Question 1

Which of the following can be related to a company’s stock price?

Options :

A : Economic Value Added

B : Residual Income

C : Return on Investment

D : Operating Profit

Answer: A

Question 2

Which agency implements monetary policy through purchases and sales of treasury securities?

Options :

A : Federal Deposit Insurance Corporation

B : Fannie Mae

C : Office of the Comptroller of the Currency

D : Federal Reserve

Answer: D

Question 3

The issue of corporate governance in publicly traded companies arises from:

Options :

A : the separation of shareholder ownership and management control.

B : the conflict between the interests of bond holders and equity holders.

C : the secrecy surrounding the proceedings of board of directors meetings.

D : the inherent conflict of interest that exists when accounting firms are paid to provide audit services.

Answer: A

Question 4

The before-tax cost of long-term debt is 10% and the cost of equity is 12%. Magento-Certified-Professional-Cloud-Developer The marginal tax rate is 35%. The company's weighted average cost of capital is:

Options :

A : 6.3%.

B : 8.3%.

C : 10.6%.

D : 11.3%.

Answer: B

Question 5

The owner of XYZ Company just completed an initial public offering. Which of the following is the MOST LIKELY outcome?

Options :

A : The owner will gain more operational control.

B : The owner will be able to diversify his personal portfolio.

C : The company will save on accounting costs.

D : The company will increase productivity.

Answer: B

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