羅斯公司理財(cái)題庫(kù)全集

1、Chapter13Risk,CostofCapital,andCapitalBudgetingAnswerKeyMultipleChoiceQuestionsTheweightedaverageofthefirmscostsofequity,preferredstock,andaftertaxdebtisthe:rewardtoriskratioforthefirm.expectedcapitalgainsyieldforthestock.expectedcapitalgainsyieldforthefirm.portfoliobetaforthefirm.weightedaveragecos

2、tofcapital(WACC).Difficultylevel:EasyTopic:WACCType:DEFINITIONSIftheCAPMisusedtoestimatethecostofequitycapital,theexpectedexcessmarketreturnisequaltothe:returnonthestockminustherisk-freerate.differencebetweenthereturnonthemarketandtherisk-freerate.betatimesthemarketriskpremium.betatimestherisk-freer

3、ate.marketrateofreturn.Difficultylevel:EasyTopic:CAPMType:DEFINITIONSThebestfitlineofapairwiseplotofthereturnsofthesecurityagainstthemarketindexreturnsiscalledthe:SecurityMarketLine.CapitalMarketLine.characteristicline.riskline.Noneoftheabove.Difficultylevel:MediumTopic:CHARACTERISTICLINEType:DEFINI

4、TIONSTheuseofdebtiscalled:ductionleverage.financialleverage.totalassetturnoverrisk.businessrisk.Difficultylevel:MediumTopic:USEOFDEBTType:DEFINITIONSTheweightedaveragecostofcapitalforafirmisthe:discountratewhichthefirmshouldapplytoalloftheprojectsitundertakes.overallratewhichthe

5、firmmustearnonitsexistingassetstomaintainthevalueofitsstock.ratethefirmshouldexpecttopayonitsnextbondissue.maximumratewhichthefirmshouldrequireonanyprojectsitundertakes.rateofreturnthatthefirmspreferredstockholdersshouldexpecttoearnoverthelongterm.Difficultylevel:MediumTopic:WEIGHTEDAVERAGECOSTOFCAP

6、ITALType:DEFINITIONSTheWACCusedtotheexpectedcashflowswhenthefirmhas.discount;debtandequityinthecapitalstructurediscount;shorttermfinancingonthebalancesheetincrease;debtandequityinthecapitalstructuredecrease;shorttermfinancingonthebalancesheetNoneoftheabove.Difficultylevel:MediumTopic:WACCType:CONCEP

7、TSUsingtheCAPMtocalculatethecostofcapitalforariskyprojectassumesthat:usingthefirmsbetaisthesamemeasureofriskastheproject.thefirmisall-equityfinanced.thefinancialriskisequaltobusinessrisk.BothAandB.BothAandC.Difficultylevel:MediumTopic:CAPMType:CONCEPTSTheuseofWACCtoselectinvestmentsisacceptablewhent

8、he:correlationofallnewprojectsareequal.NPVispositivewhendiscountedbytheWACC.riskoftheprojectsareequaltotheriskofthefirm.firmiswelldiversifiedandtheunsystematicriskisnegligible.Noneoftheabove.Difficultylevel:EasyTopic:WACCType:CONCEPTSIftheriskofaninvestmentprojectisdifferentthanthefirmsriskthen:youm

9、ustadjustthediscountratefortheprojectbasedonthefirmsrisk.youmustadjustthediscountratefortheprojectbasedontheprojectrisk.youmustexerciseriskaversionandusethemarketrate.anaveragerateacrosspriorprojectsisacceptablebecauseestimatescontainerrors.onemusthavetheactualdatatodetermineanydifferencesinthecalcu

10、lations.Difficultylevel:EasyTopic:DISCOUNTRATEType:CONCEPTSIftheprojectbetaandIRRcoordinatesplotabovetheSMLtheprojectshouldbe:accepted.rejected.Itisimpossibletotell.ItwilldependontheNPV.Noneoftheabove.Difficultylevel:MediumTopic:SECURITYMARKETLINEType:CONCEPTSThebetaofasecurityprovidesan:estimateoft

11、hemarketriskpremium.estimateoftheslopeoftheCapitalMarketLine.estimateoftheslopeoftheSecurityMarketLine.estimateofthesystematicriskofthesecurity.Noneoftheabove.Difficultylevel:EasyTopic:BETAType:CONCEPTSRegressionanalysiscanbeusedtoestimate:beta.therisk-freerate.standarddeviation.variance.expectedret

12、urn.Difficultylevel:EasyTopic:BETAESTIMATIONType:CONCEPTSBetameasuresdependhighlyonthe:directionofthemarketvariance.overallcycleofthemarket.varianceofthemarketandasset,butnottheirco-movement.covarianceofthesecuritywiththemarketandhowtheyarecorrelated.Alloftheabove.Difficultylevel:MediumTopic:BETATyp

13、e:CONCEPTSTheformulaforcalculatingbetaisgivenbythedividingtheofthestockwiththemarketportfoliobytheofthemarketportfolio.variance;covariancecovariance;variancestandarddeviation;varianceexpectedreturn;varianceexpectedreturn;covarianceDifficultylevel:MediumTopic:BETAType:CONCEPTSTheslopeofthecharacteris

14、ticlineistheestimated:intercept.beta.unsystematicrisk.marketvariance.marketriskpremium.Difficultylevel:MediumTopic:BETAANDCHARACTERISTICLINEType:CONCEPTSCompaniesthathavehighlycyclicalsaleswillhavea:lowbetaifsalesarehighlydependentonthemarketcycle.highbetaifsalesarehighlydependentonthemarketcycle.hi

