Professional Documents
Culture Documents
1. Calculate the value of shareholders equity for Omega Limited if it has PPE (net) of
$35,000, long-term debt of $14,000, net working capital of $5,000, and current liabilities
of $8,000.
a. $13,000
b. $21,000
c. $26,000
d. $27,000
2. Calculate the value of PPE (net) for Pioneer Limited if has shareholders' equity of $20,000,
total debt of $16,000, long-term debt of $12,000, and net working capital of $7,000.
a. $13,000
b. $19,000
c. $20,000
d. $25,000
3. Calculate the value of net working capital for Sigma Limited if it has total assets of $50,000,
net fixed assets of $25,000, shareholders equity of $20,000, accounts receivable of
$15,000, and current liabilities of $10,000.
a. $15,000
b. $25,000
c. $30,000
d. $35,000
4. Calculate the value of shareholders equity for Mars Limited if it has long-term debt of
$21,000, net fixed assets of $40,000, current liabilities of $6,000, and net working capital
of $5,000.
a. $14,000
b. $24,000
c. $25,000
d. $32,000
5. Alpha Limited increased its accounts payable by $100, increased its inventory by $150, and
increased its accounts receivable by $200 over the year. The effect on Alphas statement of
cash flows is
a. 250 source of cash
b. 250 use of cash
c. 450 source of cash
d. 450 use of cash
6. If a firm has a debt-equity ratio of 4.0, then its debt to asset ratio must be which one of the
following?
a. 0.20
b. 0.25
c. 0.80
d. 1.25
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7. If a firm produces a twenty percent return on assets and also a twenty-four percent return
on equity, then the firm has an equity multiplier of?
a. 0.05
b. 0.83
c. 1.20
d. 5.00
8. Pioneer Limited has a profit margin of 8 percent, a return on assets of 20 percent, and an
equity multiplier of 1.2. What is the return on equity?
a. 1.60%
b. 9.60%
c. 16.67%
d. 24.00%
9. Sally deposits $20,000 in an account that earns 12% interest per annum. Calculate the
interest payment on a 5-year simple interest deposit.
a. $2,400.00
b. $12,000.00
c. $15,246.83
d. $19,200.00
10. Peter is going to pay an interest amount of $1,200 on a 3-year loan. Calculate the loan
amount with an 5% simple interest rate.
a. $3,600.00
b. $7,947.31
c. $8,000.00
d. $10,823.53
11. Samuel has been promised $1,500 of interest after 6 months of investing $20,000 with St.
George Bank. What rate of simple interest is Samuel earning per annum?
a. 7.50%
b. 13.95%
c. 15.00%
d. 15.56%
12. Sam has a savings of $25,000 at St. George Bank. The Bank provides a simple interest rate
of 6% per annum. How long (in months) must Sam invest for in order to earn $7,500 of
simple interest.
a. 40.00 months
b. 46.00 months
c. 54.00 months
d. 60.00 months
13. Peter will receive a study excellence award of $30,000 per year at the end of the next 4
years. Calculate the future value at the end of year 4 of Peter's cash flows if the effective
annual interest rate is 6%.
a. $103,953.17
b. $110,190.36
c. $131,238.48
d. $139,112.79
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14. Sam will receive a study excellence award of $50,000 per year at the end of the next 2
years. Calculate the present value today of Sam's cash flows if the effective annual interest
rate is 8%.
a. $89,163.24
b. $96,296.30
c. $104,000.00
d. $112,320.00
15. If bond price is lower than face value, then this is a bond.
a. Discount
b. Par
c. Premium
d. None of the above
16. Long position in forwards contract makes a gain when underlying asset prices
exercise price.
a. Fall below
b. Rise above
c. Unchanged compared to
d. None of the above
17. Long position in forwards contract makes a loss when underlying asset prices
a. Fall
b. Rise
c. Unchanged
d. None of the above
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Part A: Multiple Choice Questions (20 Marks)
1. Calculate the value of current liabilities for Venus Limited if it has total assets of $15,000,
net fixed assets of $12,000, and net working capital of $2,000.
a. $1,000
b. $3,000
c. $5,000
d. $10,000
2. Calculate the value of the long-term debt for Sigma Limited if it has total assets of $50,000,
shareholders equity of $25,000, current assets of $15,000, and current liabilities of
$10,000.
