.
What is Company A's return on equity? A Financial securities move closely together with the market B Financial securities have perfect co-movement C Investing in securities with the highest returns D Financial securities have imperfect correlation 213. B Causes a cash outflow. Refer to the Table, which investment has the highest rate of return? Performance based compensation Diff: 3 Section: 1. A 100 B 50 C 10 D Cannot be calculated from the information given 167. Investments relate to decisions concerning stocks and bonds and include a number of activities: 1 Security analysis deals with finding the proper values of individual securities i. Which statement is true about the Capital Asset Pricing Model? Rational investors want to hold diversified portfolios in order to limit risks, so choosing a properly balanced portfolio is an important issue for any investor.
What is value weight returns for an investment portfolio? Ross, Randolph W Westerfield, Bradford D Jordan Solutions Manual. Which financial statement would you find retained earnings? If a corporation is proceeding with a project, which of the following statements are true for the net present value of the project? I used to give midterms before I wised up and they are included as well. C Higher interest rates cause the maturity of bonds to become shorter. A Put option B Call option C Option premium D Marking to market 123. If your risk premium is 5%, risk free return is 3%, and inflation is 3%, what should be the minimal rate of return for this project? How do financial analyst measure the risk associated with an investment? What is the equity premium? Why should I use previously administered tests to study? What is the tradeoff between rates of return and risk? A The buyer of this contract B The seller of this contract C Both the buyer and seller of this contract D There is no marking to mark requirement for futures contract 135. C A limited partner is not liable until all the assets of the general partners have been exhausted.
Assume the corporation borrows a maximum of 50% of total assets. Which of the following institutions help corporations issue new stocks or new bonds? Which answer below increases the size of an option premium? Why can corporations raise a substantial amount of capital? Money Markets are the markets for short-term, highly liquid debt securities. If a corporation issues 75% bonds with a beta of 0. What is the maximum growth rate in sales if the corporation cannot raise any debt? Future markets have clearing houses which manage the market and therefore, there is no counterparty risk. Capital markets relate to the markets where interest rates, along with stock and bond prices, are determined. A Average market return minus a comparable risk free financial instrument B Average market return plus a comparable risk free financial instrument C Average market return divided by a comparable risk free financial instrument D Average market return multiplied by a comparable risk free financial instrument 226. If you are going to invest in a financial security that is in the table below, what is the expected rate of return if both outcomes are equally likely? This list contains the top 20 corporate finance interview questions that are most frequently asked by employers.
Answer: B Diff: 1 Section: 1. A Proctor and Gamble B The bank C Both the bank, and Proctor and Gamble D There is no marking to mark requirement for futures contract 136. The New York Stock Exchange is a secondary market because it deals in outstanding, as opposed to newly issued, stocks and bonds. What should managers of a corporation do? A Access to capital markets B Limited liability C Unlimited life D All of the above Answer: D Diff: 2 Section: 1. If you are planning to invest in bonds of a new company and a comparable U. What is the stand-alone principal? Which item below is a liability? Secondary Markets are markets in which existing, already outstanding securities are traded among investors.
Thus the inflation rate built into a 1 year security is the rate of inflation over the next year, while the rate built into a 30 year security is the average rate of inflation expected over the next 30 years. A Accounts receivable increases B Company pays dividends C Company pays salaries D Company issues new stock 42. Investments relate to decisions concerning stocks and bonds and include a number of activities: 1 Security analysis deals with finding the proper values of individual securities i. A 100% B 10% C 97% D Cannot be determined from information given Lesson 4 - Time Value of Money 66. A The Dow provides fast information, as information is updated every second B The government calculates the Dow, manipulating the number to prevent financial crisis C The Dow helps corporations earn billions of dollars in profits D The Dow helps corporations issue new stocks and bonds 114.
Cash Flow Statement is categorised into three activities: Cash Flow from Operations, Cash Flow from Investing and Cash Flow from Financing. What is the maximum growth rate in sales if the corporation cannot raise any debt? D Company pays for an expense. Introduction to Corporate Finance Chapter Exam Instructions Choose your answers to the questions and click 'Next' to see the next set of questions. Working capital tells us about the amount of capital tied up to its business daily activities such as account receivables, payables, inventory in hand and many more. B two of more persons.