Which of the following financial statement items is least likely proportional to sales in a sales-driven pro-forma financial statement?

A)    Operating margin.

B)   Cost of goods sold.

C)   Interest expense.

D)   Selling, general and administrative expenses.

Question 77

Which of the following is used to illustrate a firm’s weighted average cost of capital (WACC) at different levels of capital?

A)    Marginal cost of capital schedule.

B)   Cost of capital component schedule.

C)   Schedule of marginal capital break points.

D)   Schedule of marginal capital costs.

Question 78

Which of the following board characteristics and practices are least likely to be considered supportive of the protection of shareholders’ interests?

A)    The board routinely includes management at its meetings.

B)   The chairman of the board is not the CEO, or former CEO of the firm.

C)   A majority of the board of directors is comprised of independent, non-management, members.

D)   Board members are not closely aligned with a firm supplier, customer, or pension advisor.

Question 79

Which of the following statements about portfolio theory is least accurate?

A)    For a two-stock portfolio, the lowest risk occurs when the correlation coefficient is close to negative one.

B)   Assuming that the correlation coefficient is less than one, the risk of the portfolio will always be less than the simple weighted average of individual stock risks.

C)   When the return on an asset added to a portfolio has a correlation coefficient of less than one with the other portfolio asset returns but has the same risk, adding the asset will not decrease the overall portfolio standard deviation.

D)   Risk aversion results in an upward sloping security market line.

[此贴子已经被作者于2008-11-8 14:02:50编辑过]

Question 76

Which of the following financial statement items is least likely proportional to sales in a sales-driven pro-forma financial statement?

A)    Operating margin.

B)   Cost of goods sold.

C)   Interest expense.

D)   Selling, general and administrative expenses.

The correct answer was C) Interest expense

Interest expense is usually forecast based on current payments on long-term debt and expected future long-term debt.

This question tested from Session 11, Reading 47, LOS a

Question 77

Which of the following is used to illustrate a firm’s weighted average cost of capital (WACC) at different levels of capital?

A)    Marginal cost of capital schedule.

B)   Cost of capital component schedule.

C)   Schedule of marginal capital break points.

D)   Schedule of marginal capital costs.

The correct answer was A) Marginal cost of capital schedule.

The marginal cost of capital schedule shows the WACC at different levels of capital investment. It is usually upward sloping and is a function of a firm’s capital structure and its cost of capital at different levels of total capital investment.

This question tested from Session 11, Reading 45, LOS j

Question 78

Which of the following board characteristics and practices are least likely to be considered supportive of the protection of shareholders’ interests?

A)    The board routinely includes management at its meetings.

B)   The chairman of the board is not the CEO, or former CEO of the firm.

C)   A majority of the board of directors is comprised of independent, non-management, members.

D)   Board members are not closely aligned with a firm supplier, customer, or pension advisor.

The correct answer was A) The board routinely includes management at its meetings.

It is not generally considered to be supportive of shareholder protection to meet regularly in the presence of management. The concern here is that management presence may have a tendency to influence the independence of board members’ decisions and objectivity.

This question tested from Session 11, Reading 48, LOS b

Question 79

Which of the following statements about portfolio theory is least accurate?

A)    For a two-stock portfolio, the lowest risk occurs when the correlation coefficient is close to negative one.

B)   Assuming that the correlation coefficient is less than one, the risk of the portfolio will always be less than the simple weighted average of individual stock risks.

C)   When the return on an asset added to a portfolio has a correlation coefficient of less than one with the other portfolio asset returns but has the same risk, adding the asset will not decrease the overall portfolio standard deviation.

D)   Risk aversion results in an upward sloping security market line.

The correct answer was C) When the return on an asset added to a portfolio has a correlation coefficient of less than one with the other portfolio asset returns but has the same risk, adding the asset will not decrease the overall portfolio standard deviation.

When the return on an asset added to a portfolio has a correlation coefficient of less than one with the other portfolio asset returns but has the same risk, adding the asset will decrease the overall portfolio standard deviation. Any time the correlation coefficient is less than one, there are benefits from diversification. The other choices are true.

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