Question 1

Presented below are partial year-end financial statement data for companies A and B.

If Company A has 60 common shares outstanding, then it has a book value per share, to the nearest

cent, of

Options :

A : $1.67

B : $2.50

C : $4.17

D : $5.00

Answer: C

Question 2

A firm’s optimal capital structure

Options :

A : Minimizes the firm’s tax liability.

B : Minimizes the firm’s risk.

C : Maximizes the firm’s degree of financial leverage

D : Maximizes the price of the firm’s stock.

Answer: D

Question 3

During which stage of the product life cycle will prices most like’ be reduced to the lowest possible level?

Options :

A : Introductory stage.

B : Growth stage.

C : Maturity stage.

D : Dechnestage

Answer: C

Question 4

An organization’s executive committee, meeting to solve an important problem, spent 30 minutes

analyzing data and debating the cause of the problem. Finally, they agreed and could move onto the

next step. Possible steps in the creative problem-solving process are listed below. Which step should

the committee perform next?

Options :

A : Select a solution.

B : Generate alternative solutions.

C : Identify the problem.

D : Consider the reaction of competitors to various courses of action.

Answer: B

Question 5

Maylar Corporation has sold $50 million of $1 .000 par value, 12% coupon bonds The bonds were sold at a discount and the corporation received $985 per bond. If the corporate tax rate is 40%. the after-tax cost of these bonds for the first year (rounded to the nearest hundredth percent) is

Options :

A : 7.31%.

B : 4.87%.

C : 12.00%.

D : 7.09%.

Answer: A

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