str 581 final exam answers guide for 2013
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STR581
2013 Answer
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Final EXAM
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STR581 – Strategic Planning and Implementation – Final Exam Study Guide 2013 200 Correctly Answered Questions Check out ACCNerd STR 581 Answers for the latest updates. Section 1 1. “Power prices” use price as a key strategic tool. These “power prices” have discovered the highly ________ effect of price on the bottom line. A. direct B. dramatic C. soothing D. Leveraged E. abrasive 2. Some intermediaries use the following: strategic planning, advanced information systems, sophisticated marketing tools, measure performance on a return-‐on-‐investment basis, segment their markets, improve their target marketing and positioning, and ________. A. dominant the manufacturers they do business with B. contend with dwindling customer bases C. aggressively pursue market expansion and diversification strategies D. aggressively pursue take over strategies E. aggressively “squeeze” manufacturer margins 3. Price has operated as the major determinant of buyer choice among poorer nations, among poorer groups, and with ________ products. A. similar B. identical C. commodity-‐type D. over the Internet
4. Major retailer types include the following EXCEPT ________. A. the Internet B. specialty store C. superstore D. catalog showroom E. discount store
5. Following the ________ approach to target market selection encompasses a strong knowledge of the segment’s needs, a strong market presence, and operating economies through specializing in production, distribution, and promotion. A. selective specialization B. market specialization C. full market coverage D. product specialization E. single-‐segment concentration 6. To reach Generation Y, rock band Foo Fighters created a digital street team that sends targeted e-‐mail messages to members who “get the latest news, exclusive audio/video sneak previews, tons of chances to win great Foo Fighters prizes, and become part of the Foo Fighters Family.” Which of the following techniques for reaching Generation Y are the Foo Fighters using? A. Unconventional sports B. Computer games C. Online buzz D. Cool events E. Student ambassadors 7. A company can add new products through acquisition or development. The acquisition route can take three forms. The company can buy other companies, it can acquire patents from other companies, or it can buy a ________ or _________ from another company. A. license/receive permission B. franchise/co-‐brand C. franchise/acquire rights D license/franchise 8. New-‐to-‐the-‐ world products are ________. A. new products that allow a company to enter an established market for the first time B. new products that provide improved performance or greater perceived value and replace existing products C. existing products that are targeted to new markets or market segments D. new products that supplement established product lines (package sizes, flavors, and so on) E. new products that create an entirely new market 9. The chief disadvantage to a firm that decides to follow a product specialization strategy in selecting target markets is ________.
A. logistics can become a nightmare B. competitors can easily copy any new product introductions C. e-‐commerce becomes difficult for the company D. the product may be supplanted by an entirely new technology E. no synergy exists
10. Which of the following statements best defines a work group?
A. A work group interacts primarily to share information, rather than to engage in work that requires joint effort. B. A work group consists of 3 or more people from across departmental or functional lines. C. A work group is a group comprised of 10 or more people D. A work group consists of 3 or more people who take on self-‐supervising responsibilities. E. The performance of a work group is generally greater than the sum of its inputs from individual members. 11. The traditional view of conflict is the belief that conflict is _____. A. natural B. situationally-‐dependent C. neutral D. necessary E. harmful 12. Which of the following is NOT included in the definition of conflict? disruption of tasks negative effects incompatibility something that is cared about perception 13. Which of the following statements about leadership is true? Formal rights enable managers to lead effectively. leaders are hierarchically superior to followers. Nonsanctioned leadership is as important as or more important than formal influence. managers are leaders. leaders are managers. 14. _____ bargaining is negotiation that seeks to divide a “fixed pie.” Integrative Affective Conjunctive Reflective Distributive 15. Danielle wants to become a surgeon, not only because achieving this goal will give her self-‐respect and autonomy, but also because she wants a job with high status and recognition from others. Which of Maslow’s needs is Danielle trying to fill? social psychological safety esteem
self-‐actualization 16. Which of the following qualities is NOT found in work groups? security energy objectives enthusiasm synergy 17. A ________ is a set of procedures and sources managers use to obtain everyday information about developments in the marketing environment. marketing research system marketing intelligence system vertical system product management system marketing information system 18. ________ is the difference between the prospective customer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives. Perceived usefulness Customer perceived value Competitors market share rate Report rating Failure avoidance rate 19. A(n) ________ is any good, service, or idea that is perceived by someone as new. product creative product new idea innovation 20. A company can take several steps to improve the quality of its marketing intelligence. If the company purchases competitive products for study, attends open houses and trade shows, and reads competitors’ published reports and stockholder information, the company is using ________ to improve the quality of its marketing intelligence. sales force surrogates advisory panels customer feedback systems external networks intermediaries 21. Most established companies focus on ________ when it comes to innovation. incremental innovation
demand innovation competitive innovation everyday innovation continuous innovation 22. ________ consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. A marketing information system A promotional campaign A marketing database A marketing intelligence system A marketing research system 23. The value proposition consists of a cluster of benefits the company promises to deliver; it is customer expectations Customer loyalty to the company business processes total customer satisfaction customer experience with the company 24. Purchase decisions are based on how consumers perceive prices and what they consider to be the ________ price—not the marketer’s stated price. current sale price current actual referent price last purchased price 25. A ________ consists of a group of customers who share a similar set of needs and wants. market segment market target market level market slice market group 26. Marketers usually identify niches by ________. examining the demographics section of The Handbook of Marketing dividing a segment into sub-‐segments producing products that can be used in a variety of ways allowing consumers to gravitate toward product brands conducting VALS tests 27. Which of the following is generally considered to be the last step in the marketing research process? Make the decision.
