George lends $200,000 for each new idea. George's history is that he selects low-risk projects or ideas that hit 80% of the time. What rate of return must each successful project pay George for him to break even?
Question 2 of 20 5.0/ 5.0 Points
Which of the statements below is TRUE?
A. The investment decision, although minor in comparison to the financing decision, is still an important consideration.
B. The financing decision, although minor in comparison to the investing decision, is still an important consideration.
C. The financing decision is minor in comparison to the investing decision and thus can be ignored.
D. The financing and investing decisions are equally important in terms of determining firm value.
Question 3 of 20 5.0/ 5.0 Points
Low-dividend clientele are preferred by firms because .
A. they pay more money per share of comparable stock than other types of investors
B. high-dividend clientele are more active shareholders
C. they are less critical of management decisions D. none of the above. Low dividend clientele are no more preferred than high-dividend clientele.
Question 4 of 20 5.0/ 5.0 Points
Financial leverage is the degree to which a firm or individual utilizes .
A. borrowed money to pay wages
B. borrowed money to pay dividends C. borrowed money to magnify equity earnings
D. borrowed money to diminish equity earnings
Question 5 of 20 5.0/ 5.0 Points
If we are using foreign currency for the NPV decision, all we have to do is restate all the in terms of present value and use the current exchange rate.
A. domestic incremental cash flow B. foreign incremental cash flow
C. salvage value
D. None of these
Question 6 of 20 5.0/ 5.0 Points
According to the text, which of the following four cash flows should be LAST in order of priority for a firm?
A. cash to pay off debts in a timely fashion
B. cash to maintain operations C. cash dividends
D. cash for reinvesting
Question 7 of 20 0.0/ 5.0 Points
Which of the statements below is FALSE?
A. Multinational capital budgeting is a straightforward application of the Net Present Value (NPV. model with one twist: we can do the analysis in either domestic currency or foreign currency.
B. If we are using foreign currency for the NPV decision, all we have to do is restate all the foreign incremental cash flow in terms of future value and use the current exchange rate.
C. In conducting a multinational NPV, one must be careful to avoid differences with rounding of exchange rates, discount rates, and cash flow to produce the exact same value.
D. With the foreign currency approach in NPV analysis, if we know the appropriate discount rate in the home country and the expected inflation rates in the two countries, we can determine the appropriate foreign discount rate.
Question 8 of 20 5.0/ 5.0 Points
The decision to pay a cash dividend is within the jurisdiction of . A. the board of directors of the firm
B. the firm's largest labor union
C. the largest shareholders of the firm
Question 9 of 20 5.0/ 5.0 Points
The final distribution of cash to shareholders after a company has been sold off or discontinued operations is called a dividend.
A. complete B. liquidating
Question 10 of 20 5.0/ 5.0 Points
The difficulties of managing international business operations stem from three special issues. Which of the choices below is NOT one of these?
A. political risk
B. differences in business practices C. social fads
D. cultural differences
Question 11 of 20 5.0/ 5.0 Points
Typically, shares of stock are stored in the vault of the brokerage firm and you, as owner, will not take physical possession. Under these circumstances the brokerage firm is the and you are the
A. street owner; settlement owner
B. settlement owner; street owner C. owner of record; beneficiary owner
D. beneficiary owner; owner of record
Question 12 of 20 5.0/ 5.0 Points
Which of the following is NOT a form of corporate dividend?
A. regular cash dividend
B. special cash dividend
C. stock dividend D. These are all forms of corporate dividends.
Question 13 of 20 5.0/ 5.0 Points
Anticipated cash inflows may fall in value if unexpected movements in the exchange rate hurt your ability to convert the foreign currency into domestic currency. This reduction in the conversion of future payments is called .
A. translation exposure B. transaction exposure
C. conversion exposure
D. operating exposure
Question 14 of 20 5.0/ 5.0 Points
Which of the following is NOT a reason for a high-dividend-payout policy?
A. convenient and direct deposit of cash dividend
B. avoidance of transaction costs for selling shares C. higher potential future returns for shareholders
D. cash payments today versus uncertain cash payments tomorrow
Question 15 of 20 5.0/ 5.0 Points
Specific issues related to cultural differences can arise in the management of a multinational enterprise. All of the following are related to cultural differences EXCEPT .
A. a requirement to have local management
B. issues with promotion of women into management positions
C. issues with observation of religious holidays D. nationalization of the assets of a company by the foreign government
Question 16 of 20 5.0/ 5.0 Points
Investors who wish to avoid paying taxes in the present are typically . A. low-dividend clientele
B. high-dividend clientele
C. drawn to firms that have erratic dividend policies
D. none of the above
Question 17 of 20 5.0/ 5.0 Points
A is a separate entity and in that capacity can borrow from banks, bondholders, preferred stockholders, and common shareholders.
A. limited partnership
B. sole proprietorship
C. government organization D. public company
Question 18 of 20 5.0/ 5.0 Points
"Individuals living off of their dividends streams do not like reductions in their quarterly payments." This sounds like an argument for what type of dividend policy?
A. residual dividend policy B. sticky dividend policy
C. constantly declining dividend policy
D. none of the above
Question 19 of 20 5.0/ 5.0 Points
Businesses that operate in more than one country are commonly referred to as .
A. multi-American firms B. multinational firms
C. ultranational firms
D. worldwide firms
Question 20 of 20 0.0/ 5.0 Points
Capital structure refers to how the firm finances its operations and growth through a combination of .
A. equity types
B. security types
C. types of earnings D. types of debt