公司金融.docx

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1、Corporate Fina nce 1. A. B. C.Corporate governance: complies with a set of global standards. is independent of both shareholder theory and stakeholder theory. seeks to minimize and manage conflicting interests between insiders and external shareholders.C is correct. Corporate governance is the arran

2、gement of checks, balances, and incentives a company needs to minimize and manage the conflicting interests between insiders and external shareholders.2.Which group of company stakeholders would be least affected if the firms financial position weakens? Suppliers Customers Managers and employeesA. B

3、. C.B is correct. Compared with other stakeholder groups, customers tend to be less concerned with, and affected by, a companys financial performance.3.Which of the following represents a principalagent conflict between shareholders and management? Risk tolerance Multiple share classes Accounting an

4、d reporting practicesA. B. C.A is correct. Shareholder and manager interests can diverge with respect to risk tolerance. In some cases, shareholders with diversified investment portfolios can have a fairly high risk tolerance because specific company risk can be diversified away. Managers are typica

5、lly more risk averse in their corporate decision making to better protect their employment status.4.Which of the following issues discussed at a shareholders general meeting would most likely require only a simple majority vote for approval? Voting on a merger Election of directors Amendments to byl

6、awsA. B. C.B is correct.The election of directors is considered an ordinary resolution and, therefore, requires only a simple majority of votes to be passed.5.Which of the following statements regarding stakeholder management is most accurate? Company management ensures compliance with all applicabl

7、e laws and regulations. Directors are excluded from voting on transactions in which they hold material interest. The use of variable incentive plans in executive remuneration is decreasing.A.B.C.B is correct. Often, policies on related-party transactions require that such transactions or matters be

8、voted on by the board (or shareholders), excluding the director holding the interest.6.Which of the following represents a responsibility of a companys board of directors? Implementation of strategy Enterprise risk management Considering the interests of shareholders onlyA. B. C.B is correct. The bo

9、ard typically ensures that the company has an appropriate enterprise risk management system in place.7.Which of the following statements about non-market factors in corporate governance is most accurate? Stakeholders can spread information quickly and shape public opinion. 60 A civil law system offe

10、rs better protection of shareholder interests than does a common law system. Vendors providing corporate governance services have limited influence on corporate governance practices.A. B.C.A is correct. Social media has become a powerful tool for stakeholders to instantly broadcast information with

11、little cost or effort and to compete with company management in influencing public sentiment.8.Which of the following statements regarding corporate shareholders is most accurate? Cross-shareholdings help promote corporate mergers. Dual-class structures are used to align economic ownership with cont

12、rol. Affiliated shareholders can protect a company against hostile takeover bids.A. B. C.C is correct. The presence of a sizable affiliated stockholder (such as an individual, family trust, endowment, or private equity fund) can shield a company from the effects of voting by outside shareholders.9.W

13、hich of the following statements about environmental, social, and governance (ESG) in investment analysis is correct? ESG factors are strictly intangible in nature. ESG terminology is easily distinguishable among investors. Environmental and social factors have been adopted in investment analysis mo

14、re slowly than governance factors.A. B. C.C is correct. The risks of poor corporate governance have long been understood by analysts and shareholders. In contrast, the practice of considering environmental and social factors has been slower to take hold.10. Which of the following statements regardin

15、g ESG implementation methods is most accurate? Negative screening is the most commonly applied method. Thematic investing considers multiple factors. The best-in-class strategy excludes industries with unfavorable ESG aspects.A. B. C.A is correct. Negative screening, which refers to the practice of

16、excluding certain sectors or companies that violate accepted standards in such areas as human rights or environmental concerns, is the most common ESG investment strategy (implementation method).11.Given the following cash flows for a capital project, calculate the NPV and IRR. The required rate of

17、return is 8 percent.NPV $1,905 $1,905 $3,379IRR 10.9% 26.0% 10.9%A. B. C.C is correct.NPV = -50,000 +15,00015,00015,00015,00015,000+1.0821.0831.0841.0851.08Year012345 Cash flow-50,00015,00015,00020,00010,0005,000NPV = -50,000 + 13,888.89 + 12,860.08 + 15,876.64 + 7,350.30 + 3,402.92 NPV = 50,000 + 5