Present the findings. Draft the report Control the environment. Analyze the information. 28. ________ is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company. Demographics Marketing intelligence Marketing management Marketing research MIS (marketing information system) 29. With respect to the sampling plan, three decisions must be made. The decisions are: the sampling unit—who is to be surveyed? Sample size—how many people should be surveyed? And ________. sampling procedure—how should the respondents be chosen? sample cost—how much does sampling cost? sample supervisor—who will lead the sampling effort? sample security—how to protect the sample data? surveyor skill—who will do the surveying? 30. ________ communicates a company’s intended value positioning of its product or brand to the market. Promotion Packaging Physical evidence Place Price 31. A company has total fixed costs of $120,000 and a contribution margin ratio of 20%. The total sales necessary to break even are $150,000. $600,000. $144,000. $480,000. 32. A company requires $1,020,000 in sales to meet its net income target. Its contribution margin is 30%, and fixed costs are $180,000. What is the target net income? $420,000. $234,000. $126,000. $306,000.
33. At the break-‐even point of 2,000 units, variable costs are $55,000, and fixed costs are $32,000. How much is the selling price per unit? $16.00. $11.50. Not enough information $43.50. 34. The last step in activity-‐based costing is to identify and classify the major activities involved in the manufacture of specific products. compute the activity-‐based overhead rate per cost driver. identify the cost driver that has a strong correlation to the activity cost pool. assign manufacturing overhead costs for each activity cost pool to products. 35. A well-‐designed activity-‐based costing system starts with assigning manufacturing overhead costs for each activity cost pool to products. computing the activity-‐based overhead rate. analyzing the activities performed to manufacture a product. identifying the activity-‐cost pools. 36. Identify which of the following statements about "perfection standards" is true. They usually result in unfavorable variances. They are expressions of the most efficient performance possible. All of these answers are correct It is generally believed that they have a negative influence on employee morale. 37. In a process cost system, a Work in Process account is maintained for each process. a materials requisition must identify the job on which the materials will be used. one Work in Process account is maintained for all the processes, similar to a job order cost system. a Work in Process account is maintained for each product. 38. _____ are profitability ratios. Earnings per share and dividend yield Dividend payout and rate of return in invested capital Price earnings and current ratio Gross profit rate and return on sales 39. The _____ is not one of the three major financial statements. balance income statement statement of equity position statement of cash flows
40. Financial statements are helpful to predict the future performance of a company for all of the following reasons except _____. financial statements are required to give formal projections of management's assessment of the next period's financial results the assets and liabilities of a company provide clues to a company's future prospects past performance is often a good indicator of future performance the evaluation of management's past performance gives clues to its ability to generate future returns 41. A local retail shop has been operating as a sole proprietorship. The business is growing and now the owner wants to incorporate. Which of the following is not a reason for this owner to incorporate? ability to raise capital for expansion the ease in transferring shares of the corporation’s stock the prestige of operating as a corporation desire to limit the owner’s personal liability 42. Which country does the text describe as becoming the largest producer and consumer of many of the world's goods? Japan Ecuador China Mexico Canada 43. Which of the following might a company consider to help employees address work-‐life conflicts? keeping work-‐related travel reasonable relocation assistance tie manager pay to customer satisfaction offering off-‐site quality child-‐care reducing workloads 44. Which of the following is not one of the Caux Round Table Principles for International Business? Avoidance of Illicit Operations. Responsibility of Business Beyond Shareholders Toward Stakeholders. Respect for the Environment. Promotion of Multiculturalism. Support for Multilateral Trade. 45. One study found that manufacturing labor costs about ___ an hour in China, compared to ____ dollars in the United States. Less than $1; about 15 Less than $1; about 40 $2; about 25 Less than $1; about 25
About $2; about 15 46. Diversity training programs are generally intended to provide a vehicle for _____. increasing awareness and examining stereotypes socializing otherwise unmanageable employees balancing work/life conflicts eliminating group learning focusing on individual differences 47. Which of the following is correct about litigating commercial disputes? Nearly all states have specialized trial courts that hear commercial disputes. In all states, commercial disputes must be heard in a limited-‐jurisdiction court. Businesses generally dislike the concept of specialized trail courts for commercial disputes because the large numbers of consumers who sue businesses in these courts have led the judges to become generally biased against business. A few states have established specialized trial courts for commercial disputes. Commercial disputes, because of their specialized nature, are first heard at the appellate court level. 48. Which article of the United States Constitution deals with the judicial power of the federal government? Article I. Article V. Article IV. Article III. Article II. 49. When an economist says that the demand for a product has increased, this means that: quantity demanded is greater at each possible price. the demand curve becomes steeper. consumers respond to a lower price by buying more. firms make less of the product available for sale. 50. When movie ticket prices increase, families tend to spend less time watching movies and more time at home watching videos instead. This best reflects: diminishing marginal utility. the substitution effect. the rationing function of markets. the income effect. 51. Which of the following is NOT a function of functional area information systems? provides information to managers in the functional areas provides analysis capabilities to middle level managers and staff provides data from business events to the corporate database provides information mainly in the form of reports supports the managerial tasks of planning, organizing, and controlling operations
52. The costs of delivering products in the _____ channel are much higher than delivering products in the _____ channel. physical, financial digital, e-‐commerce physical, digital digital, physical e-‐commerce, digital 53. _____ is the integration of economic, social, cultural, and ecological facets of life, enabled by information technologies. globalization regionalization business environment nationalization 54. A _____ scale is a scale that scores an object or property without making a direct comparison to another object or property. Sorting Rating Recording Categorization Ranking 55. The quartile deviation is: In squared units of the original data. The square root of the variance. Appropriate only for symmetric distributions. Based on the middle 50 percent of the observations. 56. Marketing research is now about a ________ billion industry globally. $10 $21.5 $7.5 $16.5 $50 57. An investor's risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true? Selling any stock in this portfolio will lower the beta of the portfolio. An investor cannot change the risk of this portfolio by her choice about personal leverage (lending or borrowing). Each stock in the portfolio will have a beta greater than one. Each stock in the portfolio has its own beta.
