FIN 534 (Str) Read, Lead, Succeed/uophelpdotcom
FIN 534 Entire Course (Str Course)
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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
FIN 534 Week 3 Chapter 5 Solution
FIN 534 Week 4 Chapter 6 Solution
FIN 534 Week 4 Chapter 7 Solution
FIN 534 Week 5 Chapter 8 Solution
FIN 534 Week 5 Chapter 9 Solution
FIN 534 Week 6 Chapter 10 Solution
FIN 534 Week 6 Chapter 11 Solution
FIN 534 Week 7 Chapter 12 Solution
FIN 534 Week 7 Chapter 13 Solution
FIN 534 Week 8 Chapter 14 Solution
FIN 534 Week 8 Chapter 15 Solution
FIN 534 Week 9 Chapter 16 Solution
FIN 534 Week 10 Chapter 17 Solution
Fin 534 Week 1 Quiz 1
FIN 534 Week 3 Quiz 2
FIN 534 Week 4 Quiz 3
FIN 534 Week 5 Quiz 4
FIN 536 Week 6 Quiz 5
FIN 534 Week 7 Quiz 6
FIN 534 Week 8 Quiz 7
FIN 534 Week 9 Quiz 8
FIN 534 Week 10 Quiz 9
FIN 534 Week 11 Quiz 10
FIN 534 Week 1 DQ 1
FIN 534 Week 1 DQ 2
FIN 534 Week 2 DQ 1
FIN 534 Week 2 DQ 2
FIN 534 Week 3 DQ 1
FIN 534 Week 3 DQ 2
FIN 534 Week 4 DQ 1
FIN 534 Week 4 DQ 2
FIN 534 Week 5 DQ 1
FIN 534 Week 6 DQ 1
FIN 534 Week 7 DQ 1
FIN 534 Week 7 DQ 2
FIN 534 Week 8 DQ 1
FIN 534 Week 8 DQ 2
FIN 534 Week 9 DQ 1
FIN 534 Week 9 DQ 2
FIN 534 Week 10 DQ 1
FIN 534 Week 10 DQ 2
FIN 534 Week 11 DQ 1
FIN 534 Week 11 DQ 2
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FIN 534 Week 1 Chapter 1 Solution
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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.
d. One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights, i.e., “one person, one vote.”
e. Corporations of all types are subject to the corporate income tax.
2. Which of the following would be most likely to lead to higher interest rates on all debt securities in the economy?
a. Households start saving a larger percentage of their income.
b. The economy moves from a boom to a recession.
c. The level of inflation begins to decline.
d. Corporations step up their expansion plans and thus increase their demand for capital.
e. The Federal Reserve uses monetary policy in an attempt to stimulate the economy.
3. Which of the following statements is CORRECT?
a. If General Electric were to issue new stock this year it would be considered a secondary market transaction since the company already has stock outstanding.
b. Capital market transactions only include preferred stock and common stock transactions.
c. The distinguishing feature between spot markets versus futures markets transactions is the maturity of the investments. That is, spot market transactions involve securities that have maturities of less than one year, whereas futures markets transactions involve securities with maturities greater than one year.
d. Both Nasdaq “dealers” and NYSE “specialists” hold inventories of stocks.
e. An electronic communications network (ECN) is a physical location exchange.
4. Which of the following statements is CORRECT?
a. A good goal for a firm’s management is maximization of expected EPS.
b. Most business in the U.S. is conducted by corporations, and corporations’ popularity results primarily from their favorable tax treatment.
c. Because most stock ownership is concentrated in the hands of a relatively small segment of society, firms’ actions to maximize their stock prices have little benefit to society.
d. Corporations and partnerships have an advantage over proprietorships because a sole proprietor is exposed to unlimited liability, but the liability of all investors in the other types of businesses is more limited.
e. The potential exists for agency conflicts between stockholders and managers.
