Corporate Financial Management Practice Mid-Semester Examination (Answers at back) Disclaimer: This practice exam covers a selection of the types of questions that may be asked in the mid-semester exam, however it should not be taken as being exhaustive as to the topics that could be included in the exam. Students should therefore not be surprised if other types of questions appear in the exam. 1. $200 invested today and earning 8 per cent per annum compounded semi-annually will grow to what amount at the end of three years? (A) (B) $251.94 (C) $380.75 (D) 2. $158.80 $253.06 Bill plans to fund his individual retirement account with the maximum contribution of $2,000 at the end of each year for the next …show more content…
(B) a parallel shift downward in the security market line. (C) a decrease in the slope of the security market line. (D) a parallel shift upward in the security market line. 14. The market price of outstanding bond issues often varies from par because (A) (B) the market rate of interest has changed. (C) the maturity date has changed. (D) 15. the coupon rate has changed. old bonds sells for less than new bonds. A firm has an expected dividend next year of $1.20 per share, a zero growth rate of dividends, and a required return of 10 per cent per annum. The value of each of the firm 's shares is (A) (B) $12 (C) $120 (D) 16. $10 $100 In the Gordon model, the value of ordinary shares is the (A) present value of a constant, growing dividend stream. (B) actual amount each ordinary shareholder would expect to receive if the firm 's assets are sold, creditors and preference shareholders are repaid, and any remaining money is divided among the ordinary shareholders. (C) present value of a non-growing dividend stream. (D) net value of all assets which are liquidated for their exact accounting value. 17. A constant annual rate of dividend growth of 9 per cent is expected on a particular firm’s ordinary shares for an indefinite period into the future. The
e) Questioning is another method of sampling evidence and will involve the questioning of both the assessor and the candidate. To ensure that the evidence has the necessary validity the questions to the learner should happen in private away from the assessor. The need for the learner to feel that they have the confidence to disclose the true picture of the assessment process is very important. The question sessions can be recorded on the necessary portfolio documentation but can add validity if they are recorded on tape or digitally and used as evidence.
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Three examinations will be administered. The exams will consist of multiple choice questions and problems. Problems will be similar to those covered in class or those given as homework assignments.
On exam day, students will have to be prepared with a comprehensive knowledge of their chosen topics. Faculty members will ask their chosen questions of the student and, with only a whiteboard or computer projector in front of them, students will have to orally work through the program and present their answer to the panel. If the student presents a satisfactory answer to each question, they pass the
Suppose Ace, over the last few years, has had an 18 percent average return on equity (ROE) and has paid out 20 percent of its net income as dividends. Under what conditions could this information be used to help estimate the firm’s expected future growth rate, g? Estimate ks using this procedure for determining g.
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This practice exam consists of 30 multiple choice questions on 11 pages (including this cover page).
This exam has 5 short questions and would be 30% of your final examination grade.
Your required rate of return is 9 percent. Ignoring taxes, what is the value of one share of this stock today?
EPS Growth Rate: These values are also found in exhibit 6, leading to g = 5.55%
Dividends were assumed to grow at the geometric average of the last 6 years, 20.28%. P0 = D2 Dn Pn D1 + + ··· + + 1 2 n (1 + Ke ) (1 + Ke ) (1 + Ke ) (1 + Ke )n $1.58 $2.28 $87.31 $1.31 + + ··· + + = 1 2 4 (1 + 7.0%) (1 + 7.0%) (1 + 7.0%) (1 + 7.0%)4 = $72.53
It cannot be used with binary variables (those taking on a value of 0 or 1)
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What are the expected dividend yield and capital gains yield during the fourth year (from Year 3 to Year 4)?
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