An accountant is fired after reporting to the SEC that she witnessed the CFO inappropriately reduce expenses ahead of the quarterly earnings announcement. Which of the following would apply?
A. The accountant is protected by `whistle-blower' laws.
B. The CFO is liable for Bank Secrecy Act reporting.
C. The accountant is in violation of Section 404 of the Sarbanes-Oxley Act.
D. The CFO is protected by the code of ethics.
Without regard to costs, which of the following concentration mechanisms maximizes investment income in a multi-bank environment?
A. Wire transfer
B. Zero balance account
C. ACH
D. DTC
Which of the following concentration transfer alternatives provide the fastest availability of funds?
A. Point-of-sale terminal transfers
B. Electronic depository transfers
C. Wire transfers
D. Value-added banks
A company has selected a specific project for investment. If the weighted average cost of capital (WACC) used to evaluate the project results in a negative net present value (NPV), which of the following will occur?
A. The WACC will be reduced.
B. The overall value of the company will be increased.
C. The overall value of the company will be reduced.
D. The overall value of the company will not be impacted.
James Corp has a 7.98% WACC and an assumed tax rate of 30%. James Corp employed 70,000,000 of capital (long-term debt and equity) in a project that generated an operating profit of 9,500,000, after depreciation expense of 300,000. EVA in this case would be:
A. 764,000.
B. 1,064,000.
C. 1,087,940.
D. 1,274,000.
A manufacturing company's long-term capital structure is 30% debt and 70% equity, its cost of equity is 10%, its average cost of debt is 8%, and the marginal tax rate is 34%. If the company has invested total capital of $567,865 in its production unit and the unit's operating profit is $79,856, what is the economic value added (EVA) of the unit?
A. ($674.35)
B. $3,982.14
C. $5,412.56
D. $6,571.78
What is the Weighted Average Cost of Capital for XYZ Company, assuming the following:
The pre-tax cost of long term debt is 8%
The cost of equity is 11%
The marginal tax rate is 33%
Total liabilities = $75,000
Long term debt = $50,000
Owners equity = $75,000
A. 7.2%
B. 7.8%
C. 8.7%
D. 12.4%
An electronics firm realizes that due to adverse events projected over the next 18 months there is a 5% chance that its profits will decrease by $100,000. The company's beta is .08 and its cost of capital is 9%. What approach is the company MOST LIKELY using to determine its level of financial risk?
A. Value at Risk
B. Sensitivity analysis
C. Scenario analysis
D. Monte Carlo simulation
Which of the following methods of compensation is NOT used by banks in the United States?
A. Account service fees
B. Value dating
C. Wire charges
D. Check clearing charges
Which of the following occurs when the U.S. dollar strengthens?
A. Foreigners will purchase more U.S. goods.
B. U.S. exports become more competitive.
C. Foreign exports become less competitive.
D. Foreign exports become more competitive.
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