1.Jefferson City Computers has developed a forecasting model to determine the additional funds it needs in the upcoming year.All else being equal, which of the following factors is likely to increase its additional funds needed (AFN)?

A.An increase in the firm's "Net Income.".

B.A reduction in its dividend payout ratio.

C.The company reduces its reliance on trade credit from its suppliers, which sharply reduces its "Accounts Payable."

2.Considering each action independently and holding other things constant, which of the followingactions would reduce a firm's need for additional capital?

A.An increase in the dividend payout ratio.

B.A decrease in the profit margin.

C.A decrease in the "days sales outstanding" for Accounts Receivable.

D.An increase in expected sales growth.

E.A decrease in the accrual accounts (accrued wages and taxes).

3.__________ for forecasting sales dollars is generally believed byfinance theorists and researchers to produce the most reliable sales forecast.

A.Regression analysis (which can be calculated via the Excel LOGEST function)

B.The compound annual growth rate (which may be calculated with the BA-II Plus calculator)

C.The arithmetic average annual growth rate

D.The Weighted Average Cost of Capital (WACC) method

4.Future sales for a firm may depend on each of the following EXCEPT

A.prospects for the industry in which the firm operates.

B.the firm's current product line.

C.the firm's marketing campaigns.

D.the number of common stock shares which the firm has outstanding.

5.Each of the following is an account that is assumed to increase proportionately with an increase in sales dollars EXCEPT

A.Accrued Liabilities.

B.Inventory

C.Short-Term Investments

D.Accounts Payable

6.Each of the following is a source of funds for a growing firm EXCEPT

A."Net Income" that is retained by the company and re-invested.

B.proceeds from new stock issues.

C.an increase in spontaneous current liability accounts, such as "Accounts Payable."

D.an increase in spontaneous current asset accounts, such as "Accounts Receivable."

7.Generally, the owner of common stock in a publicly-held corporation is entitled to one vote pershare of stock held.Shareholders may transfer their votes to another party via a

A.purchase agreement.

B.prospectus

C.proxy

D.parallel contract

8.___________ transaction occurs when additional shares of stock are issued by apublicly-held company to raise equity capital for expansion projects.

A.primary market

B.secondary market

C.money market

D.black market

9.The theoretical value of any asset is

A.its book value on its balance sheet.

B.the present value of the expected future cash flow stream that the asset generates.

C.solely a function of investor perception.

D.impossible to calculate.

10.A constant growth stock

A.typically has a growth rate ( g ) that exceeds its required rate of return ( r_s ).

B.is nearly always repurchased by the firm for its Treasury (i.e., Treasury stock).

C.rarely pays a dividend to shareholders.

D.is one whose dividends are expected to grow forever at a constant rate:g

11.The Gordon constant growth stock model is most appropriate to use to value

A.mature companies with a stable history of growth.

B.firms that pay a dividend that tends to increase at a fairly constant, annual rate.

C.firms that have long-term bonds outstanding.

D.A and B.

E.A and B and C.