58. Due to asymmetric information, the market fears that a firm issuing securities will do so when the stock is _________. overvalued caught up in a bear market being sold by insiders undervalued 59. __________ says to seek out investments that offer the greatest expected risk-‐adjusted real return. The Signaling Principle The Principle of Self-‐Interested Behavior The Principle of Valuable Ideas The Principle of Incremental Benefits 60. Under capital rationing, a good tool to use is the __________. payback method PI method NPV method IRR method 61. A checking account is __________. a place to “collect” money between inflows and outflows an account that acts like a reservoir useful because you can add money in any amount all of these 62. __________ says that if you transfer risk to another party, you must offer a return that fully compensates for the amount of risk transferred. The Principle of Self-‐Interested The Principle of Incremental Benefits The Risk-‐Return Trade-‐Off Principle The Behavioral Principle 63. A key variable covered in our text for the Black-‐Scholes OPM is __________. the riskless APR with continuous compounding dividends. EPS. transaction costs. 64. Dimensions of risk include __________. uncertainty about yesterday’s outcome the impossibility of the same return
the certainty of a negative outcome uncertainty about the future outcome 65. According to the Principle of Risk-‐Return Trade-‐Off, investors require a higher return to compensate for __________. greater risk less risk diversification lack of diversification 66. Which of these investments would you expect to have the highest rate of return for the next 20 years? anybody’s guess intermediate-‐term U.S. government bonds long-‐term corporate bonds U.S. Treasury bills 67. The conversion price (for a convertible security) is usually adjusted __________. for a new debt offering. for stock splits. for cash dividends. all of these 68. Which (if any) statement is false? The Principle of Self-‐Interested Behavior suggests that self-‐interested capital market transactions force market prices toward being fair prices. The Principle of Two-‐Sided Transactions states that intense capital market competition to get and use information to take advantage of arbitrage opportunities eliminates such opportunities. The Principle of Signaling states that information in the transactions of others can be valuable, such as providing an accurate measure of current market value, or information about expected future value. none of these answers are correct. 69. Which of the following is (are) true? The Principle of Capital Market Efficiency states that differences between financial assets are measured primarily in terms of risk and return. Investors choose the highest return for a given risk level. The Principle of Comparative Advantage states that people apply the Principles of Self-‐Interested Behavior, Two-‐Sided Transactions, and Signaling to an environment characterized by similar financial assets, low transaction costs, and intense competition leads to capital market efficiency. The Principle of Valuable Ideas states that new ideas can provide value when first introduced, even in an efficient capital market. all of these answers are correct. 70. A transfer price exists when two segments of the same organization sell _____. the same service to competitors
a product in a foreign country a service to each other a product to the same customer 71. Incremental analysis would be appropriate for acceptance of an order at a special price. a retain or replace equipment decision. a sell or process further decision. all of the answers are correct. 72. Undertaker Corporation has a joint process that produces three products: P, G, and A. Each product may be sold at split-‐off or processed further and then sold. Joint processing costs for a year amount to $25,000. Other relevant data are as follows: Processing Sales Value Costs after Sales Value Product at Split-‐off Split-‐off at Completion P $62,000 $5,000 $88,000 G 12,500 6,500 19,000 A 9,400 5,000 12,000 Product G _____. an be processed further or sold at split off; there is no difference in profit. should be processed further to increase profits by $19,000. should be sold at split off since processing further would only reduce profits by $6,500. should be processed further to increase profits by $6,500. 73. It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 2,000 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Garner has sufficient unused capacity to produce the 2,000 scales. If the special order is accepted, what will be the effect on net income? $30,000 increase $6,000 decrease $4,000 decrease $4,000 increase 74. Incremental analysis would not be appropriate for Analysis of manufacturing variances elimination of an unprofitable segment. an allocation of limited resource decision.
a make or buy decision. 75. Which of the following does not appear as a separate section on the cash budget? Financing Capital expenditures Cash disbursements Cash receipts 76. Blue Company planned to sell 35,000 units. Actual sales were 30,000 units. Based on this information, Blue Company was _____. ineffective effective inefficient efficient 77. Effectiveness is indicated by _____. all of these answers are correct flexible-‐budget variances static-‐budget variances sales-‐activity variances 78. A _____ gives the expected sales under a given set of conditions. budget forecast sales budget sales forecast sales prediction 79. For an activity base to be useful in cost behavior analysis, the activity should always be stated in terms of units. there should be a correlation between changes in the level of activity and changes in costs. the activity level should be constant over a period of time. the activity should always be stated in dollars. 80. Between the late 1960s and the mid-‐1980s, the use of written tests declined because they were characterized as _____. mathematically flawed unprofessional invalid discriminatory unreliable 81. _____ can be used to increase the perception that employees are treated fairly. Focusing on subjective evaluations Selective evaluation
Documenting with a journal Due process Multiple raters 82. Which of the following has proven to be a particularly good predictor for jobs that require cognitive complexity? behavioral assessment intelligence tests aptitude tests integrity evaluations work sampling 83. Examples of off-‐the-‐job training include all of the following except _____. videotapes classroom lectures public seminars apprenticeship programs Internet courses 84. Which type of skill training has become increasingly important in organizations? social financial interpersonal technical problem solving 85. The “realistic” personality from Holland’s typology of personality and congruent occupations would be well suited for which of the following jobs? biologist painter lawyer accountant mechanic 86. Investors bragged about their investing expertise during the stock market rally between 1996 and early 2000, then blamed analysts, brokers, and the Federal Reserve when the market imploded in 2000. These investors were most probably guilty of what? selective perception fundamental attribution error distinctiveness self-‐serving bias the halo effect 87. Each of the six personality types developed in Holland’s personality-‐job fit theory has a ________.
supplemental skill set supplemental personality style supplemental occupational environment congruent personality style congruent occupational environment 88. _____ developed a Vocational Preference Inventory questionnaire that contains 160 occupational titles. Surber Maslow Herzberg Holland Hofstede 89. Phrases such as “more cultural diversity,” “many new entrants with inadequate skills,” and “increase in aging workers” are all examples of what force for change? competition technology social trends world politics nature of the work force 90. According to David Maister, the most complex projects requiring innovation and creativity are called _________. “gray hair” projects “brain surgery” projects “grinding” projects “procedures” projects 91. The ______ the percentage of contact time between the service system and the customer, the ________ the degree of interaction between the two during the production process. lesser, greater greater, greater none of these answers greater, lesser 92. Goldratt's rule of production scheduling include all but: An hour saved at a non-‐bottleneck is a mirage A process batch should be fixed both along its route and in time Priorities can be set only by examining the system's constraints Do not balance the capacity -‐ balance the flow Utilization and activation of a resource is not the same thing
93. If the system contains a bottleneck, the _______ is the best place for control. If there is no bottleneck, the __________ is the best place for control. capacity-‐constrained resource, drum bottleneck, capacity constrained resource none of these answers capacity-‐constrained resource, bottleneck 94. Operations stage toolkit for the Data Analysis and Solution Development phase include(s): I. SPC tools II. Bottleneck analysis III. Computer simulation IV. Balanced scoreboard I, II, III II, III, and IV I, II, III, and IV I and II II and III 95. Which of the following statements is true? 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. 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. The Time Value of Money Principle advises to include any time-‐value-‐of-‐money tax benefits from capital structure choices. all of these 96. An all-‐equity-‐financed firm would __________. pay corporate income taxes because it would have interest expense. not pay corporate income taxes because it would have no interest expense. pay corporate income taxes if its taxable income is positive not pay any income taxes because interest would exactly offset its taxable income. 97. __________ says to recognize the value of hidden options in a situation, such as the foreign exchange options in some derivative instruments. The Principle of Comparative Advantage The Principle of Two-‐Sided Transactions The Time Value of Money Principle The Options Principle 98. __________ says to look for opportunities to invest in positive-‐NPV projects in foreign markets or to develop derivatives or design arrangements that enable firms to cope better with the risks they face in their foreign operations. The Principle of Diversification The Principle of Capital Market Efficiency
The Principle of Valuable Ideas The Principle of Risk-‐Return Trade-‐off 99. Which of the following statements is true? 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. 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. 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. all of these Section 2
100. Occurs when inaccurate information can falsely exist. A. free-‐rider problem B. adverse selection C. moral hazard D. The Principle of Valuable Ideas
101. Which principle states that extraordinary returns are achievable with new ideas?
A. The Principle of Valuable Ideas B. The Principle of Risk-‐Return Trade-‐Off C. The Principle of Incremental Ideas D. The Notional Principle
102. Which of the following statements is true? A. The difference between the value of one
action and the value of the best alternative is called an opportunity cost. B. An agent-‐manager can never make bad decisions. C. A security is a claim issued by a firm that pays owners interest but not dividends. D. A call option analyzes conflicts of interest and behavior in a principal-‐agent relationship.
103. Generally accepted accounting principles (GAAP) refers to A. the extent to which
something can be sold for cash quickly and easily without loss of value. B. the length of an asset’s life when it is issued. C. a technical accounting term that encompasses the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. D. a report issued annually by a firm that includes, at a minimum, an income statement, a balance sheet, a statement of cash flows, and accompanying notes.
104. Remaining maturity refers to: A. the amount of time remaining until its maturity. B. the
length of an asset’s life when it is issued. C. a technical accounting term that encompasses the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. D. a report issued annually by a firm that includes, at a minimum, an income statement, a balance sheet, a statement of cash flows, and accompanying notes.
105. The annual report refers to A. the extent to which something can be sold for cash quickly and easily without loss of value. B. a report issued annually by managers to primarily convey information about select working capital ratios. C. the length of time remaining until an asset’s maturity. D. a report issued annually by a firm that includes, at a minimum, an income statement, a balance sheet, a statement of cash flows, and accompanying notes.
106. The firm’s assets in the balance sheet refer to: A. the extent to which something can be
sold for cash quickly and easily without loss of value. B. the productive resources in the firm’s operations. C. the statement of a firm's financial position at one point in time, including its assets and the claims on those assets by creditors (liabilities) and owners (stockholders' equity).
107. Book value (or Net book value) refers to: A. the net amount shown in the accounting
statements. B. the length of an asset’s life when it is issued. C. the statement of a firm's financial position at one point in time, including its assets and the claims on those assets by creditors (liabilities) and owners (stockholders' equity). D. the price for which something could be bought or sold in a reasonable length of time, where “reasonable length of time” is defined in terms of the item’s liquidity.
108. Original maturity refers to: A. the net amount (net book value) for something shown in
quarterly accounting statements. B. the length of an asset’s life when it is issued. C. a technical accounting term that encompasses the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. D. the price for which something could be bought or sold in a reasonable length of time, where “reasonable length of time” is defined in terms of the item’s liquidity. FIN/571 Corporate Finance Final Exam Progress: (0/57)
109. Preferred stock payment obligations are typically __________. A. viewed like debt
obligations. B. issued with a maturity date. C. valued as an annuity. D. none of these
110. Assume that the par value of a bond is $1,000. Consider a bond where the coupon rate is 9% and the current yield is 10%. Which of the following statements is true? A. The current yield was a lot greater than 9% when the bond was first issued B. The current yield was a lot less than 9% when the bond was first issued C. The market value of the bond is less than $1,000 D. The market value of the bond is more than $1,000
111. If the yield to maturity for a bond is less than the bond's coupon rate, then the market
value of the bond is __________. A. less than the par value. B. greater than the par value. C. cannot tell D. equal to the par value.
112. According to the CAPM, the expected return for a portfolio is determined by the
portfolio's. A. variance. B. beta. C. standard deviation. D. none of these
113. Certain countries have restrictions. In practice, U.S. investors have NOT invested very much internationally. Possible factors include __________. A. lower transaction costs. B. expropriation risk. C. firm-‐specific risk. D. all of these
114. Certain countries have restrictions. In practice, U.S. investors have NOT invested very
much internationally. Possible factors include __________. A. non-‐listing of foreign securities
on U.S. stock exchanges. B. foreign tax considerations. C. efficiency in converting currencies. D. all of these
115. Dimensions of risk include ___________. A. the certainty of a negative outcome B.
uncertainty about the future outcome C. uncertainty about yesterday’s outcome D. the impossibility of the same return
116. One problem with using negative values for w1 (the proportion invested in the riskless
asset) to represent a borrowed amount is that the implied borrowing rate of interest is the same as __________. A. the current rate of interest B. the prime rate of interest C. the nominal rate of interest D. the lending rate of interest
117. The Principle of __________ implies that the expected return for an asset equals its
required return. A. Risk-‐Return Trade-‐ B. Capital Market Efficiency C. Signaling D. Comparative Advantage FIN/571 Corporate Finance Final Exam Progress: (0/57)
118. __________ says to calculate the incremental after-‐tax cash flows connected with
working capital decisions. A. The Principle of Incremental Benefits B. The Signaling Principle C. The Options Principle D. The Principle of Time Value of Money
119. Stony Products has an inventory conversion period (ICP) of about 60.83 days. The
receivables collection period (RCP) is 36.50 days. The payables deferral period (PDP) is about 30.42 days. What is Stony's cash conversion cycle (CCC)? A. about 69 days B. about 66 days C. about 67 days D. about 68 days
120. Firms make short-‐term financial decisions just about every day solving such questions as __________. A. Where should we borrow? B. Where should we invest our cash? C. How much liquidity should we have? D. all of these
121. __________ says to calculate the incremental after-‐tax cash flows connected with
working capital decisions. A. The Options Principle B. The Signaling Principle C. The Principle of Incremental Benefits D. The Principle of Time Value of Money
122. Main sources of short-‐term funds include __________. A. trade credit and commercial
paper B. futures and bank loans C. bonds and trade credit D. none of these
123. Which of the following statements is (are) true? A. The "dating 120" or the "60 extra" mean that the clock does not start until 120 or 60 days after the invoice date. B. Prox or proximate refers to the next month. C. Invoices with "10th prox" must be paid by the 10th of the next month. D. all of these
124. Which (if any) of the following statements is false? A. The invoice is a written statement
about goods that were ordered, along with their prices and the payment dates. In other words, the invoice is simply the bill for purchases. B. For the 4/10, net 40 credit terms, you are offering a total credit period of 30 days from the date of the invoice, a discount period of 10 days, and a 4% discount if paid on or before the discount period expires. C. When a firm is
using invoice billing, the invoice that accompanies shipment is a separate bill to be paid. D. none of these
125. Most credit sales are made on an open account basis, which means __________. A. that
suppliers cannot dictate the terms of the purchase. B. that customers simply purchase what they want. C. that suppliers dictate the terms of the purchase. D. that customers cannot simply purchase what they want. FIN/571 Corporate Finance Final Exam Progress: (0/57)
126. An all-‐equity-‐financed firm would __________. A. pay corporate income taxes if its
taxable income is positive. B. not pay any income taxes because interest would exactly offset its taxable income. C. pay corporate income taxes because it would have interest expense. D. not pay corporate income taxes because it would have no interest expense.
