Exam 1 FIN370 Winter 2009 Version - A Key

1. The process of managing a firm's long-term investments is called: a. capital structure management. b. asset allocation. c. risk management. D. capital budgeting. e. working capital management.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 001 #1 SECTION: 1.2 TOPIC: CAPITAL BUDGETING TYPE: DEFINITIONS

2. Capital structure refers to the: a. combination of short-term and long-term assets held by a firm. B. mixture of debt and equity a firm uses to finance its operations. c. types of long-term assets a firm employs in its operations. d. amount of cash versus other short-term assets held by a firm. e. average amount of cash equivalents held by a firm.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 001 #2 SECTION: 1.2 TOPIC: CAPITAL STRUCTURE TYPE: DEFINITIONS

3. A business organization owned by two or more individuals or entities, each of whom has unlimited liability for the firm's debts, is called a: a. limited liability company. b. limited partnership. c. dual company. d. joint stock company. E. general partnership.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 001 #5 SECTION: 1.3 TOPIC: GENERAL PARTNERSHIP TYPE: DEFINITIONS

4. The potential conflict of interest between a firm's owners and its managers is referred to as a(n): a. organizational problem. b. structure problem. C. agency problem. d. control issue. e. management conflict.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 001 #7 SECTION: 1.5 TOPIC: AGENCY PROBLEM TYPE: DEFINITIONS

5. Working capital management includes which of the following? I. establishing the inventory level II. deciding when to pay suppliers III. determining the amount of cash needed on a daily basis IV. establishing credit terms for customers a. I and II only b. III and IV only c. I, II, and III only d. I, II, and IV only E. I, II, III, and IV

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 001 #20 SECTION: 1.2 TOPIC: WORKING CAPITAL MANAGEMENT TYPE: CONCEPTS

6. A sole proprietorship: A. is relatively easy to create. b. involves significant legal costs during the formation process. c. has an unlimited life. d. is taxed as a separate legal entity. e. can generally raise significant capital from non-owner sources.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 001 #22 SECTION: 1.3 TOPIC: SOLE PROPRIETORSHIP TYPE: CONCEPTS

7. Which of the following are advantages of the corporate form of organization? I. ability to raise large sums of capital II. ease of ownership transfer III. corporate taxation IV. unlimited firm life a. I and II only b. III and IV only c. II, III, and IV only D. I, II, and IV only e. I, II, III, and IV

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 001 #32 SECTION: 1.3 TOPIC: CORPORATION TYPE: CONCEPTS

8. The primary goal of financial management is to maximize the: a. current net income. b. net working capital. c. the number of shares outstanding. D. market value of the existing stock. e. revenue growth.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 001 #36 SECTION: 1.4 TOPIC: GOAL OF FINANCIAL MANAGEMENT TYPE: CONCEPTS

9. Theresa sold 300 shares of MNO stock on the NYSE today. This transaction occurred in: a. a dealer market. b. the over-the-counter market. C. the secondary market. d. the primary market. e. a private placement.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEVEL OF DIFFICULTY: BASIC Ross - Chapter 001 #53 SECTION: 1.6 TOPIC: SECONDARY MARKET TYPE: CONCEPTS

10. Which of the following correctly describe a dealer market? I. Dealers match buyers with sellers. II. Dealers buy and sell for themselves at their own risk. III. Dealer trading occurs over-the-counter. IV. Dealer transactions occur on a trading floor. a. I and III only b. I and IV only C. II and III only d. II and IV only e. I, II, and III only

BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 001 #57 SECTION: 1.6 TOPIC: DEALER MARKET TYPE: CONCEPTS

11. Auction markets: I. match sellers with buyers. II. have a physical location. III. consist solely of electronic trades. IV. are based on dealers. a. II only b. III only C. I and II only d. III and IV only e. I, III, and IV only

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 001 #58 SECTION: 1.6 TOPIC: AUCTION MARKET TYPE: CONCEPTS

12. Which one of the following statements is correct? a. The majority of the publicly traded firms in the U.S. are listed on the NYSE. b. The NYSE is a dealer market. c. NASDAQ is an auction market. D. The NYSE has the most stringent listing requirements. e. The trading floor for NASDAQ is located in Chicago.

BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 001 #59 SECTION: 1.6 TOPIC: STOCK EXCHANGES TYPE: CONCEPTS

13. Net working capital is defined as: a. cash, accounts receivable, and inventory. b. current assets. c. cash minus current liabilities. d. current assets plus current liabilities. E. current assets minus current liabilities.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEVEL OF DIFFICULTY: BASIC Ross - Chapter 002 #1 SECTION: 2.1 TOPIC: NET WORKING CAPITAL TYPE: DEFINITIONS

14. The financial statement that summarizes a firm's operations over a period of time is called a(n): A. income statement. b. cash flow statement. c. production report. d. balance sheet. e. periodic operating statement.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 002 #3 SECTION: 2.2 TOPIC: INCOME STATEMENT TYPE: DEFINITIONS

15. An expense that lowers net income but does not affect a firm's cash flow is referred to as a(n): a. indirect cost. b. direct cost. C. noncash item. d. period cost. e. variable cost.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 002 #4 SECTION: 2.2 TOPIC: NONCASH ITEMS TYPE: DEFINITIONS

16. The average tax rate is defined as the: a. amount of tax due on the next dollar of taxable income. b. total tax paid divided by total revenue. c. amount of tax due on the next dollar of revenue. d. total tax paid divided by total assets. E. total taxes divided by total taxable income.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 002 #5 SECTION: 2.3 TOPIC: AVERAGE TAX RATE TYPE: DEFINITIONS

17. The cash generated from a firm's normal business activities is referred to as the firm's: a. net profit. b. addition to retained earnings. c. operating margin. d. addition to net working capital. E. operating cash flow.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 002 #8 SECTION: 2.4 TOPIC: OPERATING CASH FLOW TYPE: DEFINITIONS

18. When net new borrowings are subtracted from the interest payments a firm pays to its creditors the result is called the: A. cash flow to creditors. b. free cash flow. c. cash flow from assets. d. operating cash flow. e. change in net working capital.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 002 #10 SECTION: 2.4 TOPIC: CASH FLOW TO CREDITORS TYPE: DEFINITIONS

19. Anderson Enterprises currently has $400 in cash. The company owes $1,200 to suppliers for merchandise and $4,500 to the bank for a long-term loan. Customers owe Anderson's $1,900. The inventory has a book value of $3,700 and an estimated market value of $4,400. If Anderson's compiled a financial statement today, how much would it show as the value of the current assets? a. $5,200 b. $5,600 C. $6,000 d. $6,300 e. $6,700

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEVEL OF DIFFICULTY: BASIC Ross - Chapter 002 #55 SECTION: 2.1 TOPIC: CURRENT ASSETS TYPE: PROBLEMS

20. The Bake Shoppe has net working capital of $6,100, long-term debt of $10,400, total debt of $15,200, and owners' equity of $18,900. What is the value of The Bake Shoppe's net fixed assets? a. $12,800 b. $16,500 c. $18,900 d. $21,300 E. $23,200

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 002 #56 SECTION: 2.1 TOPIC: NET FIXED ASSETS TYPE: PROBLEMS

21. Grandel, Inc. has current liabilities of $10,200 and accounts receivable of $14,800. The firm has total assets of $39,700 and net fixed assets of $18,900. The owners' equity has a book value of $16,500. What is the amount of the net working capital? A. $10,600 b. $20,800 c. $23,200 d. $25,400 e. $31,000

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 002 #59 SECTION: 2.1 TOPIC: NET WORKING CAPITAL TYPE: PROBLEMS

22. The financial statements of Classic Collectables reflect cash of $15,800, accounts receivable of $31,600, accounts payable of $40,100, inventory of $54,700, long-term debt of $60,000, and net fixed assets of $99,500. The firm estimates that if it wanted to cease operations today it could sell the inventory for $39,000 and the fixed assets for $77,000. What is the market value of the assets? a. $63,300 b. $101,500 C. $163,400 d. $181,700 e. $201,600

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 002 #70 SECTION: 2.1 TOPIC: MARKET VALUE TYPE: PROBLEMS

23. Baldwin, Inc. paid $18,500 in dividends and $44,600 in interest over the past year while net working capital increased from $10,200 to $28,200. The company purchased $30,000 in net new fixed assets and had depreciation expenses of $15,700. During the year, the firm issued $45,000 in net new equity and paid off $16,000 in long-term debt. What is the amount of Baldwin's cash flow from assets? a. $3,700 b. $18,000 c. $30,200 D. $34,100 e. $48,000

