QUESTIONS 61 THROUGH 72 RELATE TO CORPORATE FINANCE. (18 MINUTES)AN AN...

6-month certificate of deposit that will return 2.5% over the 180-day holding period. Miller should purchase:

A)

the Treasury bill.

B)

the commercial paper.

C)

the certificate of deposit.

Question #63 of 120

Question ID: 1146366

Which of the following is the least appropriate method for estimating a firm's before-tax cost of debt capital?

Use the market yield on bonds with a rating and maturity

similar to the firm’s existing debt.

Assume the firm’s cost of debt capital is equal to the yield

to maturity on its publicly traded debt.

Use the coupon rate on the firm’s most recently issued

debt.

Question #64 of 120

Question ID: 1146369

Paul Dufray, CFA, is estimating the asset beta for a new project based on a firm that primarily makes and sells a similar

product. In addition to the beta of that firm, Dufray will need to estimate the firm's:

sales risk and financial risk.

debt-to-equity ratio and tax rate.

operating leverage and financial leverage.

Question #65 of 120

Question ID: 1146355

Stakeholder theory is most accurately described as the belief that corporate governance should focus on managing:

the activities of a company in the best interests of its

owners.

employee activities in compliance with ethical standards

and applicable laws.

conflicts among different groups that have an interest in a

company’s activities.

Question #66 of 120

Question ID: 1146376

Which of the following working capital management outcomes is least desirable?

Low operating cycle.

High inventory turnover.

High cash conversion cycle.

Question #67 of 120

Question ID: 1146362

Which of the following is least likely a problem associated with the internal rate of return (IRR) method of choosing investment

projects?

Using IRR to rank mutually exclusive projects assumes

reinvestment of cash flows at the IRR.

For independent projects, the IRR and NPV can lead to

different investment decisions.

If the project has an unconventional cash flow pattern, the

result can be multiple IRRs.

Question #68 of 120

Question ID: 1146370

Break points in a firm's marginal cost of capital schedule are best interpreted as representing:

the maximum amounts of debt, preferred stock, and

common stock the firm can issue.

the amounts of new securities a firm would need to issue

to take advantage of flotation cost discounts.

the amounts of capital expenditure at which the company’s

weighted average cost of capital increases.

Question #69 of 120

Question ID: 1146356

With regard to environmental, social, and governance (ESG) considerations, which of the following statements is most

accurate?

Fiduciary duty requires managers to integrate their clients’

ESG-related considerations into investment decisions.

Integrating ESG factors into the analysis of a company’s

risk and return characteristics is not considered a violation

of fiduciary duty.

A “values-based” objective involves investing in

companies that have ESG-related opportunities that are

not fully reflected in their share prices.

Question #70 of 120

Question ID: 1146367

Janet Adams, CFA, is reviewing Rival Company's financial statements. Rival's long-term debt totals $35 million, while total

shareholder equity equals $140 million. Rival's long-term debt has a YTM of 9%. Rival's tax rate is 40% and its beta is 0.9.

Adams gathers the following additional facts:

Treasury bills earn 4.0%.

The equity risk premium is 4.5%.

Based on the information provided, Rival's weighted average cost of capital is closestto: