Piko

Total score: 112/3.5 points per question

Part I: Multiple choice, please choose the most appropriate answer.

1. Suppose Cryogenic Concepts expects a 10 persent return on a new risky investment, when top-quality corporate bonds (almost risk free) are offering 10 percent rates of return. What should the firm do?

A. Invest in the new product.

B. Invest in the top-quality corporate bonds.

C. Any of these.

D. Pay out cash to its shareholders.

2. When Patricia sells her General Motors common stock t the same time that Brian purchases the same amount of General Motors stock, General Motors receives:

A. only the par value of the common stock.

B. nothing.

C. the dollar amount of the transaction, less brokerage fees.

D. the dollar value of the transaction.

3. With semi-strong form market efficiency:

A. all currently published information is reflectd in the current stock price.

B. all historical information on past prices is reflected in the current stock

A. price.

B. all insider information is reflected in the currect stock price.

C. both A and B.

4. Which of the following changes in working capital will result in an increase in cash flows?

A. Decrease in other current liabilities

B. Increase in accounts payable

C. Increase in inventories

D. Increase in accounts receivable

5. Which of the following statements is true for a corporation with $2 million market value of equity, $3 million market value of assets, and 1,000 shares of outstanding stocks?

A. Market value per share equals $2,000.

B. Market value of liabilities equals $1 million.

C. Market value per share equals $1,000.

D. Market value of liabilities exceeds book value of liabilities.

6. Which of the following is not typically considered a function of financial intermediaries?

A. Spreading, or pooling risk among individuals

B. Investing in real assets

C. Providing a payment mechanism

D. Accumulating funds from...