18、3,378.83 = 3,378.83 The IRR, found with a financial calculator, is 10.88 percent.12. Given the following cash flows for a capital project, calculate its payback period and discounted payback period. The required rate of return is 8 percent.The discounted payback period is: A. B. C.0.16 years longer

19、than the payback period. 0.51 years longer than the payback period. 1.01 years longer than the payback period.C is correct.As the table shows, the cumulative cash flow offsets the initial investment in exactly three years. The payback period is 3.00 years. The discounted payback period is between fo

20、ur and five years. The discounted payback period is 4 years plus 24.09/3,402.92 = 0.007 of the fifth year cash flow, or 4.007 = 4.01 years. The discounted payback period is 4.01 3.00 = 1.01 years longer than the payback period.13. An investment of $100 generates after-tax cash flows of $40 in Year 1

21、, $80 in Year 2, and $120 in Year 3. The required rate of return is 20 percent. The net present value is closest to: $42.22. $58.33. $68.52.A. B. C.B is correct. = = = += $. ( + ). . . Year012345 Cash flow-50,00015,00015,00020,00010,0005,000 Cumulative cash flow-50,000-35,000-20,000010,00015,000Disc

22、ounted cash flow-50,00013,888.8912,860.0815,876.647,350.303,402.92Cumulative DCF-50,000-36,111.11-23,251.03-7,374.38-24.093378.83Year012345 Cash flow-50,00015,00015,00020,00010,0005,00014. An investment of $150,000 is expected to generate an after-tax cash flow of $100,000 in one year and another $1

23、20,000 in two years. The cost of capital is 10 percent. What is the internal rate of return? 28.39 percent. 28.59 percent. 28.79 percent.A. B. C.C is correct. The IRR can be found using a financial calculator or with trial and error. Using trial and error, the total PV is equal to zero if the discou

24、nt rate is 28.79 percent.A more precise IRR of 28.7854 percent has a total PV closer to zero.15.Kim Corporation is considering an investment of 750 million won with expected after-tax cash inflows of 175 million won per year for seven years. The required rate of return is 10 percent. What is the pro

25、jects: NPV? 102 million won 157 million won 193 million wonIRR? 14.0% 23.3% 10.0%A. B. C.A is correct. = = += + . = . . The IRR, found with a financial calculator, is 14.02 percent. (The PV is 750, N = 7, and PMT = 175.)16.Kim Corporation is considering an investment of 750 million won with expected

26、 after-tax cash inflows of 175 million won per year for seven years. The required rate of return is 10 percent. Expressed in years, the projects payback period and discounted payback period, respectively, are closest to: 4.3 years and 5.4 years. 4.3 years and 5.9 years. 4.8 years and 6.3 years.A. B.

27、 C.B is correct.Present Value YearCash Flow28.19%28.39%28.59%28.79% 0-150,000-150,000-150,000-150,000-150,000 1100,00078,00977,88877,76777,646 2120,00073,02572,79872,57272,346 Total1,034686338-8The payback period is between four and five years. The payback period is four years plus 50/175 = 0.29 of

28、the fifth year cash flow, or 4.29 years.The discounted payback period is between five and six years. The discounted payback period is five years plus 86.61/98.78 = 0.88 of the sixth year cash flow, or 5.88 years.17. An investment of $20,000 will create a perpetual after-tax cash flow of $2,000. The

29、required rate of return is 8 percent. What is the investments profitability index? 1.08. 1.16. 1.25.A. B. C.C is correct.The present value of future cash flows is =, = , . , = . The profitability index is = , 18. Hermann Corporation is considering an investment of 375 million with expected after- ta

30、x cash inflows of 115 million per year for seven years and an additional after-tax salvage value of 50 million in Year 7. The required rate of return is 10 percent. What is the investments PI? 1.19. 1.33. 1.56.A. B. C.C is correct. = = += . . . Year01234567 Cash flow-750175175175175175175175 Discoun

31、ted cash flow-750159.09144.63131.48119.53108.6 698.7889.80Cumulative DCF-750-590.91-446.28-314.80-195.27-86.6112.17101.97Year01234567 Cash flow-750175175175175175175175 Cumulative cash flow-750-575-400-225-50125300475. = . 19. Erin Chou is reviewing a profitable investment project that has a convent

32、ional cash flow pattern. If the cash flows for the project, initial outlay, and future after- tax cash flows all double, Chou would predict that the IRR would: increase and the NPV would increase. stay the same and the NPV would increase. stay the same and the NPV would stay the same.A. B. C.B is co

