Financial Management

211. The relationship between the values of the two currencies is known as:

1. the currency rate
2. the conversion rate
3. the forward rate
4. the foreign exchange rate

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212. Forward and spot transactions take place:

1. over-the-counter
2. in the foreign currency exchange
3. between domestic and foreign governments
4. between individuals and foreign governments

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213. Which of the following is not a primary source of international business financing?

1. The Export Development Bank
2. The eurobond market
3. International equity markets
4. Domestic bond and equity markets

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214. In analyzing the firm, the investor should consider:

1. the risk inherent in the firm's operation
2. the time patterns over which the firm's earnings increase/decrease
3. the quality and reliability of the firm's reported earnings
4. all of the above should be considered

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215. The main focus of finance for the last 40 years has been:

1. mergers and acquisitions
2. conglomerate firms
3. inflation
4. risk-return relationships

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216. Which of the following is not true regarding the P/E ratio?

1. It is the multiplier applied to earnings per share to determine current value
2. P/E ratios allow comparison of the relative market values of many companies based on $1 of earnings per share.
3. It indicates expectations about the future of a company.
4. Firms expected to provide returns greater than those of the market with equal or less risk normally have P/E ratios lower than the market P/E.

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217. The aftertax cost of a tax deductible expense is:

1. cost times the tax rate
2. cost times (1-tax rate)
3. the cost of the expense
4. the cost divided by the tax rate

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218. Liquidity ratios measure:

1. the speed at which the firm is turning over its assets
2. the ability of the firm to earn an adequate return on sales, total assets, and invested capital
3. the firm's ability to pay off short term obligations as they are due
4. the debt position of the firm in light of its assets and earning power.

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219. All of the following are debt utilization ratios except:

1. debt to total assets
2. times interest earned
3. fixed charge coverage
4. debt to sales

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220. The most comprehensive means of financial forecasting is:

1. through the use of securities analysts forecasts for the firm
2. done with a short term time horizon
3. done with a long term time horizon
4. through the use of pro forma financial statements

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