a. $0
b. $15,000
c. $25,000
d. $30,000
3. Calculate the value of dividends paid for Pioneer Limited if it an addition to retained
earnings of $20,000, net income of $30,000, and sales of $150,000.
a. $5,000
b. $10,000
c. $15,000
d. $35,000
4. Calculate the value of the retained earnings account for Alpha Limited of 2016 if it has for
the year 2016 dividends of $4,000, net income of $10,000, and shareholders equity of
$120,000. The year 2015 retained earnings is $50,000.
a. $56,000
b. $60,000
c. $70,000
d. $74,000
5. A firm has total debt of $10,000 and a debt-equity ratio of 2. What is the value of the total
assets?
a. $5,000
b. $15,000
c. $20,000
d. $30,000
6. Omega Limited has cash of $5,000, accounts receivable of $15,000, accounts payable of
$25,000, and inventory of $30,000. What is the value of the quick ratio?
a. 0.20
b. 0.67
c. 0.80
d. 2.00
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7. Venus Limited has net working capital of $5,000, net fixed assets of $80,000, sales of
$60,000, and current liabilities of $15,000. Calculate total asset turnover ratio.
a. 0.60 times
b. 0.67 times
c. 0.75 times
d. 0.86 times
8. Mars Limited has net income of $10,000, a price-earnings ratio of 4, and earnings per share
of $0.2. How many shares of stock are outstanding?
a. 2,500
b. 8,000
c. 40,000
d. 50,000
9. John can purchase a laptop on a 3-year loan at 8% simple interest per year. Calculate the
future value of a $2,000 loan.
a. $2,480.00
b. $2,519.42
c. $2,631.58
d. $6,000.00
10. You have been told that the maturity value of a Treasury Bill that matures in 9 months is
$50,000. The simple interest rate offered by the Treasury Bill is 6% per annum. Calculate
the principal of the investment.
a. $37,500.00
b. $47,750.00
c. $47,846.89
d. $47,861.97
11. Andrew bought an antique sculpture for $20,000 and sold it 6-months later for $21,200.
What simple interest rate did he earn on this sale?
a. 6.00%
b. 11.32%
c. 12.00%
d. 12.36%
12. Jacqueline wants to know how long (in months) it would take for her savings of $24,000
to grow to $26,160 if Westpac bank offers her a simple interest rate of 6% per annum.
a. 12 months
b. 18 months
c. 20 months
d. 9 months
13. Samuel would like to accumulate $40,000 in his savings account at the end of 5 years. If
effective annual interest rate is 12%. What would be the amount of equal deposit at the end
of each year for 5 years.
a. $5,621.78
b. $6,296.39
c. $9,907.49
d. $11,096.39
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14. Amanda deposited $50,000 at 10% effective annual interest rate. She will make equal
withdrawals at the end of each year over an 8-year term. What would be the amount of
equal withdrawal?
a. $3,974.73
b. $4,372.20
c. $8,520.18
d. $9,372.20
15. If coupon rate is lower than yield to maturity, then this is a bond.
a. Discount
b. Par
c. Premium
d. None of the above
16. Short position in forwards contract makes a gain when underlying asset prices
exercise price.
a. Fall below
b. Rise above
c. Unchanged
d. None of the above
17. Short position in forwards contract makes a loss when underlying asset prices
a. Fall
b. Rise
c. Unchanged
d. None of the above
19. is when a company issues higher number of new shares to replace old shares.
a. Cash Dividend
b. Reverse Split
c. Stock Dividend
d. Stock Split
20. is when a company issues lower number of new shares to replace old shares.
a. Cash Dividend
b. Reverse Split
c. Stock Dividend
d. Stock Split
3
Part A: Multiple Choice Questions (20 Marks)
1. Land is classified as
a. Current assets
b. Current liabilities
c. Intangible assets
d. Tangible assets
4. Pioneer Limited has sales of $200,000, total assets of $500,000, and a profit margin of 12
percent. The firm has a total equity ratio of 30 percent. What is the return on equity?
a. 4.80%
b. 16.00%
c. 40.00%
d. 250.00%
5. Sigma Limited has sales of $500,000, costs of goods sold of $400,000, inventory of
$80,000, and accounts receivable of $50,000. How many days, on average, does it take the
firm to sell its inventory assuming that all sales are on credit?
a. 36.50 days
b. 45.63 days
c. 58.40 days
d. 73.00 days
6. On the Statement of Cash Flows, which of the following are considered operating
activities?
I. costs of goods sold
II. decrease in accounts payable
III. interest paid
IV. dividends paid
a. I and III only
b. III and IV only
c. I, II, and III only
d. I, III, and IV only
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7. Luke invested $32,000 at 6% effective annual interest rate for 9 years. Calculate the future
value of his investment.
a. $49,280.00
b. $54,063.33
c. $69,565.22
d. $288,000.00
8. Jacob would like to have a savings of $40,000 in an account at the end of three years.
Calculate the amount he needs to save now if the saving account earns an annually effective
rate of return of 4%.
a. $4,800.00
b. $35,200.00
c. $35,559.85
d. $35,714.29
9. Amanda borrowed $6,000 from her best friend, six months later, Amanda repaid her
$6,235.38. Calculate the effective annual interest rate.
a. 3.92%
b. 7.55%
c. 7.85%
d. 8.00%
10. Madelene deposits $3,000 at the end of each year for 7 years. The effective annual interest
rate is 4%. Calculate the accumulated value of Madelenes savings account at the end of
year 10.
a. $16,007.41
b. $16,647.71
c. $26,653.52
d. $27,719.66
11. Andrew paid annual instalments of $5,000 on 1 January 2012 for 6 years. The effective
annual interest rate is 12%. Calculate the value of the loan on 1 January 2008.
a. $14,632.09
b. $16,387.94
c. $57,006.28
d. $63,847.04
12. What happens to the price of a discount bond over time until it reaches maturity?
a. Decreases
b. Increases
c. Remains constant
d. Cannot be determined
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14. Zero-coupon bond is a bond.
a. Discount
b. Par
c. Premium
d. None of the above
16. Forward contracts are traded while future contracts are traded
a. In exchange In exchange
b. In exchange Over the counter
c. Over the counter In exchange
d. Over the counter Over the counter
18. Forward contracts have while future contracts have credit risk.
a. High High
b. High Low
c. Low High
d. Low Low
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Part A: Multiple Choice Questions (20 Marks)
4. The sources and uses of cash over a stated period of time are reflected on the:
a. Balance sheet
b. Income statement
c. Statement of cash flows
d. Statement of shareholders equity
7. Nicolas invested $24,000 in a fund offering a rate of return of 14% per year, approximately
how many years will it take for the investment to reach $52,679.34?
a. 2.19 years
b. 3.89 years
c. 6.00 years
d. 8.54 years
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8. Lucy invested $50,000 in a fund offering a rate of return of 6% per year, approximately
how many years will it take for the investment to reach $100,000?
a. 6 years
b. 10 years
c. 12 years
d. 18 years
9. Monica saved $15,000 today at 8% interest rate, compounded quarterly. How much would
she accumulate after 5 years?
a. $21,000.00
b. $22,039.92
c. $22,289.21
d. $25,000.00
10. Jennifer would like to receive $20,000 at the end of each year indefinitely, what amount
she have to invest today if the annual effective interest rate is 8%.
a. $114,932.78
b. $124,127.40
c. $250,000.00
d. $333,333.33
11. Mary would receive an annual cash flow of $40,000 at the end of each year that will
continue indefinitely. This cash flow is expected to grow at 2% per annum. Calculate the
present value of these cash flows if the effective annual interest rate is 12%.
a. $277,507.97
b. $285,714.29
c. $333,333.33
d. $400,000.00
13. Which of the following is false? Investors are concerned with the following determinants
of investment:
a. Higher return for a given level of risk
b. Higher risk for a given level of return
c. Relatively more liquid investment
d. Higher frequency of periodic cash inflows
14. represents ownership of the company and has the right to vote.
a. Bonds
b. Ordinary shares
c. Preference shares
d. Term loans
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15. Which of the following is less accurate, shares are characterised by
a. It benefits from capital gains
b. It has a lower risk compared to bonds
c. It has a higher expected return compared to bonds
d. It allows shareholders to vote for major investment decisions
3
Part A: Multiple Choice Questions (20 Marks)
4. Financial ratios that measures the ability of a firm to meet its short-term commitments are
known as ratios.
a. Activity ratios
b. Liquidity ratios
c. Profitability ratios
d. Solvency ratios
5. Financial ratios that measures the ability of a firm to meet its long-term commitments are
known as ratios.
a. Activity ratios
b. Liquidity ratios
c. Profitability ratios
d. Solvency ratios
7. Mike would like to have a savings of $40,000 in an account at the end of three years.
Calculate the amount he needs to save now if the saving account earns an annual rate of
return of 6%, compounded semi-annually.
a. $32,800.00
b. $33,499.37
c. $33,584.77
d. $33,898.31
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8. A savings account earns 15% per annum, compounded monthly. Calculate the interest rate
per month.
a. 1.25%
b. 2.50%
c. 3.75%
d. 5.00%
9. Calculate the effective annual rate equivalent to 6% annual interest rate compounded
quarterly.
a. 1.50%
b. 5.87%
c. 6.00%
d. 6.14%
10. Pioneer Limited has a deposit of $500,000 at St. George bank. If effective annual interest
rate is 6%, calculate how much annual interest Pioneer Limited could withdraw every year
continuing indefinitely.
a. $25,000.00
b. $30,000.00
c. $95,925.77
d. $101,681.31
12. represents ownership of the company and has the right to get regular dividends.
a. Bonds
b. Ordinary shares
c. Preference shares
d. Term loans
2
15. is not listed on the stock exchange.
a. Private company
b. Public company
c. Listed company
d. All of the above
17. If the average monthly return and volatility of ASX 200 is 12% and 20% respectively and
the average monthly return on U.S. treasury bills is 4%. Calculate sharp ratio.
a. 0.400%
b. 0.600%
c. 1.667%
d. 2.500%
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Part A: Multiple Choice Questions (20 Marks)
4. An increase in which one of the following will increase a firm's quick ratio without
affecting its cash ratio?
a. Accounts payable
b. Accounts receivable
c. Cash
d. Inventory
5. The formula which breaks down the return on equity into three component parts is referred
to as which one of the following?
a. Altman Z Score
b. Balance of payment
c. Balance sheet
d. Du Pont Analysis
6. Relationships determined from a firm's financial information and used for comparison
purposes are known as
a. Dimensional analysis
b. Financial ratios
c. Scenario analysis
d. Sensitivity analysis
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7. A dollar today is worth a dollar after 1 year.
a. same value as
b. More than
c. Less than
d. None of the above
8. Andrew won a lottery of $1,000,000 and would like to make a deposit for 1 year only.
Commonwealth bank offers an effective annual rate of 10% and St. George bank offers a
simple interest rate of 10% per annum. Andrew should choose the offer of for 1
year deposit.
a. St. George bank only
b. Commonwealth bank only
c. Both banks give the same return for a year
d. None of them
9. Effective annual rate (EAR) is annual percentage rate (APR) when interest is
paid many times a year.
a. Equal to
b. Greater than
c. Less than
d. None of the above
10. Lucy has a deposit of $100,000 at Westpac bank. Effective annual interest rate is 8%. Lucy
wants to withdraw a series of consecutive payments at the end of each year that continue
indefinitely, and each payment grows at 2%. Calculate the value of the first withdrawal at
the end of year 1.
a. $6,000.00
b. $8,000.00
c. $16,112.48
d. $17,401.48
11. Which of the following equity financing method(s) is not issued at a discount price.
a. Private Placement
b. Public Offering
c. Rights issue
d. All of the above
13. Which of the following is not considered as an advantage for rights issue?
a. Limited raised capital
b. Lower transaction cost compared to public offering
c. Same shareholders structure
d. Shareholders ownership is not diluted
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14. Which of the following is not considered as a disadvantage for private placement?
a. Cannot place over 15% of shares
b. Dilutes the proportionate claims of existing shareholders
c. Issued at discount to market price
d. Sold to certain investor(s) of special interest
15. Which of the following is not considered as a disadvantage for public offering?
a. Access to capital markets
b. Company has no control over who buys shares unlike private placement
c. Dilute control of existing shareholders
d. Higher cost compared to private placement