5. Which of the following statements is NOT CORRECT?
a. When a corporation’s shares are owned by a few individuals and are not traded on public markets, we say that the firm is “closely, or privately, held.”
b. “Going public” establishes a firm’s true intrinsic value, and it also insures that a highly liquid market will always exist for the firm’s shares.
c. When stock in a closely held corporation is offered to the public for the first time, the transaction is called “going public,” and the market for such stock is called the new issue market.
d. Publicly owned companies have shares owned by investors who are not associated with management, and public companies must register with and report to a regulatory agency such as the SEC.
e. It is possible for a firm to go public and yet not raise any additional new capital at the time.
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FIN 534 Week 1 Chapter 2 Solution
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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.
d. If a firm is more profitable than most other firms, we would normally expect to see its book value per share exceed its stock price, especially after several years of high inflation.
e. The more depreciation a firm has in a given year, the higher its EPS, other things held constant.
2. Which of the following statements is CORRECT?
a. The statement of cash flows reflects cash flows from operations, but it does not reflect the effects of buying or selling fixed assets.
b. The statement of cash flows shows where the firm’s cash is located; indeed, it provides a listing of all banks and brokerage houses where cash is on deposit.
c. The statement of cash flows reflects cash flows from continuing operations, but it does not reflect the effects of changes in working capital.
d. The statement of cash flows reflects cash flows from operations and from borrowings, but it does not reflect cash obtained by selling new common stock.
e. The statement of cash flows shows how much the firm’s cash — the total of currency, bank deposits, and short-term liquid securities (or cash equivalents) — increased or decreased during a given year.
3. Which of the following statements is CORRECT?
a. Dividends paid reduce the net income that is reported on a company’s income statement.
b. If a company uses some of its bank deposits to buy short-term, highly liquid marketable securities, this will cause a decline in its current assets as shown on the balance sheet.
c. If a company issues new long-term bonds during the current year, this will increase its reported current liabilities at the end of the year.
d. Accounts receivable are reported as a current liability on the balance sheet.
e. If a company pays more in dividends than it generates in net income, its retained. earnings as reported on the balance sheet will decline from the previous year’s balance.
4. Last year Roussakis Company’s operations provided a negative net cash flow, yet the cash shown on its balance sheet increased. Which of the following statements could explain the increase in cash, assuming the company’s financial statements were prepared under generally accepted accounting principles?
a. The company repurchased some of its common stock.
b. The company dramatically increased its capital expenditures.
c. The company retired a large amount of its long-term debt.
d. The company sold some of its fixed assets.
e. The company had high depreciation expenses.
5. Bartling Energy Systems recently reported $9,250 of sales, $5,750 of operating costs other than depreciation, and $700 of depreciation. The company had no amortization charges, it had $3,200 of outstanding bonds that carry a 5% interest rate, and its federal-plus-state income tax rate was 35%. In order to sustain its operations and thus generate sales and cash flows in the future, the firm was required to make $1,250 of capital expenditures on new fixed assets and to invest $300 in net operating working capital. By how much did the firm’s net income exceed its free cash flow?
a. $673.27
b. $708.70
c. $746.00
d. $783.30
e. $822.47
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FIN 534 Week 1 DQ 1
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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.
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FIN 534 Week 1 DQ 2
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Week 1 discussion 2
Discuss ways that the basic concepts we have discussed in this chapter directly impact your life. Provide specific examples to support your response.
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Fin 534 Week 1 Quiz 1
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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.
2) This is an example of a primary market transaction.
3) This is an example of a direct transfer of capital.
4) This is an example of a money market transaction.
5) This is an example of a derivatives market transaction.
Question 2
Which of the following statements is CORRECT?
1) While the distinctions are blurring, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise capital from other parties
2) A liquid security is a security whose value is derived from the price of some other “underlying” asset
3) Money market mutual funds usually invest most of their money in a well-diversified portfolio of liquid common stocks.
4) Money markets are markets for long-term debt and common stocks.
