FINANCE 3000-A firm has assets valued at $250M
Subject: Business / Finance
Question
Quiz – FIN:3000:0EXW Smr16 Introductory Financial Management – ICON
A firm has assets valued at $250M, liabilities properly valued at $100M. What is the maximum percentage drop in asset prices can the firm withstand before becoming insolvent?
Quiz – FIN:3000:0EXW Smr16 Introductory Financial Management – ICON Quiz – FIN:3000:0EXW Smr16 Introductory Financial Management – ICON
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40.0%
25.0%
66.7%
60.0%
Question 1 options:
40.0%
25.0%
66.7%
60.0%
Quiz – FIN:3000:0EXW Smr16 Introductory Financial Management – ICON
Would you expect interest rates and consumer borrowing to be positively correlated or negatively correlated and why?
Question 2 options:
Negatively correlated because consumers will borrow more when interest rates are low
Positively correlated because consumers will borrow more when interest rates are low
Positively correlated because consumers will borrow more when interest rates are high
Negatively correlated because consumers will borrow more when interest rates are high
Quiz – FIN:3000:0EXW Smr16 Introductory Financial Management – ICON
Which of the following is an advantage of using IRR as a capital budgeting tool?
Question 3 options:
It is easier to ignore sunk costs in this method
There is not a simple Excel function to calculate IRR
Estimates are extremely sensitive to changes in the discount rate
It allows for an easy comparison against the discount rate or WACC
Quiz – FIN:3000:0EXW Smr16 Introductory Financial Management – ICON
In which scenario should a company be most inclined to issue additional equity?
Question 5 options:
The company has many investment opportunities, little debt, and an undervalued stock price
The company wishes to increase its leverage to increase returns on equity
The company’s stock price has just doubled as they completed a 2-1 stock split
The company is illiquid with an overvalued stock price
Quiz – FIN:3000:0EXW Smr16 Introductory Financial Management – ICON
You take out a loan to buy a brand new car. If the Effective Annual Rate (EAR) is 8.3% when compounding monthly, calculate the EAR when compounding quarterly.
Question 6 options:
8.27%
8.24%
8.3%
8.0%
