B. Acy Bachelor of Accountancy Corporate Finance and Financial Management

Question 1

Which of the following best describes the primary goal of financial management in a corporation?

Accepted Answer

Maximizing shareholder wealth

Answer

Maximizing total revenues

Answer

Minimizing total costs

Answer

Maximizing net income

Question 2

A firm has EBIT of $500,000, interest expense of $80,000, and a tax rate of 25%. What is the firm's net income?

Accepted Answer

$315,000

Answer

$375,000

Answer

$420,000

Answer

$500,000

Question 3

Which capital budgeting method considers the time value of money and measures the dollar value added to a project?

Accepted Answer

Net present value (NPV)

Answer

Payback period

Answer

Accounting rate of return

Answer

Profitability index

Question 4

The weighted average cost of capital (WACC) is used to:

Accepted Answer

Discount future cash flows to evaluate investment projects

Answer

Determine the optimal dividend payout ratio

Answer

Calculate the firm's debt-to-equity ratio

Answer

Measure the firm's liquidity position

Question 5

If a bond has a face value of $1,000, a coupon rate of 6%, and is currently trading at $950, its current yield is approximately:

Accepted Answer

6.3%

Answer

6.0%

Answer

5.7%

Answer

7.0%

Question 6

Which of the following is NOT a component of the operating cycle?

Accepted Answer

Cash conversion cycle

Answer

Days sales outstanding

Answer

Days inventory outstanding

Answer

Days payable outstanding

Question 7

Under the Capital Asset Pricing Model (CAPM), a stock with a beta greater than 1.0 is considered:

Accepted Answer

More volatile than the market

Answer

Less volatile than the market

Answer

Risk-free

Answer

Negatively correlated with the market