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 002 #82 SECTION: 2.4 TOPIC: CASH FLOW FROM ASSETS TYPE: PROBLEMS

24. Solomon, Inc. has net sales of $745,100 and costs of $590,800. The depreciation expense is $82,600 and the interest paid is $15,500. What is the amount of the firm's operating cash flow if the tax rate is 35 percent? a. $46,605 b. $52,030 c. $71,700 d. $105,720 E. $134,630

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 002 #83 SECTION: 2.4 TOPIC: OPERATING CASH FLOW TYPE: PROBLEMS

25. The internal growth rate is best described as the _____ growth rate achievable _____. a. minimum; if a firm retains all of its net income b. minimum; if a firm maintains a constant debt-equity ratio c. maximum; without any additional external equity financing D. maximum; without any additional external financing of any type e. maximum; if external debt financing is maximized

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 003 #4 SECTION: 3.4 TOPIC: INTERNAL GROWTH RATE TYPE: DEFINITIONS

26. The sustainable growth rate is best described as the _____ growth rate achievable _____. a. minimum; if a firm ceases all dividend payments b. minimum; if a firm maintains a constant equity multiplier c. maximum; without external financing of any kind d. maximum; if external debt financing is maximized E. maximum; if a firm maintains a constant debt-equity ratio and does not issue any additional equity securities

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 003 #5 SECTION: 3.4 TOPIC: SUSTAINABLE GROWTH RATE TYPE: DEFINITIONS

27. A common-size income statement: I. expresses all values as a percent of total assets. II. should reflect a relatively constant cost of goods sold unless a firm changed the percent that it uses to mark up the wholesale price to get the retail price. III. expresses net income as 100 percent. IV. can be used to compare the performance of a firm both over time and against its industry. a. I and III only B. II and IV only c. III and IV only d. I, II, and III only e. II, III, and IV only

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 003 #8 SECTION: 3.1 TOPIC: COMMON-SIZE STATEMENT TYPE: CONCEPTS

28. Which one of the following actions will decrease the current ratio, all else constant? Assume the current ratio is greater than 1.0. A. purchasing inventory on credit b. paying an account payable c. collecting payment from a customer d. selling inventory at a profit in a charge sale e. selling inventory at cost in a cash sale

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 003 #11 SECTION: 3.2 TOPIC: CURRENT RATIO TYPE: CONCEPTS

29. A firm has a times interest earned ratio of 2. This means that the firm has twice as much: a. net income as it does interest expense. b. interest expense as it does net income. C. earnings before interest and taxes as it does interest expense. d. interest expense as it does earnings before interest and taxes. e. operating cash flow as it does interest expense.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 003 #16 SECTION: 3.2 TOPIC: TIMES INTEREST EARNED TYPE: CONCEPTS

30. The profit margin is the amount of net profit earned for every $1 of: a. total assets. b. equity. c. long-term debt. D. sales. e. external financing.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 003 #21 SECTION: 3.2 TOPIC: PROFIT MARGIN TYPE: CONCEPTS

31. A firm has inventory of $1,200, accounts payable of $600, cash of $130, net fixed assets of $2,100, longterm debt of $1,900, accounts receivable of $400, and total equity of $1,330. What is the common-size percentage for the net fixed assets? A. 54.83 percent b. 56.76 percent c. 61.22 percent d. 63.36 percent e. 65.02 percent

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 003 #37 SECTION: 3.1 TOPIC: COMMON-SIZE STATEMENTS TYPE: PROBLEMS

32. You are analyzing a company that has cash of $2,000, accounts receivable of $3,700, fixed assets of $10,900, accounts payable of $6,600, and inventory of $4,100. What is the quick ratio? a. .30 b. .67 C. .86 d. 1.48 e. 3.30

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 003 #45 SECTION: 3.2 TOPIC: QUICK RATIO TYPE: PROBLEMS

33. The Fruit Co. has total assets of $7,800, fixed assets of $7,100, current liabilities of $1,500, and long-term liabilities of $4,600. What is the total debt ratio? a. .41 b. .60 c. .65 D. .78 e. .86

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 003 #49 SECTION: 3.2 TOPIC: TOTAL DEBT RATIO TYPE: PROBLEMS

34. A firm has total assets of $456,000 and total equity of $217,000. What is the debt-equity ratio? a. .48 b. .68 C. 1.10 d. 1.48 e. 2.10

