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FIN 534 Entire Course (Str Course)

FIN 534 Week 1 Chapter 1 Solution (Str Course)

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www.fin534tutor.com FIN 534 Week 1 Chapter 1 Solution FIN 534 Week 1 Chapter 2 Solution FIN 534 Week 2 Chapter 3 Solution FIN 534 Week 3 Chapter 4 Solution

FOR MORE CLASSES VISIT www.fin534tutor.com 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.


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FIN 534 Week 1 DQ 1 (Str Course)

FOR MORE CLASSES VISIT www.fin534tutor.com 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.


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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.





FIN 534 Week 1 DQ 2 (Str Course)

Fin 534 Week 1 Quiz 1 (Str Course)


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Discuss ways that the basic concepts we have discussed in this chapter directly impact your life. Provide specific examples to support your response.


www.fin534tutor.com 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?

1) This is an example of an exchange

of physical assets.


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FOR MORE CLASSES VISIT www.fin534tutor.com 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.

d. An increase in the DSO, other things held constant, could be expected to increase the ROE.


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1 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.






FIN 534 Week 3 Quiz 2 (Str Course)


www.fin534tutor.com 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.


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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.








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.


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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.







FOR MORE CLASSES VISIT www.fin534tutor.com 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

following in your report:


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. 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.








www.fin534tutor.com 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.


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Finance 534 week 5 quiz 4 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?








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.


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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.







FOR MORE CLASSES VISIT www.fin534tutor.com Finance 534 week 6 Quiz5 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


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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.







FOR MORE CLASSES VISIT www.fin534tutor.com 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


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Finance 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.








www.fin534tutor.com 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.


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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.







FOR MORE CLASSES VISIT www.fin534tutor.com Finance 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?


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1. Swim Suits Unlimited is in a highly seasonal business, and the following summary balance sheet data show its assets and liabilities at peak and off-peak seasons (in thousands of dollars):

Peak Off-Peak Cash $ 50 $ 30 Marketable securities 0 20 Accounts receivable 40 20 Inventories 100 50








www.fin534tutor.com 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


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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?







FOR MORE CLASSES VISIT www.fin534tutor.com Finance 534 week 10 quiz 9 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


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Finance 534 week 11 quiz 10 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.





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