Question #1 (1 point)
When a corporation uses the financial markets to raise new funds, the sale of securities is said to be made in the primary market.
True
False
Question #2 (1 point)
The free cash flows that are generated from the firm’s operations and investments in assets must always be equal to the free cash flows paid to or received from the company’s investor financing.
True
False
Question #3 (1 point)
All of the following are core financial principles except
a firm’s expenditures will always increase as its revenues increase
cash flows, not profit, are are the proper measures of wealth
a dollar today is worth more than a dollar tomorrow
additional risk must be accompanied by additional corresponding additional expected return
Question #4 (1 point)
Hayek Inc. has total assets of $400,000, total liabilities of $140,000, a preferred stock obligation of $10,000, and 50,000 outstanding shares of common stock. What is Hayek, Inc.’s book value per share?
4.0
4.8
5.8
5.0
Question #5 (1 point)
In the U.S., inflation was not considered an important factor in financial decisions until
1930
1965
1948
1982
Question #6 (1 point)
All of the following are primary sources of capital except
bondholders
preferred stockholders
common stockholders
company liabilities
Question #7 (1 point)
All of the following statements about restructuring are true except
Results in large reductions of the workforce
Results in changes in how liabilities and equity are reflected on the balance sheet
A forced restructuring is a result of a company’s poor performance
Results in the selling off of the firm’s most profitable divisions
Question #8 (1 point)
Which formula best describes the composition of the basic balance sheet?
current assets – current liabilities = fixed assets – current stock – retained earnings – long term liabilities
total assets = total equity – total liability
current assets + fixed assets = current liabilities + long term liabilities…