CFA Domain 5: Corporate Issuers (Quiz 2)

"A company provides the following data (in RUB): If the company produces and sells 50,000 units, the total contribution margin from those units is closest to:"

A company issued 1 million shares of fixed-rate perpetual preferred stock five years ago. Each share was issued at £50 and pays a dividend of £1.50. At that time, the company also had 20 million common shares trading at £55 that paid a dividend of £1.10. Management plans on issuing new preferred shares a month from now at £60 per share with the same preferred dividend yield as the previous issuance. The preferred dividend per share on the new issuance is closest to:

According to Modigliani-Miller Proposition I without taxes, if a company reduces the amount of debt in its capital structure, most likely the company's:

Which of the following most accurately describes the opportunity cost of funds used in net present value (NPV) analysis of investment projects?

A company's capital consists of debt of $120 million and equity of $100 million. The company is launching a new product line, which will be financed with $20 million of debt and $10 million of equity. Using the pure-play method, which of the following debt-to-equity values is the most appropriate for calculating the project's beta?

Companies can most likely shorten their cash conversion cycle and generate funds internally by increasing days of:

Analysts most appropriately use the company's weighted average cost of capital to determine a project's:

"An analyst gathers the following data for a company: Based on this information, the days of inventory on hand (DOH) is closest to:"

A CFO meets with a finance manager and states, "I want to know the effect on our forecasted net earnings in response to increases in units sold." The most appropriate metric that the manager should use to conduct the analysis is:

An automobile manufacturer has a factory producing low-margin compact cars. The company is considering converting the factory to the production of luxury sedans, financed by borrowing the necessary funds. The company is also considering selling the factory. Using net present value (NPV) analysis, which of the following is least likely an incremental cash flow for investing in luxury sedan production?

A manufacturer is evaluating a plan to replace an existing product with a new product. For the capital budgeting decision, an externality is most appropriately considered to be the company's:

A mining company sold 3,000 kilos of gold last year at a price of €45,000 per kilo and at a variable cost of €33,000 per kilo. The company had €150,000,000 in fixed operating costs and €60,000,000 in fixed financing costs. All else equal, in order to break even, the company must increase sales by an amount closest to:

Which of the following is most accurate with regard to a dual-class share structure?

Of the following, the most likely source of principal-agent conflict between managers and shareholders is managers' having:

A company invests in Project X in 20X8 and plans to invest in Project Y in 20X9 only if Project X is financially successful. This project interaction is best described as:

A street vendor sells pizza from a food truck. To accommodate rapidly rising customer demand, the vendor seeks to replace the food truck with a much larger restaurant building. Which of the following capital budgeting categories best describes this project?

Which of the following factors will most likely result in a pull, rather than a drag, on a company's liquidity position?

A company has a quick ratio of 0.95. If the company reports current liabilities of HKD400 million, deferred tax liabilities due in 14 months of HKD100 million, and inventory of HKD120 million, its current ratio is closest to:

A company issues a €100 million face value bond for €90 million with 10% semiannual coupon payments. The bond matures in five years. If the company's marginal tax rate is 30% the after-tax cost of debt is closest to:

All else equal, if a firm maintains a larger proportion of equity in its actual capital structure than in its target structure, the most likely reason is that: