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QUESTION

Finance

  1. Financial Crisis occur about every …
    1. 3-5 years
    2. 7-10 years
    3. 15-20 years
  1.  The common cause of all financial crisis is
    1. CEO salaries
    2. Greed
    3. Leverage
    4. Housing bubbles
  1. Who’s actions contributed to the Financial Crisis
    1. banks
    2. consumers
    3. government
    4. all of the above
  1. Marking-to-market as it relates to the Financial Crisis is defined as
    1. An adjustment of Futures account margin at the close of trading
    2. Valuation of asset accounts on the balance sheet to reflect the current market price
    3. Valuation of long term asset values to reflect the current market price in lieu of book value
    4. Valuation of a security based on a price that would be received in an orderly market rather than a forced liquidation to reflect fair value
  1. Lesson not learned. One of the causes of the Asian financial crisis of 1997/8  that contributed to the fall of Bear Stern in 2008 was
    1. Lack of transparency in the mortgage market
    2. Financing longer term investments with short term debt
    3. Extensive use of Credit Default Swaps (CDS)
    4. The repeal of the Glass-Steagall Act
  1. You can trace back the inception of the 2008 Financial Crisis to
    1. 1999
    2. 2001
    3. 2007
    4. 2008
  1. What you should take away from the financial crisis
    1. Don’t borrow money
    2. Establish an emergency account
    3. Stocks are not a good investment
  1. Which of the following is the driver for dividend growth in the constant growth Dividend Discount Model (DDM)?
  1. GDP growth
  2. Capital gains
  3. Stock price appreciation
  4. Growth in EPS
  1. A firm that has a competitive advantage over its competitors will have
  1. An ROE > ROE of competitors
  2. An ROE > g
  3. An ROE > k
  4. An ROE >EPS
  1. Which of the following is not an assumption of DDM
  1. The firm pays a dividend
  2. The dividends are stable
  3. The dividends are growing at a constant rate
  4. The dividend payout ratio is constant
  1. Which of the following statements is INCORRECT
  1. The Gordon model is a perpetuity
  2. The Gordon Model is an intrinsic value model
  3. ROE is a component of growth
  4. The required return can never exceed EPS growth rate
  1. When a security is over-priced
  1. Its required return (K) exceeds its expected return
  2. Its return on equity exceeds its required return
  3. Its expected return exceeds its required return
  4. None of the above
  1. When the firm takes on additional debt, all else being equal, FCFF will
  1. Increase
  2. Decrease
  3. Not change
  4. Increase initially and decrease in future periods
  1. When a firm does not pay a dividend, investors will demand earnings grow at
  1. The firm’s required Rate of Return
  2. a constant growth rate
  3. the firm’s Return on Invested Capital
  4. the firm’s Return on Equity
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