BUS 401 Week 4 Quiz Version a

 This document of BUS 401 Week 4 Quiz Version a consists of:


 1. If a firm has no operating leverage and no financial leverage, then a 10% increase in sales will have what effect on EPS?

 2. As production levels increase,

 3. The payment of dividends may indirectly result in closer monitoring of management's investment activities, thus increasing shareholder value by

 4. A firm's optimal capital structure occurs where?

 5. JBC Corp. declared a dividend of $2 per share, which was an increase of 25% from the prior year, yet JBC Corp. stock declined by 3% the day of the announcement. RBG Corp. declared a dividend of $2 per share, which was the same as the prior year, and its stock increased in value by 2% on the day of the announcement. These events could be most readily explained by the

 6. What is the economic difference between a stock dividend and a stock split?

 7. When deciding upon how much debt financing to employ, most practitioners would cite which of the following as the most important influence on the level of the debt ratio?

 8. Business risk refers to

 9. The Modigliani and Miller hypothesis does not work in the "real world" because

 10. Benkart's Tire Store has fixed costs of $220,000. Tires sell for $95 each and have a unit variable cost of $45. What is Benkart's break-even point in units?

Business - General Business
 1.



 Question :



 Investors will make an investment if:















 Student Answer:





 the historical rate of return exceeds the expected rate of return.











 the required rate of return exceeds the expected rate of return.











 the expected rate of return exceeds the actual rate of return.













 the expected rate of return exceeds the required rate of return.







 Instructor Explanation:



 The answer can be found in Section 9.1: The Building Blocks of the Required Return.























 Points Received:



 1 of 1







 Comments:























 2.



 Question :



 Which of the following is true regarding market risk?















 Student Answer:





 It is measured by beta.











 It is also called nondiversifiable risk.











 It is also called systematic risk.













 all of the above







 Instructor Explanation:



 The answer can be found in Section 9.2: Risk and Return.























 Points Received:



 1 of 1







 Comments:























 3.



 Question :



 Which of the following statements regarding the cost of equity is true?















 Student Answer:







 It can be estimated in three different ways.











 It is always estimated using the present value of future dividends approach.











 It is estimated by solving for the discount rate for a perpetuity.











 It is generally lower than the cost of debt because equity holders are paid after taxes are paid.







 Instructor Explanation:


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