FINC 600 FINC600 Week 5 Practice Quiz Answers (APU)

FINC600 Week 5 Practice Quiz (APUS)

1. If the capital markets are efficient, then the sale or purchase of any security at the prevailing market price is: 
2. Generally, a firm is able to find positive NPV opportunities with: I) Financing decisions
   II) Capital investment decisions
   III) Short-term borrowing decisions 
3. Stock price cycles or patterns self-destruct as soon as investors recognize them through: 
4. Which of the following is a statement of semi-strong form efficiency?
   I) If the markets are efficient in the semi-strong form then prices will adjust immediately to public information
   II) If the markets are efficient in the semi-strong form then prices reflect all information III) If the markets are efficient in the semi-strong form then prices will adjust to newly published information after a long time delay 
5. Weak form efficiency implies that past stock price(s) 
6. One important implication of the efficient markets hypothesis is that: 
7. On January 2, Michigan Mining declared a $25-per-share quarterly dividend payable on March 9th to stockholders of record on February 9. What is the latest date by which you could purchase the stock and still get the recently declared dividend? 
8. Firms can repurchase shares in the following ways: I) Open market repurchase
   II) Through a tender offer
   III) Through a Dutch auction process 
9. IV) Through direct negotiation with a major shareholder
10. Company X has 100 shares outstanding. It earns $1,000 per year and expects to pay all of it as dividends. If the firm expects to maintain this dividend forever, Calculate the stock price today. (The required rate of return is 10%)
11. Capital structure of the firm can be defined as:
    I) the firm's debt-equity ratio
    II) the firm's mix of different securities used to finance assets III) the market imperfection that the firm's manager can exploit