Question 1

Which measure of the business cycle represents the market value of all goods and services produced in a country over a twelve-month period?

Accepted Answer

A)  industrial production index 
B)  money supply 
C)  gross domestic product 
D)  productivity average 
A)  industrial production index 
B)  money supply 
C)  gross domestic product 
D)  productivity average

Question 2

When comparing companies in the same industry but of different sizes, the current ratio is a better indicator of relative liquidity than net working capital.

Accepted Answer

A) True 
 B)False

Question 3

Substituting EBITDA for EBIT when computing the times interest earned ratio will make the company appear

Accepted Answer

A)  more leveraged. 
B)  less leveraged. 
C)  more profitable. 
D)  less efficient. 
A)  more leveraged. 
B)  less leveraged. 
C)  more profitable. 
D)  less efficient.

Question 4

Name at least three economic variables that the affect the stock market and describe their effects.

Accepted Answer

1. Interest rates: When interest rates a

Question 5

The times interest earned ratio is calculated by dividing net income by interest expense.

Accepted Answer

A) True 
 B)False

Question 6

Advanced Computing Inc. has sales of $300 million, a net profit margin of 9%, and 10 million shares of common stock outstanding. It has no preferred stock outstanding. If Allied stock trades at $32.40 per share, it has a price/earnings ratio of 12.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following are characteristics of an expansionary fiscal policy?
I. Increased government spending on infrastructure projects.
II. Reduction in defense and education budgets.
III. Increasing money supply.
IV. Reduction in government borrowing.

Accepted Answer

A)  I and III only 
B)  II and III only 
C)  I, II and IV only 
D)  I, II, III and IV 
A)  I and III only 
B)  II and III only 
C)  I, II and IV only 
D)  I, II, III and IV

Question 8

Return on equity (ROE) is computed by dividing net income by the market value of equity.

Accepted Answer

A) True 
 B)False

Question 9

JJ Industries has a P/E ratio of 18 and an EPS of $0.93. This means that JJ's stock is currently selling for

Accepted Answer

A)  $16.74 per share. 
B)  $17.07 per share. 
C)  $18.00 per share. 
D)  $19.35 per share. 
A)  $16.74 per share. 
B)  $17.07 per share. 
C)  $18.00 per share. 
D)  $19.35 per share.

Question 10

Which stage of an industry's growth cycle is most influenced by economic events?

Accepted Answer

A)  initial development 
B)  stability or decline 
C)  mature growth 
D)  rapid expansion 
A)  initial development 
B)  stability or decline 
C)  mature growth 
D)  rapid expansion

Question 11

Kim has gathered the following information on a company. $$\begin{array} { l l } 
\text { Sales } & \$ 640,000 \
\text { Dividends paid on common stock } & \$ 18,000 \
\text { Net profit margin } & 5 \% \
\text { Number of shares outstanding } & 128,000
\end{array}$$ What is the amount of the earnings per share?

Accepted Answer

A)  $0.14 
B)  $0.25 
C)  $0.28 
D)  $0.30 
A)  $0.14 
B)  $0.25 
C)  $0.28 
D)  $0.30

Question 12

If a company's ROA is high, then an investor can assume that the company

Accepted Answer

A)  is in danger of defaulting on its loans. 
B)  pays a high dividend. 
C)  is profitable. 
D)  has more equity than debt in its capital structure. 
A)  is in danger of defaulting on its loans. 
B)  pays a high dividend. 
C)  is profitable. 
D)  has more equity than debt in its capital structure.

Question 13

The basic motivation of security analysis is to help investors

Accepted Answer

A)  identify the best times to buy and sell securities. 
B)  contribute to the efficiency of securities markets. 
C)  identify securities whose intrinsic values are at or near their market values. 
D)  identify mispriced stocks. 
A)  identify the best times to buy and sell securities. 
B)  contribute to the efficiency of securities markets. 
C)  identify securities whose intrinsic values are at or near their market values. 
D)  identify mispriced stocks.

Question 14

In seeking potential stock investments, most analysts look for companies that have PEG ratios that are equal to or less than one.

Accepted Answer

A) True 
 B)False

Question 15

For their last fiscal year, Edelman, Inc. reported the following information: $$\begin{array} { l r } 
\text { Accounts Receivable } & \$ 320,000 \
\text { Inventory } & \$ 408,000 \
\text { Sales } & \$ 2,336,000 \
\text { Cost of Goods Sold } & \$ 1,448,000
\end{array}$$ What is the accounts receivables turnover rate?

Accepted Answer

A)  7.3 
B)  4.5 
C)  2.8 
D)  0.8 
A)  7.3 
B)  4.5 
C)  2.8 
D)  0.8

Question 16

Use the following information for the question(s) that follow.

Patco and Ramsco are competitors in the same industry and have the following ratios.

-Based on the information above, we can conclude that

Accepted Answer

A)  Patco is more financially conservative than Ramsco. 
B)  Patco is more liquid than Ramsco. 
C)  Patco is reinvesting a higher percentage of its earnings in the business than Ramsco. 
D)  Patco is using assets less efficiently than Ramsco. 
A)  Patco is more financially conservative than Ramsco. 
B)  Patco is more liquid than Ramsco. 
C)  Patco is reinvesting a higher percentage of its earnings in the business than Ramsco. 
D)  Patco is using assets less efficiently than Ramsco.