5) The NYSE operates as an auction market, whereas the Nasdaq is a dealer market
Question 3
Which of the following statements is CORRECT?
1) The NYSE does not exist as a physical location; rather it represents a loose collection of
dealers who trade stock electronically.
2) An example of a primary market transaction would be your uncle transferring 100 shares of
Wal-Mart stock to you as a birthday gift.
3) Capital market instruments include both long-term debt and common stocks.
4) If your uncle in New York sold 100 shares of Microsoft through his broker to an investor in
Los Angeles, this would be a primary market transaction.
5) While the two frequently perform similar functions, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise large blocks of capital from investors.
Question 4
Which of the following statements is CORRECT?
1) It is usually easier to transfer ownership in a corporation than it is to transfer ownership in a sole proprietorship
2) Corporate shareholders are exposed to unlimited liability.
3) Corporations generally face fewer regulations than sole proprietorships.
4) Corporate shareholders are exposed to unlimited liability, and this factor may be compounded by the tax disadvantages of incorporation.
5) There is a tax disadvantage to incorporation, and there is no way any corporation can escape this disadvantage, even if it is very small
Question 5
Which of the following statements is CORRECT?
1) One disadvantage of operating as a corporation rather than as a partnership is that corporate shareholders are exposed to more personal liability than partners
2) There is no good reason to expect a firm’s stockholders and bondholders to react differently to the types of new asset investments a firm makes
3) Bondholders are generally more willing than stockholders to have managers invest in risky projects with high potential returns as opposed to safer projects with lower expected returns
4) Stockholders are generally more willing than bondholders to have managers invest in risky projects with high potential returns as opposed to safer projects with lower expected returns
5) Relative to sole proprietorships, corporations generally face fewer regulations, and this makes it easier for corporations to raise capital
Question 6
Suppose the U.S. Treasury announces plans to issue $50 billion of new bonds. Assuming the announcement was not expected, what effect, other things held constant, would that have on bond prices and interest rates?
1) Prices and interest rates would both rise.
2) Prices would rise and interest rates would decline.
3) Prices and interest rates would both decline.
4) There would be no changes in either prices or interest rates.
5) Prices would decline and interest rates would rise.
Question 7
Which of the following statements is CORRECT?
1) Corporations are at a disadvantage relative to partnerships because they have to file more reports to state and federal agencies, including the Securities and Exchange Administration, even if they are not publicly owned
2) In a regular partnership, liability for the firm’s debts is limited to the amount a particular partner has invested in the business
3) A fast-growth company would be more likely to set up as a partnership for its business organization than would a slow-growth company
4) Partnerships have difficulty attracting capital in part because of their unlimited liability, the lack of impermanence of the organization, and difficulty in transferring ownership
5) A major disadvantage of a partnership relative to a corporation as a form of business organization is the high cost and practical difficulty of its formation
Question 8
Which of the following statements is CORRECT?
1) In a regular partnership, liability for other partners’ misdeeds is limited to the amount of a particular partner’s investment in the business
2) Partnerships have more difficulty attracting large amounts of capital than corporations because of such factors as unlimited liability, the need to reorganize when a partner dies, and the illiquidity (difficulty buying and selling) of partnership interests
3) A slow-growth company, with little need for new capital, would be more likely to organize as a corporation than would a faster growing company
4) In a limited partnership, the limited partners have voting control, while the general partner has operating control over the business. Also, the limited partners are individually responsible, on a pro rata basis, for the firm’s debts in the event of bankruptcy.
5) A major disadvantage of all partnerships relative to all corporations is the fact that federal income taxes must be paid by the partners rather than by the firm itself
Question 9
Which of the following statements is CORRECT?
1) If you purchase 100 shares of Disney stock from your brother-in-law, this is an example of a primary market transaction.
2) If Disney issues additional shares of common stock through an investment banker, this would be a secondary market transaction.
3) The NYSE is an example of an over-the-counter market.
4) Only institutions, and not individuals, can engage in derivative market transactions.
5) As they are generally defined, money market transactions involve debt securities with maturities of less than one year
Question 10
Which of the following factors would be most likely to lead to an increase in interest rates in the economy?
1) Households reduce their consumption and increase their savings
2) The Federal Reserve decides to try to stimulate the economy.
3) There is a decrease in expected inflation
4) The economy falls into a recession
5) Most businesses decide to modernize and expand their manufacturing capacity, and to install new equipment to reduce labor costs
Question 11
Which of the following statements is CORRECT?
1) Hedge funds are legal in Europe and Asia, but they are not permitted to operate in the United States
2) Hedge funds have more in common with commercial banks than with any other type of financial institution
3) Hedge funds have more in common with investment banks than with any other type of financial institution
4) Hedge funds are legal in the United States, but they are not permitted to operate in Europe or Asia
5) The justification for the “light” regulation of hedge funds is that only “sophisticated” investors with high net worths and high incomes are permitted to invest in these funds, and such investors supposedly can do the necessary “due diligence” on their own rather than have it done by the SEC or some other regulator
Question 12
Which of the following statements is CORRECT?
1) The New York Stock Exchange is an auction market with a physical location
2) Capital market transactions involve only the purchase and sale of equity securities, i.e., common stocks
3) If an investor sells shares of stock through a broker, then this would be a primary market transaction.
4) Consumer automobile loans are evidenced by legal documents called “promissory notes,” and these individual notes are traded in the money market
5) Consumer automobile loans are evidenced by legal documents called “promissory notes,” and these individual notes are traded in the money market
Question 13
Which of the following statements is CORRECT?
1) The corporate bylaws are a standard set of rules established by the state of incorporation. These rules are identical for all corporations in the state, and their purpose is to ensure that the firm’s managers run the firm in accordance with state laws
2) The corporate charter is a standard document prescribed by the state of incorporation, and its purpose is to ensure that the firm’s managers run the firm in accordance with state laws. Procedures for electing corporate directors are contained in bylaws, while the declaration of the activities that the firm will pursue and the number of directors are included in the corporate charter.
3) Companies must establish a home office, or domicile, in a particular state, and that state must be the one in which most of their business (sales, manufacturing, and so forth) is conducted
4) Attorney fees are generally involved when a company develops its charter and bylaws, but since these documents are voluntary, a new corporation can avoid these costs by deciding not to have either a charter or bylaws
5) The corporate charter is concerned with things like what business the company will engage in, whereas the bylaws are concerned with things like procedures for electing the board of directors
Question 14
Which of the following statements is CORRECT?
1) If expected inflation increases, interest rates are likely to increase
2) If individuals in general increase the percentage of their income that they save, interest rates are likely to increase
3) If companies have fewer good investment opportunities, interest rates are likely to increase
4) Interest rates on all debt securities tend to rise during recessions because recessions increase the possibility of bankruptcy, hence the riskiness of all debt securities
5) Interest rates on long-term bonds are more volatile than rates on short-term debt securities like T-bills
Question 15
The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to ____
1) maximize its expected total corporate income
2) maximize its expected EPS
3) minimize the chances of losses
4) maximize the stock price per share over the long run, which is the stock’s intrinsic value
5) maximize the stock price on a specific target date
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FIN 534 Week 2 Chapter 3 Solution
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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.
e. An increase in a firm’s debt ratio, with no changes in its sales or operating costs, could be expected to lower the profit margin.
2. Companies HD and LD have the same tax rate, sales, total assets, and basic earning power. Both companies have positive net incomes. Company HD has a higher debt ratio and, therefore, a higher interest expense. Which of the following statements is CORRECT?
a. Company HD has a lower equity multiplier.
b. Company HD has more net income.
c. Company HD pays more in taxes.
d. Company HD has a lower ROE.
e. Company HD has a lower times interest earned (TIE) ratio.
