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Relax, You WILL Pass! STR581 Final EXAM 2013 Answer Guide

Relax, You WILL Pass!

STR581

Final EXAM

Relax, You WILL Pass! STR581 Final EXAM 2013 Answer Guide

2013

Answer

Guide

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: s trategic 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 majo r determinant of buyer choice among poorer nations, among poorer

groups, and with A. similar

products.

 

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 specia lizing 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 t he 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/acquir e 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

e xisting 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 e ffort.

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. T he 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 natural situationally - dependent

A.

B.

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 right s 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 hi gh 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

syne rgy

17. A

developments in the marketing environment. marketing research system marketing intelligence system vertical system product management system marketing information system

is a set of procedures and sources managers use to obtain everyday information about

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)

product

creative product

new idea

innovation

is any good, service, or idea that is perceived by someone as new.

20. A company can take several steps to improve the quality of its marketing i ntelligence. 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 the quality of its marketing intellige nce. sales force surrogates advisory panels customer feedback systems external networks intermediaries

to improve

21. Most established companies focus on

incremental innovation

when it comes to 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 promo tional 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 bus iness 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

market segment

market target

market level

market slice

market group

consists of a group of customers who share a similar set of needs and wants.

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 p lan, 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? s ample 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

marke t . Promoti on 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.

compu te 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 t hey 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 m aintained 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 capit al Price earnings and current ratio Gross profit rate and return on sales

39. The

balance

income statement statement of equity position statement of cash flows

is not one of the three major financial statements.

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 cor poration’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 o f Multiculturalism. Support for Multilateral Trade.

45. One study found that manufacturing labor costs about

dollars in the United States.

Less than $1; about 15 Less than $1; about 40 $2; about 25 Less than $1; ab out 25

an hour in China, compared to

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 w ith 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, or ganizing, 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

another object or property. Sorting Rating Recording Categorization Ranking

scale is a scale that scores an object or property without making a direct comparison to

55. The quartile deviation is:

In squared units of the original data. The square root of the variance. Appropriate only for symmet ric 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 th e 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 Princip le 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 dividen ds. 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

y ears?

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 dividend s. 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 i ntense 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 S ignaling 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 sa me 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 join t 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 t he 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 eliminat ion 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

flex ible - budget variances static - budget variances sales - activity variances

78. A

budget forecast

sales budget

sales forecast

sales prediction

gives the expected sales under a given set of conditions.

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 peri od 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 particular ly 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 Holla nd’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 envir onment

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 th e 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

bottleneck, the

capacity - constrained resource, drum bottleneck, capacity constrained resource none of these answers capacity - constrained resource, bottleneck

is the best place for control. If there is no

is the best place for control.

94. Operations st age 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 followin g 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 struc ture 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 option s 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 Id eas 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. f ree - 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 neve r 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) r efers 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 am ount 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) ref ers 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 (liabil ities) 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 amou nt (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 p ractice 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. Pr eferred 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

cannot tell D. equal to the par value.

A. less than the par value . B. greater than the par value . C.

112. According to the CAPM, the expected return for a portfolio is determined by the portfolio's. A. variance. B. beta. C. st andard deviation. D. none of these

113. Certain countries have restrictions. In practice, U.S. investors have NOT invested very

much internationally. Possible factors include expropriation risk . C. firm - specific risk . D. all of these

A. lower transaction costs. B.

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 consideratio ns . 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 r eturn

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

A. the current rate of interest B. the prime rate of interest C. the nominal rate of interest D. the lending rate of interest

same as

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. Comparat ive 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 Opt ions 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 Sto ny'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 inve st 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 Increme ntal 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 (a re) 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 o f 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 invoic e 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 th ey 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 it s

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 ex pense.

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 b eta . 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 air craft. In the face of competition,

Boeing often faces a critical

passenger aircraft. A. dividend B. present value C. payback D. capital budgeting

decision: whether to develop a new generation of

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 budget ing 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 t he 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, th en 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, t he 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

turn over ratio. C. the ability of assets to support borrowing . D. management’s attitude toward what other industries are doing.

A. accounting practices. B. the firm’s inventory

136. Studies show systematic differences in capital structures across industries. These are

due mostly to differences in the availabili ty of tax shelter provided by things other than debt,

such as

investment tax credit. D. all of these

A. accelerated depreciation. B. operating tax loss carryforwards. C.

137. Studies show systematic differences in capital structures across industr ies. These are

due mostly to differences in

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

A. hiring and firing practices. B. the availability of tax

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 w ays 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. t o 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 finan cing

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 - Inter ested 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 transfe r 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 Mark et 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 s ell 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 varia ble 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. W hich 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

all of t hese

A. wrong . B. fair. C. followed by many analysts. D.

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 Mo ney 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 o f 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 statemen ts 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 sta ge, 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 follo wing 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 th e 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 tr iggered

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 inventor y. 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

ch aracteristics: 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 co st, 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 bu t: 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 Goldr att 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 du ration 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 follow ing: 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 efficie nt 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 approp riate 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, operatio ns 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

eva luate 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 su ccessful 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 sta tion 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 utilizi ng 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 shorteni ng 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. Tr end 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 reaso n.

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 producti on 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 m any 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 def inition 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 plann ing 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 i ncrease 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 des cribes 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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