11. According to the financial perspective, value creation is based on (Please READ ALL alternatives before answering):

a. The cash flows of the firm

b. the timing & risk of the cash flows

c. the net income, aka profits, of the firm

d. both a & c

e. both a & b

12. Financial markets are generally recognized as being semistrong form efficient, which means:

a. All publicly available information is reflected in current prices

b. All available information, both public and private is reflected in current prices

c. Only all past price information is reflected in current prices

d. There is no opportunity for consistently earning returns on investments

13. Double taxation refers to:

a. dividends being paid after corporate taxes are paid, and thus being taxed twice at the corporate level

b. dividends being paid after corporate taxes are paid, and thus being taxed once at the corporate level and again at the personal level when an investor receives the dividend

c. interest being paid after corporate taxes are paid, and thus being taxed twice at the corporate level

d. interest being paid after corporate taxes are paid, and thus being taxed once at the corporate level and again at the personal level when an investor receives the interest

e. None of the above

14. The government has issued a bond that will pay $1000 in 25 years. The bond will pay no interim coupon payment. What is the present value of the bond if the discount rate is 10% a. 92.30

b. 1000

c. 9077

d. 9169

e. 9230

15. Assume that you invested $5000 in an account that is expected to average 10% return per year for the next 30 years. How much do you expect to have in the account at the end of the 30 years?

a. 5000

b. 87,247

c. 150,000

d. 822,470

e. insufficient information to compute

16. Assuming the current ratio is currently 2.0, which of the following actions will increase the ratio?

a. purchasing inventory with cash

b. purchasing inventory with shortterm credit

c. paying off a shortterm bank loan with a longterm debt

d. a customer paying an overdue bill

e. all of the above will increase the current ratio

17. Assume the following for your corporation: sales (aka revenue) = $250 Cost of goods sold = 160 depreciation = 35 Interest Expense = 20 tax rate = 34% What is the corporation's total after tax net income?

a. 23.10

b. 11.90

c. 35.00

d. 46.20

e. 36.30

18. In a reasonably efficient market, at the time of an announcement, market prices react to;

a. The announcement of new information that was unanticipated

b. The announcement of new information that was previously fully anticipated

c. Both, i. e., both the announcement of new information that was previously fully anticipated, as well as information that was unanticipated

d. neither, because market price movements are random

19. Worldwide Inc. has decided to acquire another firm by purchasing the firm's outstanding stock. Analysts forecast a period of 2 years of extraordinary growth (20 percent), followed by 1 year of unusual growth (10 percent), and finally a normal (sustainable) growth rate of 6.5 percent annually indefinitely. The last dividend was D0= $1.00 per share and the required return is 8.6 percent. What is D4 (i.e., the dividend expected at end of period 4)?

a. 1.0000

b. 1.286

c. 1.584

d. 1.687

e. 1.440 20.

20. Assume D4 ( I.e., the dividend at end of period 4) is expected to be $2.00 and is forecasted to grow at a constant rate of 6.5%. If investors required return is 8.6%, what is P3 (i.e., expected price at the end of period 3)?

a. 0.95

b. 2.00

c. 23.26

d. 30.77

e. 95.24 f.

Insufficient information to compute