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 003 #51 SECTION: 3.2 TOPIC: DEBT-EQUITY RATIO TYPE: PROBLEMS

35. The Laptop Company has sales of $874,000, a profit margin of 9 percent, a total asset turnover rate of .80, and an equity multiplier of 1.75. What is the return on equity? a. 5.14 percent b. 7.20 percent c. 10.86 percent D. 12.60 percent e. 15.75 percent

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 003 #81 SECTION: 3.3 TOPIC: DU PONT IDENTITY TYPE: PROBLEMS

36. A firm has a return on equity of 14 percent, a return on assets of 9.5 percent, and a 30 percent dividend payout ratio. What is the sustainable growth rate? a. 2.93 percent b. 4.38 percent c. 7.12 percent d. 9.58 percent E. 10.86 percent

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 003 #102 SECTION: 3.4 TOPIC: SUSTAINABLE GROWTH RATE TYPE: PROBLEMS

37. The value of an investment after one or more time periods is called the: a. true value. B. future value. c. present value. d. discounted value. e. complex value.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #1 SECTION: 4.1 TOPIC: FUTURE VALUE TYPE: DEFINITIONS

38. The process of adding the interest earned on an investment to the original investment in order to earn more interest is called: a. discounting. B. compounding. c. duplicating. d. multiplying. e. indexing.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #2 SECTION: 4.1 TOPIC: COMPOUNDING TYPE: DEFINITIONS

39. By definition, a bank that pays simple interest on a savings account will pay interest: a. only at the beginning of the investment period. b. only at the end of the investment period. C. only on the initial investment. d. on both the initial investment and all prior interest payments that are reinvested. e. only if all previous interest payments are reinvested.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #5 SECTION: 4.1 TOPIC: SIMPLE INTEREST TYPE: DEFINITIONS

40. The current value of future cash flows discounted at the appropriate discount rate is called the: a. simple value. b. future value. C. present value. d. complex value. e. principal value.

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #6 SECTION: 4.2 TOPIC: PRESENT VALUE TYPE: DEFINITIONS

41. Which one of the following will increase the future value of a lump sum invested today? a. decreasing the amount of the lump sum B. increasing the rate of interest c. paying simple interest rather than compound interest d. paying interest only at the end of the investment period e. shortening the investment time period

BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #10 SECTION: 4.1 TOPIC: FUTURE VALUE TYPE: CONCEPTS

42. An increase in which of the following will increase the future value of a lump sum investment made today assuming that all interest is reinvested? Assume the interest rate is a positive value. I. interest rate II. amount of the lump sum III. frequency of the interest payments IV. length of the investment period a. I and III only b. II and IV only c. I, II, and IV only d. II, III, and IV only E. I, II, III, and IV

BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 004 #17 SECTION: 4.1 TOPIC: FUTURE VALUE TYPE: CONCEPTS

43. You want to invest an amount of money today and receive back twice that amount in the future. You expect to earn 6 percent interest. Approximately how long must you wait for your investment to double in value? a. 6 years b. 8 years c. 9 years d. 10 years E. 12 years

BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #27 SECTION: 4.3 TOPIC: RULE OF 72 TYPE: CONCEPTS

44. Today, you deposit $10,750 in a bank account that pays 3 percent simple interest. How much interest will you earn over the next 7 years? a. $1,935.00 b. $2,086.06 C. $2,257.50 d. $2,471.14 e. $2,580.00

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #28 SECTION: 4.1 TOPIC: SIMPLE INTEREST TYPE: PROBLEMS

45. Your parents just gave you a gift of $25,000. You are investing this money for 5 years at 2.5 percent simple interest. How much money will you have at the end of the 5 years? a. $27,500 b. $27,595 C. $28,125 d. $28,285 e. $28,750

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #29 SECTION: 4.1 TOPIC: SIMPLE INTEREST TYPE: PROBLEMS

46. Karen has $16,000 that she wants to invest for 1 year. She can invest this amount at The North Bank and earn 5.50 percent simple interest. Or, she can open an account at The South Bank and earn 5.39 percent interest, compounded monthly. If Karen decides to invest at The North Bank, she will: a. earn $17.60 more than if she had invested with The South Bank. B. earn $4.03 less than if she had invested with The South Bank. c. earn the same amount as if she had invested with The South Bank. d. have a total balance of $16,800 in her account after 1 year. e. have a total balance of $16,862.40 in her account after 1 year.

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 1 LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 004 #33 SECTION: 4.1 TOPIC: SIMPLE VERSUS COMPOUND INTEREST TYPE: PROBLEMS

47. Thirteen years from now, you will be inheriting $30,000. What is this inheritance worth to you today if you can earn 4 percent interest compounded annually? A. $18,017.22 b. $20,741.87 c. $23,190.98 d. $26,359.88 e. $28,846.15

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 2 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #43 SECTION: 4.2 TOPIC: PRESENT VALUE TYPE: PROBLEMS

48. You have $2,000 today and want to quadruple your money in 10 years. What interest rate must you earn? a. 7.18 percent b. 11.61 percent C. 14.87 percent d. 20.13 percent e. 23.11 percent

BLOOMS TAXONOMY QUESTION TYPE: APPLICATION LEARNING OBJECTIVE NUMBER: 3 LEVEL OF DIFFICULTY: BASIC Ross - Chapter 004 #50 SECTION: 4.3 TOPIC: INTEREST RATE TYPE: PROBLEMS

Exam 1 FIN370 Winter 2008 Summary

Category BLOOMS TAXONOMY QUESTION TYPE: APPLICATION BLOOMS TAXONOMY QUESTION TYPE: COMPREHENSION BLOOMS TAXONOMY QUESTION TYPE: KNOWLEDGE LEARNING OBJECTIVE NUMBER: 1 LEARNING OBJECTIVE NUMBER: 2 LEARNING OBJECTIVE NUMBER: 3 LEARNING OBJECTIVE NUMBER: 4 LEVEL OF DIFFICULTY: BASIC LEVEL OF DIFFICULTY: INTERMEDIATE Ross - Chapter 001 Ross - Chapter 002 Ross - Chapter 003 Ross - Chapter 004 SECTION: 1.2 SECTION: 1.3 SECTION: 1.4 SECTION: 1.5 SECTION: 1.6 SECTION: 2.1 SECTION: 2.2 SECTION: 2.3 SECTION: 2.4 SECTION: 3.1 SECTION: 3.2 SECTION: 3.3 SECTION: 3.4 SECTION: 4.1 SECTION: 4.2 SECTION: 4.3 TOPIC: AGENCY PROBLEM TOPIC: AUCTION MARKET TOPIC: AVERAGE TAX RATE TOPIC: CAPITAL BUDGETING TOPIC: CAPITAL STRUCTURE TOPIC: CASH FLOW FROM ASSETS TOPIC: CASH FLOW TO CREDITORS TOPIC: COMMON-SIZE STATEMENT # of Questions 19 4 25 11 12 7 6 34 14 12 12 12 12 3 3 1 1 4 5 2 1 4 2 6 1 3 8 2 2 1 1 1 1 1 1 1 1

TOPIC: COMMON-SIZE STATEMENTS TOPIC: COMPOUNDING TOPIC: CORPORATION TOPIC: CURRENT ASSETS TOPIC: CURRENT RATIO TOPIC: DEALER MARKET TOPIC: DEBT-EQUITY RATIO TOPIC: DU PONT IDENTITY TOPIC: FUTURE VALUE TOPIC: GENERAL PARTNERSHIP TOPIC: GOAL OF FINANCIAL MANAGEMENT TOPIC: INCOME STATEMENT TOPIC: INTEREST RATE TOPIC: INTERNAL GROWTH RATE TOPIC: MARKET VALUE TOPIC: NET FIXED ASSETS TOPIC: NET WORKING CAPITAL TOPIC: NONCASH ITEMS TOPIC: OPERATING CASH FLOW TOPIC: PRESENT VALUE TOPIC: PROFIT MARGIN TOPIC: QUICK RATIO TOPIC: RULE OF 72 TOPIC: SECONDARY MARKET TOPIC: SIMPLE INTEREST TOPIC: SIMPLE VERSUS COMPOUND INTEREST TOPIC: SOLE PROPRIETORSHIP TOPIC: STOCK EXCHANGES TOPIC: SUSTAINABLE GROWTH RATE TOPIC: TIMES INTEREST EARNED TOPIC: TOTAL DEBT RATIO TOPIC: WORKING CAPITAL MANAGEMENT TYPE: CONCEPTS TYPE: DEFINITIONS TYPE: PROBLEMS

1 1 1 1 1 1 1 1 3 1 1 1 1 1 1 1 2 1 2 2 1 1 1 1 3 1 1 1 2 1 1 1 15 16 17