1. A dividend that is a truly unusual or one time event is called a(n) ____________.
A.stock dividend
B.regular cash dividend
C.cash liquidating dividend
D.extra dividend
E.special dividend


2. All else equal, which of the following is NOT an accurate statement about stock splits and stock dividends? (All of the statements refer to book values, not market values.)
A.The par value of the stock will change only with the stock split
B.Total owners' equity will not change with either a stock split or a stock dividend
C.The primary effect of either is to increase the number of shares outstanding
D.Earnings per share will likely decrease only with the stock dividend
E.The capital in excess of par account will only be affected with a stock dividend


3. BDJ, Inc. has 31,000 shares of stock outstanding with a market price of $15 per share. If net income for the year is $155,000 and the retention ratio is 80%, what is the dividend yield on BDJ Inc.'s stock?
A.3.4%
B.3.7%
C.5.5%
D.6.7%
E.8.3%


4. On January 2, 1997 The board of directors of DDT Inc. declared a dividend of $0.75 per share payable on Monday, January 28 to shareholders of record as of Monday, January 14. Under NYSE rules, if you bought 500 shares of DDT stock on Friday, January 4 for $7.50 per share, how much will you receive in dividends?
A.$0.00
B.$1.50
C.$37.50
D.$55.00
E.$375.00


5. The board of directors of DDT Inc. declared a dividend of $.75 per share payable on Monday, January 28 to shareholders of record as of Monday, January 14. You owned 500 shares of DDT on Wednesday, January 9 when the price was $7.50 per share. Under NYSE rules, if you sell your 500 shares of DDT Friday, January 11, what price will you receive assuming the ONLY change in the price of the stock (if any) is due to the dividend?
A.$3,000
B.$3,375
C.$3,500
D.$3,750
E.$4,250


6. The 60-day forward rate for Japanese Yen is ¥108.02 per $1.00. The spot rate is ¥103.09 per $1.00. In 60 days you expect to receive ¥1,500,000. If you agree to a forward contract, how many dollars will you receive in 60 days?
A.$13,886
B.$14,550
C.$15,312
D.$154.635 million
E.$162.03 million


7. The current spot rate between Australian dollars and U.S. dollars is A$1.015 per $1.00. The rate on U.S. T-bills is 5% and the rate on an Australian risk-free security is 10%. What is the 1-year forward rate if interest rate parity holds? DON'T use the approximation.
A.A$0.9689 per $1.00
B.A$1.0486 per $1.00
C.A$1.0633 per $1.00
D.A$1.0827 per $1.00
E.A$1.1124 per $1.00


8. Suppose absolute purchasing power parity holds. The exchange rate between Indian rupees and U.S. dollars is Rs .2312 per $1.00. If an automobile costs $35,000 in the United States, how much should the same car cost in India?
A.Rs 3,624
B.Rs 4,426
C.Rs 8,092
D.Rs 8,225
E.Rs 151,384


9. You own stock in a firm that has 1.25 million shares outstanding. The current stock price is $13.50 per share. If the company issues a 10% stock dividend, what would you expect the stock price to be after the dividend is paid?
A.$12.27 per share
B.$12.82 per share
C.$13.30 per share
D.$13.49 per share
E.$13.71 per share


10. A firm's balance sheet contains only the following accounts: Cash, Other Current Assets, Fixed Assets, Current Liabilities, Long-term Debt, and Equity. Which of the following correctly defines Cash using the balance sheet equation?
A.Other Current Assets - Current Liabilities + Fixed Assets - Equity
B.Long-term Debt - Equity + Current Liabilities - Other Current Assets + Fixed Assets
C.Other Current Assets - Fixed Assets + Long-term Debt
D.Long-term Debt + Equity + Current Liabilities - Other Current Assets - Fixed Assets
E.Current Liabilities - Current Assets + Other Current Assets


11. Suppose that the inventory period is 50 days, the accounts receivable period is 40 days, and the accounts payable period is 35 days. What is the cash cycle?
A.25 days
B.45 days
C.55 days
D.90 days
E.135 days


12. Melons 'R' Us, a national chain of fruit stands, has an inventory period of 65 days, an accounts payable period of 30 days, and accounts receivable are collected, on average, in 24 days. The CFO plans to implement a discount plan in order to reduce the time it takes to collect receivables to 18 days. What will happen to the firm's operating cycle?
A.It will fall from 89 days to 83 days
B.It will fall from 59 days to 53 days
C.It will be unaffected by the change in policy
D.It will rise from 85 days to 91 days
E.It will rise from 81 days to 87 days


13. On January 1st, you make plans to travel to France the following summer. The quote for French francs is $0.2000 per franc. Since it will be a short trip, you believe $1,000 in spending money will be sufficient. On June 1st, the quote for francs is $0.2500 per franc. As a result, your $1,000 will ___________.
A.buy 25 percent fewer francs than you had planned
B.buy 20 percent more francs than you had planned
C.buy 20 percent fewer francs than you had planned
D.buy 25 percent more francs than you had planned
E.buy exactly as many francs as you had planned


14. According to today's Wall Street Journal, the spot exchange rate for the Deutsche mark is DM 1 = $0.94. The six-month forward exchange rate is DM 1 = $1.03. Which following statements is/are true?
I. The Deutsche mark is selling at a discount relative to the dollar
II. The Deutsche mark is selling at a premium relative to the dollar
III. The dollar is selling at a discount relative to the Deutsche mark
IV. The dollar is selling at a premium relative to the Deutsche mark
A.I only
B.II and IV only
C.I and III only
D.I and IV only
E.II and III only


15. If the percentage difference between the forward exchange rate and the spot exchange rate is equal to the interest rate differential between two countries, then ___________ holds.
A.the unbiased interest parity theory
B.the interest rate parity theory
C.the relative purchasing power parity theory
D.the absolute purchasing power parity theory
E.the international Fisher effect


16. For the year just ended, James' Drafting Supplies had average accounts receivable of $880,000 from total credit sales of $4,800,000 for the year. Throughout the year, a factor purchased accounts receivable from the firm at an 2% discount. If James' wishes to get its cost of factoring down below 11%, what is the MAXIMUM days accounts receivable it can have?
A.67 days
B.70 days
C.72 days
D.75 days
E.87 days


17.
Ned's Co. has a 45 day (average) collection period and an operating cycle of 130 days. It has a policy of keeping at least $10 on hand as a minimum cash balance, and has a beginning cash balance for the first quarter of $20. Beginning receivables for the quarter amount to $35. Sales for the first and second quarters are expected to be $110 and $125, respectively while purchases amount to 80% of the next quarter's forecasted sales. The accounts payable period is 90 days.
R-1 16-2

What is the value of the receivables account at the end of the first quarter?
A.$35
B.$42
C.$55
D.$60
E.$110



18.
ItemBeginningEnding
Inventory800950
Accts. Rec.1,1001,200
Accts. Pay.750650
Credit Sales = $8,420
COGS = $6,250
R-2 16-1

What is the length of the operating cycle?
A.94 days
B.99 days
C.101 days
D.107 days
E.111 days



19. Of the following, ________ would lead to a reduction in the number of shares of stock outstanding and an increase in par value.
A.a stock dividend
B.a stock repurchase
C.a liquidating dividend
D.a stock split
E.a reverse stock split


20. All else equal, an investor is likely to prefer a firm with a low dividend payout rate
A.if the firm doesn't have any positive NPV projects in which it could invest
B.if marginal corporate tax rates exceed marginal personal tax rates
C.if the costs of issuing new stock are significant
D.if the firm's dividend payout is not restricted by a bond indenture
E.if the investor is a tax-exempt entity



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