127. A profitable firm would __________. A. pay corporate income taxes because it would
have interest expense. B. pay corporate income taxes because it would not have interest expense. C. pay corporate income taxes if it had a positive taxable income. D. none of these
128. An investor's risky portfolio is made up of individual stocks. Which of the following
statements about this portfolio is true? A. Each stock in the portfolio will have a beta greater than one. B. Each stock in the portfolio has its own beta. C. Selling any stock in this portfolio will lower the beta of the portfolio. D. An investor cannot change the risk of this portfolio by her choice about personal leverage (lending or borrowing).
129. Boeing Corporation is a world leader in commercial aircraft. In the face of competition,
Boeing often faces a critical __________ decision: whether to develop a new generation of passenger aircraft. A. dividend B. present value C. payback D. capital budgeting
130. The capital budgeting process can be broken down into five steps. These steps include
which of the following? A. Generate ideas for capital budgeting projects B. Prepare proposals C. Review existing projects and facilities D. all of these
131. There are two important tax considerations for a capital budgeting project. These
include which (if any) of the following? A. It is indeed cash flow that’s irrelevant. B. The standard cash flow estimation does not explicitly identify the financing costs. C. The Principle of Incremental Benefits reminds us that it is the incremental cash flow that’s relevant. D. none of these
132. The __________ method breaks down when evaluating projects in which the sign of the
cash flow changes. A. Payback B. NPV C. PI D. IRR
133. Whenever projects are both independent and conventional, then the IRR and NPV methods agree. Which of the following statements is true? A. A mutually exclusive project is one that can be chosen independently of other projects. B. When undertaking one project prevents investing in another project, and vice versa, the projects are said to have a positive payback. C. A conventional project is a project with an initial cash outflow that is followed by one or more expected future cash inflows. D. all of these
134. In practice, the __________ rule is preferred. A. PI B. NPV C. IRR D. Payback FIN/571 Corporate Finance Final Exam Progress: (0/57)
135. Studies show systematic differences in capital structures across industries. These are
due mostly to differences in __________. A. accounting practices. B. the firm’s inventory turnover ratio. C. the ability of assets to support borrowing. D. management’s attitude toward what other industries are doing.
136. Studies show systematic differences in capital structures across industries. These are
due mostly to differences in the availability of tax shelter provided by things other than debt, such as __________. A. accelerated depreciation. B. operating tax loss carryforwards. C. investment tax credit. D. all of these
137. Studies show systematic differences in capital structures across industries. These are
due mostly to differences in __________. A. hiring and firing practices. B. the availability of tax shelter provided by things other than debt, such as accelerated depreciation, investment tax credit, and operating tax loss carryforwards. C. what the arbitrage pricing theory tells us. D. none of these
138. There can be a variety of motives for stock repurchases including __________. A. a
buyback of overvalued stock. B. an increase in leverage. C. a decrease in anticipated earnings. D. all of these
139. Some countries have __________ in which shareholders' returns are not fully taxed
twice. A. an imputation tax system B. a split tax system C. a two-‐tier tax system D. none of these
140. There can be a variety of motives for stock repurchases including __________. A. a
decrease in leverage. B. a buyback of undervalued stock. C. a decrease in anticipated earnings. D. all of these
141. Mortgage bonds are __________. A. secured by a lien on general assets of the issuer B.
secured by a lien on specific assets of the issuer C. usually secured by assets such as common shares of one of the issuer's subsidiaries D. none of these
142. Conditional sales contracts __________. A. are seldom issued to finance the purchase of
aircraft B. are similar to equipment trust certificates C. enable the borrower to obtain title to the assets only before it fully repays the debt D. all of these
143. The Time Value of Money Principle says __________. A. to look for the most
advantageous ways to finance the firm, such as the lowest-‐cost debt alternative B. to use discounted cash flow analysis to compare the costs and benefits of financing decisions, such as alternative securities to sell, lease versus borrow and buy, and bond refunding C. to set a price and other terms that investors will find acceptable when issuing securities D. that announcing the firm's decision to issue securities conveys information about the firm
144. __________ says to look for opportunities to develop asset-‐based financing
arrangements that offer new positive-‐NPV financing mechanisms. A. The Principle of Valuable
Ideas B. The Time Value of Money Principle C. The Principle of Self-‐Interested Behavior D. The Principle of Comparative Advantage
145. The Principle of Self-‐Interested Behavior says __________. A. to calculate the net
advantage of leasing based on the incremental after-‐tax benefits that leasing will provide. B. to look for profitable opportunities to lease (or rent) an asset, rather than borrow and buy it. C. to use discounted cash flow analysis to compare the costs and benefits of leasing, relative to the alternative of borrowing and buying. D. that leasing transfers the tax benefits of ownership from the lessee to the lessor.
