1. The quick ratio is always larger than the current ratio.

True

False

2. Under a Dutch auction, the company pays multiple prices to repurchase the shares of stock.

True

False

3. The Five Cs of credit include all of the following EXCEPT

1. Collateral
2. Conditions
3. Character
4. Capacity
5. All of the answers are correct

4. The ability for a company to pay off their short-term obligations is known as

1. Efficiency
2. Liquidity
3. Profit
4. Asset Recollection Ratio
5. None of the other answer

5. Higher debt reduces agency costs.

True

False

6. A dividend policy based on tax issues will call for a dividend when

1. The tax on ordinary income is greater than the capital gains tax
2. The tax on ordinary income is less than the capital gains tax
3. The tax on ordinary income is equal to the capital gains tax
4. The tax on ordinary income is greater than the company WACC
5. None of the other answer

7. Dividend smoothing is in the best interest of the shareholders.

True

False

8. EOQ describes the amount of inventory that a company will sell in a year.

True

False

9. Companies should strive for a current ratio less than or equal to 1.

True

False

10. EOQ minimizes inventory costs such as holding and ordering.

True

False

11. Under the pecking Order Theory of finance, a company will get funds to finance a project in the order of:

1. Internally-generated funds, stretch net working capital, borrow from bank, public debt, common stock, preferred stock
2. Internally-generated funds, stretch net working capital, borrow from bank, common stock, preferred stock, public debt
3. Internally-generated funds, stretch net working capital, public debt, borrow from bank, common stock, preferred stock
4. Internally-generated funds, stretch net working capital, borrow from bank, public debt, preferred stock, common stock,
5. None of the other answer

12. The goal of finance is to maximize shareholder wealth, and the dividend policy that goal is

1. Constant dividend policy
2. Dividend smoothing policy
3. Stable dividend policy
4. Residual dividend policy
5. None of the other answers.

13. A company will institute a stock repurchase for any of the following reasons EXCEPT

1. Management believes that shares of stock are undervalued
2. Tax reasons
3. Dont want to create expectations like a dividend payment
4. Reduce the number of shares on the market
5. All the other answers are reasons