33、rrect. The IRR would stay the same because both the initial outlay and the after-tax cash flows double, so that the return on each dollar invested remains the same. All of the cash flows and their present values double. The difference between total present value of the future cash flows and the init

34、ial outlay (the NPV) also doubles.20. Shirley Shea has evaluated an investment proposal and found that its payback period is one year, it has a negative NPV, and it has a positive IRR. Is this combination of results possible? Yes. No, because a project with a positive IRR has a positive NPV. No, bec

35、ause a project with such a rapid payback period has a positive NPV.A. B. C.A is correct. If the cumulative cash flow in one year equals the outlay and additional cash flows are not very large, this scenario is possible. For example, assume the outlay is 100, the cash flow in Year 1 is 100 and the ca

36、sh flow in Year 2 is 5. The required return is 10 percent. This project would have a payback of 1.0 years, an NPV of 4.96, and an IRR of 4.77 percent.21. An investment has an outlay of 100 and after-tax cash flows of 40 annually for four years. A project enhancement increases the outlay by 15 and th

37、e annual after-tax cash flows by 5. As a result, the vertical intercept of the NPV profile of the enhanced project shifts: up and the horizontal intercept shifts left. up and the horizontal intercept shifts right. down and the horizontal intercept shifts left.A. B. C.A is correct. The vertical inter

38、cept changes from 60 to 65 (NPV when cost of capital is 0%), and the horizontal intercept (IRR, when NPV equals zero) changes from 21.86 percent to 20.68 percent.22. Projects 1 and 2 have similar outlays, although the patterns of future cash flowsare different. The cash flows as well as the NPV and

39、IRR for the two projects are shown below. For both projects, the required rate of return is 10 percent.The two projects are mutually exclusive. What is the appropriate investment decision? A. B. C.Invest in both projects. Invest in Project 1 because it has the higher IRR. Invest in Project 2 because

40、 it has the higher NPV.C is correct. When valuing mutually exclusive projects, the decision should be made with the NPV method because this method uses the most realistic discount rate, namely the opportunity cost of funds. In this example, the reinvestment rate for the NPV method (here 10 percent)

41、is more realistic than the reinvestment rate for the IRR method (here 21.86 percent or 18.92 percent).23. Consider the two projects below. The cash flows as well as the NPV and IRR for the two projects are given. For both projects, the required rate of return is 10 percent.What discount rate would r

42、esult in the same NPV for both projects? A. B. C.A rate between 0.00 percent and 10.00 percent. A rate between 10.00 percent and 15.02 percent. A rate between 15.02 percent and 16.37 percent.B is correct. For these projects, a discount rate of 13.16 percent would yield the same NPV for both (an NPV

43、of 6.73).24. Wilson Flannery is concerned that this project has multiple IRRs.Year0123Cash Flows Year01234NPVIRR (%) Peoject 1-1003636363614.1216.376Peoject 2-10000017519.5315.02Cash Flows Year01234NPVIRR (%) Peoject 1-502020202013.4021.86Peoject 2-5000010018.3018.92How many discount rates produce a

44、 zero NPV for this project? A. B. C.One, a discount rate of 0 percent. Two, discount rates of 0 percent and 32 percent. Two, discount rates of 0 percent and 62 percent.C is correct. Discount rates of 0 percent and approximately 61.8 percent both give a zero NPV .25. With regard to the net present va

45、lue (NPV) profiles of two projects, the crossover rate is best described as the discount rate at which: two projects have the same NPV. two projects have the same internal rate of return. a projects NPV changes from positive to negative.A. B. C.A is correct. The crossover rate is the discount rate a

46、t which the NPV profiles for two projects cross; it is the only point where the NPVs of the projects are the same.26. With regard to net present value (NPV) profiles, the point at which a profile crosses the vertical axis is best described as: the point at which two projects have the same NPV. the s

47、um of the undiscounted cash flows from a project. a projects internal rate of return when the projects NPV is equal to zero.A. B. C.B is correct. The vertical axis represents a discount rate of zero. The point where the profile crosses the vertical axis is simply the sum of the cash flows.27. With regard to net present value (NPV) profiles, the point at which a profile crosses the horizontal axis is best described as: the point at which two projects have the same NPV. the sum of the undiscounted cash f