BUSN 379 Quiz 1 (Updated)
[Pin It]
1. (TCO 6) Which of the following is true regarding income bonds? (Points : 4)
2. (TCO 6 and 7) Financial leverage deals with: (Points : 4)
3. (TCO 6) Company A has a bond outstanding with $90 annual interest payment, a market price of $820, and a maturity date in five years. Assume the par value to be $1,000. What is the bondÂ’s yield to maturity? (Points : 4)
(The Answer is 14.28%)
4. (TCO 2) Which one of the following practices will reduce a firm’s collection float? (Points : 4)
5. (TCO 2) Storage and tracking costs, insurance and taxes, and losses due to theft are examples of: (Points : 4)
6. (TCO 1) Provide three examples of situations in which business ethics play a role in the financial management process. Explain yur rationale, and how these situations may affect the value of the firm. (Points : 10)
7. (TCO 4) What is an opportunity cost? Provide two real-life examples of opportunity costs for a project. Should opportunity costs be included in the project analysis process? Why or why not? Explain your rationale. (Points : 10)
8. (TCO 8) What is the difference between business risk and financial risk? If Company A has a higher business risk than Company B, should its cost of capital be higher? Why or why not? Explain your rationale. (Points : 10)
9. (TCO 2) What are the costs associated with extending (or not extending) a credit policy to customers? (Points : 10)
10. (TCO 6 and 7) Do you believe that it is appropriate for some industries to be more leveraged than others? Explain your rationale.
