str 581 final exam

51) __________ says to seek out investments that offer the greatest expected risk-adjusted real return.
  A.  The Principle of Incremental Benefits
 B.  The Signaling Principle
 C.  The Principle of Valuable Ideas
 D.  The Principle of Self-Interested Behavior
52) A checking account is __________.
A.  a place to “collect” money between inflows and outflows
B.  an account that acts like a reservoir
C.  useful because you can add money in any amount
D.  all of these
53) Due to asymmetric information, the market fears that a firm issuing securities will do so when the stock is _________.
A.  undervalued
B.  overvalued
C.  being sold by insiders
D.  caught up in a bear market
54) Which of the following statements is true?
  A.  The Principle of Capital Market Efficiency says to consider the possible ways to minimize the value lost to capital market imperfections, such as asymmetric taxes, asymmetric information, and transaction costs.
 B.  The Behavioral Principle suggests to look for opportunities to create value by issuing securities that are in short supply, perhaps resulting from changes in tax law.
 C.  The Signaling Principle says to consider any possible change in capital structure carefully, because financing transactions and capital structure changes convey information to outsiders and can be misunderstood.
D.  all of these
55) Which of the following statements is true?
  A.  The Principle of Incremental Benefits says to consider the possible ways to minimize the value lost to capital market imperfections, such as asymmetric taxes, asymmetric information, and transaction costs.
 B.  The Principle of Valuable Ideas suggests to look for opportunities to create value by issuing securities that are in short supply, perhaps resulting from changes in tax law.
 C.  The Time Value of Money Principle advises to include any time-value-of-money tax benefits from capital structure choices.
D.  all of these
56) __________ says to recognize the value of options contained in derivatives.
  A.  The Principle of Valuable Ideas
 B.  The Capital Market Efficiency Principle
 C.  The Principle of Comparative Advantage
 D.  The Options Principle
57) __________ says to use derivatives to pay others to take risks.
  A.  The Principle of Two-Sided Transactions
 B.  The Signaling Principle
 C.  The Principle of Self-Interested Behavior
 D.  The Principle of the Time Value of Money
58) The conversion price (for a convertible security) is usually adjusted __________.
A.  for a new debt offering.
B.  for stock splits.
C.  for cash dividends.
D.  all of these
59) The investment decision best addresses which of the following questions?
  A.  Should we buy new equipment?
 B.  Should debt be short-term?
 C.  Should we increase our advertising budget?
 D.  Should we borrow in a foreign currency?
60) Dimensions of risk include __________.
A.  uncertainty about the future outcome
B.  the impossibility of the same return
C.  uncertainty about yesterday’s outcome
D.  the certainty of a negative outcome


Total 500 Questions from 5 set of actual exams (5 sets x 100 questions) with double checked answers

final exam str 581
str 581 final exam answers
str 581 final exam
str 581 final
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