FIN 571 NERD Education Specialist /fin571nerd.com FIN 571 NERD Education Specialist /fin571nerd.com | Page 16

A.
Limited liability protection provided for all owners.
B.
Unlimited life of the firm. C. Difficulties encountered
when changing ownership. D.
Double taxation of profits. E.
Firms
ability to raise cash. Question 13 Which one of the following statements
about preferred stock is true? A. There is no significant difference in the
voting rights granted to preferred and common shareholders. B.
If
preferred dividends are non-cumulative, then preferred dividends not paid
in a particular year will be carried forward to the next year. C.
Preferred stock usually has a stated liquidating value
of $100 per share. D. Unlike dividends paid on common stock. Dividends
paid on preferred stock are a tax-deductible expenses. E. Dividends on
preferred stock payable during the next twelve months are considered to be
a corporate liability. Question 14 Book value : A. Is adjusted to market
value whenever the market value exceeds the stated book value. B. Is
based on historical cost. C. Is equivalent to market value for firms with
fixed assets. D.
Generally tends to exceed market value when fixed
assets are included. E. Is more of a financial than an accounting valuation.
Question 15 The primary goal of financial management is to: A. Avoid
financial distress. B. Maintain steady growth sales and net earnings. C.
Maximize the current value per share of the existing
stock. D.
Minimize operational costs and maximize firm
efficiency. E.
Maximize current dividends per share of the existing
stock. Question 16 Which term defines the tax rate that applies to the next
dollar of taxable income earned ? A. Deductible B. Total C.
Marginal D. Residual E.
Average Question 17
Lois is purchasing an annuity that will pay $5,000 annually for 20 years,
with the first annuity payment made on the date of purchase. What is the
value of the annuity on the purchase date given a discount rate of 7 percent
? A.
$56,191.91 B.
$52,970.07 C. 54,282.98 D.
$66,916.21 E.
56,677.98 Question 18 The cash
flow resulting from a firm’s ongoing, normal business activities is referred
to as the: A.
Net capital spending. B. Cash flow to investors. C.
Additions to net working capital. D.
Operating
cash flow. E.
Cash flow to retained earnings. Question 19 The
market price of a bond increases when the: A.
Par value decreases. B.
Coupon rate decreases. C. Discount rate decreases. D.
Face value decreases. E.
Coupon is paid annually