Question 17

Ratio analysis is the study of the relationships between various financial statement accounts.

Accepted Answer

A) True 
 B)False

Question 18

Historical comparisons will reveal whether a company's performance is improving or deteriorating.

Accepted Answer

A) True 
 B)False

Question 19

The rapid expansion stage stage of an industry usually continues for many years.

Accepted Answer

A) True 
 B)False

Question 20

Which one of the following is a leverage measure?

Accepted Answer

A)  times interest earned 
B)  net working capital 
C)  return on equity 
D)  net profit margin 
A)  times interest earned 
B)  net working capital 
C)  return on equity 
D)  net profit margin

Which measure of the business cycle represents the market value of all goods and services produced in a country over a twelve-month period?

When comparing companies in the same industry but of different sizes, the current ratio is a better indicator of relative liquidity than net working capital.

Substituting EBITDA for EBIT when computing the times interest earned ratio will make the company appear

Name at least three economic variables that the affect the stock market and describe their effects.

The times interest earned ratio is calculated by dividing net income by interest expense.

Advanced Computing Inc. has sales of $300 million, a net profit margin of 9%, and 10 million shares of common stock outstanding. It has no preferred stock outstanding. If Allied stock trades at $32.40 per share, it has a price/earnings ratio of 12.

Which of the following are characteristics of an expansionary fiscal policy? I. Increased government spending on infrastructure projects. II. Reduction in defense and education budgets. III. Increasing money supply. IV. Reduction in government borrowing.

Return on equity (ROE) is computed by dividing net income by the market value of equity.

JJ Industries has a P/E ratio of 18 and an EPS of $0.93. This means that JJ's stock is currently selling for

Which stage of an industry's growth cycle is most influenced by economic events?

Kim has gathered the following information on a company. Sales \ 640,000 Dividends paid on common stock \ 18,000 Net profit margin 5\% Number of shares outstanding 128,000 What is the amount of the earnings per share?

If a company's ROA is high, then an investor can assume that the company

The basic motivation of security analysis is to help investors

In seeking potential stock investments, most analysts look for companies that have PEG ratios that are equal to or less than one.

For their last fiscal year, Edelman, Inc. reported the following information: Accounts Receivable \ 320,000 Inventory \ 408,000 Sales \ 2,336,000 Cost of Goods Sold \ 1,448,000 What is the accounts receivables turnover rate?

Use the following information for the question(s) that follow. Patco and Ramsco are competitors in the same industry and have the following ratios. -Based on the information above, we can conclude that

Ratio analysis is the study of the relationships between various financial statement accounts.

Historical comparisons will reveal whether a company's performance is improving or deteriorating.

The rapid expansion stage stage of an industry usually continues for many years.

Which one of the following is a leverage measure?

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters

Exam 7: Analyzing Common Stocks

Which measure of the business cycle represents the market value of all goods and services produced in a country over a twelve-month period?

When comparing companies in the same industry but of different sizes, the current ratio is a better indicator of relative liquidity than net working capital.

Substituting EBITDA for EBIT when computing the times interest earned ratio will make the company appear

Name at least three economic variables that the affect the stock market and describe their effects.

The times interest earned ratio is calculated by dividing net income by interest expense.

Advanced Computing Inc. has sales of $300 million, a net profit margin of 9%, and 10 million shares of common stock outstanding. It has no preferred stock outstanding. If Allied stock trades at $32.40 per share, it has a price/earnings ratio of 12.

Which of the following are characteristics of an expansionary fiscal policy? I. Increased government spending on infrastructure projects. II. Reduction in defense and education budgets. III. Increasing money supply. IV. Reduction in government borrowing.

Return on equity (ROE) is computed by dividing net income by the market value of equity.

JJ Industries has a P/E ratio of 18 and an EPS of $0.93. This means that JJ's stock is currently selling for

Which stage of an industry's growth cycle is most influenced by economic events?

Kim has gathered the following information on a company. Sales \ 640,000 Dividends paid on common stock \ 18,000 Net profit margin 5\% Number of shares outstanding 128,000 What is the amount of the earnings per share?

If a company's ROA is high, then an investor can assume that the company

The basic motivation of security analysis is to help investors

In seeking potential stock investments, most analysts look for companies that have PEG ratios that are equal to or less than one.

For their last fiscal year, Edelman, Inc. reported the following information: Accounts Receivable \ 320,000 Inventory \ 408,000 Sales \ 2,336,000 Cost of Goods Sold \ 1,448,000 What is the accounts receivables turnover rate?

Use the following information for the question(s) that follow. Patco and Ramsco are competitors in the same industry and have the following ratios. -Based on the information above, we can conclude that

Ratio analysis is the study of the relationships between various financial statement accounts.

Historical comparisons will reveal whether a company's performance is improving or deteriorating.

The rapid expansion stage stage of an industry usually continues for many years.

Which one of the following is a leverage measure?

The Investment Environment

Securities Markets and Transactions

Investment Information and Securities Transactions

Return and Risk

Modern Portfolio Concepts

Common Stocks

Stock Valuation

Market Efficiency and Behavioral Finance

Fixed-Income Securities

Bond Valuation

Mutual Funds and Exchange-Traded Funds

Managing Your Own Portfolio

Options: Puts and Calls

Futures Markets and Securities

Filters