146. __________ says to transfer the tax benefits of ownership to other parties if they are
willing to pay for benefits your firm cannot use. A. The Principle of Two-‐Sided Transactions B. The Principle of Incremental Benefits C. The Principle of Comparative Advantage D. The Capital Market Efficiency Principle FIN/571 Corporate Finance Final Exam Progress: (0/57)
147. The wholesale price for Captain John’s is $1.00 per loaf, and the variable cost of
production is $0.50 per loaf. Captain John’s is expecting that expansion will allow them to sell an additional 5.0 million loaves in the next year. What additional revenues minus expenses will be generated from expansion? A. $25,000 B. $250,000 C. $550,000 D. none of these
148. The wholesale price for Captain John’s is $0.612 per loaf, and the variable cost of production is $0.387 per loaf. Captain John’s is expecting that expansion will allow them to sell an additional 4.5 million loaves in the next five years. What additional revenues minus expenses will be generated from expansion? A. $1,102,000 B. $912,500 C. $1,012,500 D. $1,000,500
149. The wholesale price for Captain John’s is $3.00 per loaf. One million loaves will be sold in the next year. What is the contribution margin? A. cannot tell B. $3.00 C. $3,000,000 D. $3,000,000 minus fixed costs
150. Which of the following statements is true? A. Soft capital rationing refers to the
rationing imposed externally by limited funds for borrowing from outside sources. B. Hard capital rationing refers to the rationing imposed internally by the firm. C. A post audit is a set of procedures for evaluating a capital budgeting decision after the fact. D. all of these
151. Pursuing valuable ideas is the best way __________. A. to avoid risk. B. to achieve
extraordinary returns. C. to restrain your spending. D. to get yourself in trouble.
152. In efficient markets, as in the United States, you should think long and hard before you conclude that a market price is __________. A. wrong. B. fair. C. followed by many analysts. D. all of these
153. __________ says to forecast the firm’s cash flows, and analyze the incremental cash
flows of alternative decisions. A. The Principle of Risk-‐Return Trade-‐Off B. The Signaling Principle C. The Principle of Incremental Benefits D. The Time Value of Money Principle
154. ___________ says to use both bottom-‐up and top-‐down processes to increase the chance of uncovering valuable ideas. A. The Principle of Valuable Ideas B. The Behavioral Principle C. The Principle of Two-‐Sided Transactions D. The Principle of Comparative Advantage
155. __________ says to use common industry practices as a good starting place for the
planning process. A. The Behavioral Principle B. The Principle of Incremental Benefits C. The Principle of Self-‐Interested Behavior D. The Principle of Valuable Ideas
156. The most important performance dimension for product development projects is: A. Quality B. Product flexibility C. Time-‐to-‐market D. Productivity
157. When evaluating a new product development project using net present value analysis,
which of the following will make the project more attractive? A. Delaying the start of the project B. Making the project run over a longer period of time C. Improving (bringing forward) the date when revenue will begin D. A and B
158. Which of the following statements is true about value analysis/value engineering
(VA/VE)? A. The purpose of VA/VE is to simplify products and processes. B. The objective of VA/VE is to achieve equivalent or better performance at a lower cost. C. VA is performed before the production stage, while VE deals with products already in production. D. both A and B
159. The category given the maximum point value in the Baldrige award is: A. Business
results B. Process management C. Strategic planning D. Customer and market focus
160. Which of the following is not a dimension of design quality? A. Serviceability B. Customization C. Features D. Durability
161. Which Quality Guru advocated that senior management is responsible for 94% of quality
problems? A. Ishikawa B. Juran C. Crosby D. Deming
162. Which of the following is not an assumption of the basic economic-‐order quantity model? A. ordering or setup costs are constant B. quantity discounts are available C. annual demand is constant and known D. lead time is constant
163. The basic difference between P and Q systems is: A. P models favor more expensive
items B. P model is more appropriate for important items such as critical repair parts C. Q models are event triggered while P models are time triggered D. Q models are time triggered while P models are event triggered
164. Which of the following statements is true about the Q-‐system? A. It does not have an
EOQ, since the quantity varies according to demand. B. The order interval is fixed not the order quantity. C. It does not have a reorder point but rather a target inventory. D. The system is completely determined by the two parameters, Q and R.
165. The objectives of work-‐center scheduling include(s): A. To meet due dates B. To
minimize lead times C. To minimize finish goods inventory D. A and B
166. A _________ approach actually schedules in detail each resource using the setup and runtime required for each order. A. Forward scheduling B. Backward scheduling C. Infinite loading D. Finite loading
167. The assignment method is appropriate in solving problems that have the following
characteristics: A. There are 'n' things to be distributed to 'n' destinations B. Though each destination may handle all the things, the final assignment has each thing assigned to one and only one destination C. Only one criterion should be used (minimum cost, maximum profit, for example) D. A and C
168. Which of the following according to Goldratt is not a component of production cycle
time? A. Wait time B. Maintenance time C. Setup time D. Process time
169. Goldratt's rule of production scheduling include all but: A. An hour saved at a non-‐bottleneck is a mirage B. A process batch should be fixed both along its route and in time C. Do not balance the capacity -‐ balance the flow D. Utilization and activation of a resource is not the same thing
170. According to Goldratt and Fox, a useful performance measure to treat inventory is
______. A. Inventory turnover B. Current ratio C. Quick ratio D. Dollar days
171. Which of the following would not be considered in deciding how far to minimum-‐cost schedule (crash) a project? A. Project overrun penalties B. Incentives for early completion C. Indirect project costs (e.g. interest on a construction loan) D. The normal duration times of tasks not on a critical path
172. The advantages of pure project include all but: A. The project manager has full authority
over the project. B. Team pride, motivation, and commitments are high. C. Decisions are made quickly. D. A team member can work on several projects.
173. Which of the following is not a typical project milestone? A. Completion of design B.
Production of a prototype C. Training of project members D. Completed testing of the prototype Supply-‐chain response relates to the following: A. How quickly a customer order can be filled B. How quickly a company can react to a new competing product C. How inexpensive the product is D. A and B
174. According to Hau Lee, which of the following types of products need to be delivered
with efficient supply-‐chains? A. Custom products B. Innovative products C. Grocery products D. High technology products
175. The idea of the Value Density calculation is: A. Finding a carrier that can handle the
weight B. Matching the weight of the product with an appropriate carrier C. Determining how a product should be shipped considering its weight and value D. Finding the minimum cost carrier
176. Which of the following statements is not true about capacity management in
operations? A. When looking at capacity, operations managers need to look at both resource input and product outputs. B. An operations management view also emphasizes the time
dimension of capacity. C. Capacity planning itself has different meaning to individuals at different levels within the operations management hierarchy. D. The definition of capacity, in an operations management context, makes a clear distinction between efficient and inefficient use of capacity.
177. The steps to determining capacity requirements include: A. Using decision trees to
evaluate capacity alternatives B. Calculating equipment and labor requirements to meet product line forecasts C. Projecting labor and equipment availabilities over the planning horizon D. B and C
178. Capacity utilization rate can be computed as: A. Capacity used -‐ best operating level B.
Capacity used x best operating level C. Capacity used / best operating level D. Capacity used + best operating level
179. Which of the following is NOT one of the more successful applications of lean concepts
in services? A. Organize problem-‐solving groups B. Upgrade housekeeping C. Upgrade quality D. Introduction of demand-‐push scheduling
180. A kanban card is used to signal that: A. work is ready to be moved to the next station B.
a worker has run out of parts C. a machine has broken down D. work is authorized to replenish a downstream station
181. Which of the following is not true about JIT systems? A. The JIT system is based on the
philosophy of eliminating waste and utilizing the full capability of the worker. B. Under JIT the ideal lot size is one. C. JIT is typically applied to repetitive manufacturing. D. The goal of JIT is to drive all inventory queues to a moderate level thus minimizing inventory investment and shortening lead times.
182. Which phrase most closely describes the Delphi forecasting technique? A. consumer
survey B. random individual opinions D. test markets
183. Which of the following would not be classified as a component of demand? A. Cycle B. Seasonality C. Trend D. Causal variation
184. Under exponential smoothing, if we want our forecast to be very responsive to recent
demand, the value of alpha should be: A. moderate B. zero C. small D. large E. No, Acme is not a holder in due course because of some other reason.
185. One option for altering the pattern of demand is: A. carrying inventory B. using overtime
C. hiring employees D. pricing
186. Which of the following is not a cost relevant to aggregate production planning? A. Costs associated with changes in the production rate B. Quantity discounts C. Basic production costs D. Inventory holding costs
187. Aggregate planners balance: A. demand and capacity B. demand and inventories C.
demand and costs D. supply and inventories
188. Which MRP system input element specifies how many and when the firm plans to build each end item? A. Master production schedule B. Bills of material C. Inventory records file D. Capacity planning
189. Which of the following most closely describes net material requirements? A. gross
requirements -‐ on-‐hand -‐ planned order receipts B. gross requirements -‐ on-‐hand + planned order receipts C. gross requirements -‐ planned order receipts D. gross requirements -‐ planned order releases
190. Which of the following is true about MRP Systems? A. demand pattern is random B. lot
sizing is EOQ C. based on independent demand D. objective is to meet manufacturing needs 191. Which of the following statements is not true about capacity management in
operations? A. Capacity planning itself has different meaning to individuals at different levels within the operations management hierarchy. B. An operations management view also emphasizes the time dimension of capacity. C. When looking at capacity, operations managers need to look at both resource input and product outputs. D. The definition of capacity, in an operations management context, makes a clear distinction between efficient and inefficient use of capacity.
192. Service capacity: A. is highly time and location dependent B. is subject to less volatile
demand fluctuations C. utilization directly impacts service quality D. A and C
193. The steps to determining capacity requirements include: A. Using decision trees to evaluate capacity alternatives B. Calculating equipment and labor requirements to meet product line forecasts C. Projecting labor and equipment availabilities over the planning horizon D. B and C
194. Which one of the following managerial accounting approaches attempts to allocate
manufacturing overhead. A. Activity-‐based costing. B. Just-‐in-‐time inventory. C. Total-‐quality management D. Theory of constraints.
195. Baden Company manufactures a product with a unit variable cost of $50 and a unit sales price of $88. Fixed manufacturing costs were $240,000 when 10,000 units were produced and sold. The company has a one-‐time opportunity to sell an additional 1,000 units at $70 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows: A. Income would increase by $70,000. B. Income would increase by $4,000. C. Income would increase by $20,000 D. Income would decrease by $4,000.
196. Which of the following is NOT one of the more successful applications of lean concepts in services? A. Organize problem-‐solving groups B. Upgrade housekeeping C. Upgrade quality D. Introduction of demand-‐push scheduling
197. ________ communicates a company’s intended value positioning of its product or brand to the market. A. Promotion B. Packaging. C. Physical evidence. D. Place. E. Price
198. Which list below best describes the major services performed by public accountants? A. Auditing, taxation, management consulting B. Cost accounting, production scheduling, recruiting C. Employee training, auditing, bookkeeping D. Bookkeeping, mergers, budgets
199. The primary purpose of the statement of cash flows is to __________. A. provide information about the investing and financing activities during a period B. prove that revenues exceed expenses if there is a net income C. facilitate banking relationships D. provide information about the cash receipts and cash payments during a period
200. The cost principle requires that when assets are acquired, they be recorded at __________. A. selling price B. list price C. appraisal value D. exchange price paid
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