15、ghbetaifsalesareindependentofthemarketcycle.Alloftheabove.Noneoftheabove.Difficultylevel:MediumTopic:CYCLICALBUSINESSANDBETAType:CONCEPTSBetasmayvarysubstantiallyacrossanindustry.Thedecisiontousetheindustryorfirmbetatoestimatethecostofcapitaldependson:howsmalltheestimationerrorsareofallbetasacrossin

16、dustries.howsimilarthefirmsoperationsaretotheoperationsofallotherfirmsintheindustry.whetherthecompanyisaleaderorfollower.thesizeofthecompanyspublicfloat.Noneoftheabove.Difficultylevel:MediumTopic:INDUSTRYORFIRMBETAType:CONCEPTSBetaisusefulinthecalculationofthe:panysmarketrate.Difficultylevel:MediumT

17、opic:BETAType:CONCEPTSForamulti-productfirm,ifaprojectsbetaisdifferentfromthatoftheoverallfirm,thenthe:CAPMjectshouldbediscounted

18、attheT-billrate.Difficultylevel:MediumTopic:PROJECTANDFIRMBETAType:CONCEPTSTheproblemofusingtheoverallfirmsbetaindiscountingprojectsofdifferentriskisthe:firmwouldaccepttoomanyhigh-riskprojects.firmwouldrejecttoomanylowriskprojects.firmwouldrejecttoomanyhigh-riskprojects.firmwouldaccepttoomanylowrisk

19、projects.BothAandB.Difficultylevel:MediumTopic:FIRMSBETAType:CONCEPTSTheassetbetaofaleveredfirmisgenerally:equaltotheequitybeta.differentfromtheequitybeta.differentfromthedebtbeta.thesimpleaverageoftheequitybetaanddebtbeta.BothBandC.Difficultylevel:MediumTopic:ASSETBETAType:CONCEPTSComparingtwoother

20、wiseequalfirms,thebetaofthecommonstockofaleveredfirmisthanthebetaofthecommonstockofanunleveredfirm.equaltosignificantlylessslightlylessgreaterNoneoftheabove.Difficultylevel:MediumTopic:LEVEREDVS.UNLEVEREDBETAType:CONCEPTSThebetaofafirmisdeterminedbywhichofthefollowingfirmcharacteristics?Cyclesinreve

21、nuesOperatingleverageFinancialleverageAlloftheabove.Noneoftheabove.Difficultylevel:MediumTopic:DETERMINANTSOFBETAType:CONCEPTSThebetaofafirmismorelikelytobehighunderwhattwoconditions?A.HighcyclicalbusinessactivityandlowoperatingleverageB.HighcyclicalbusinessactivityandhighoperatingleverageC.Lowcycli

22、calbusinessactivityandlowfinancialleverageD.LowcyclicalbusinessactivityandlowoperatingleverageE.Noneoftheabove.Difficultylevel:MediumTopic:FACTORSAFFECTINGBETAType:CONCEPTSAfirmwithcyclicalearningsischaracterizedby:A.revenuepatternsthatvarywiththebusinesscycle.B.highlevelsofdebtinitscapitalstructure

23、.highfixedcosts.highpriceperunit.lowcontributionmargins.Difficultylevel:MediumTopic:CYCLICALEARNINGSType:CONCEPTSAfirmwithhighoperatingleveragehas:A.lowfixedcostsinitsproductionprocess.highvariablecostsinitsproductionprocess.highfixedcostsinitsproductionprocess.highpriceperunit.lowpriceperunit.Diffi

24、cultylevel:MediumTopic:OPERATINGLEVERAGEType:CONCEPTSIfafirmhaslowfixedcostsrelativetoallotherfirmsinthesameindustry,alargechangeinsalesvolume(eitherupordown)wouldhave:asmallerchangeinEBITforthefirmversustheotherfirms.noeffectinanywayonthefirmsasvolumedoesnoteffectfixedcosts.adecreasingeffectonthecy

25、clicalnatureofthebusiness.alargerchangeinEBITforthefirmversustheotherfirms.Noneoftheabove.Difficultylevel:MediumTopic:OPERATINGLEVERAGEType:CONCEPTSAfirmwithhighoperatingleverageischaracterizedbywhileonewithhighfinancialleverageischaracterizedby.lowfixedcostofproduction;lowfixedfinancialcostshighvar

26、iablecostofproduction;highvariablefinancialcostshighfixedcostsofproduction;highfixedfinancialcostslowcostsofproduction;highfixedfinancialcostshighfixedcostsofproduction;lowvariablefinancialcostsDifficultylevel:MediumTopic:OPERATINGANDFINANCIALLEVERAGEType:CONCEPTSFirmswhoserevenuesarestronglycyclica

27、lleverageishigharelikelytohave:lowbetas.highbetas.zerobetas.negativebetas.Noneoftheabove.and whose operatingDifficultylevel:MediumTopic:DETERMINANTSOFBETAType:CONCEPTSAnindustryislikelytohavealowbetaifthe:streamofrevenuesisstableandlessvolatilethanthemarket.economyisinarecession.marketforitsgoodsisu

28、naffectedbythemarketcycle.BothAandB.BothAandC.Difficultylevel:MediumTopic:DETERMINANTSOFBETAType:CONCEPTSFortheleveredfirmtheequitybetaistheassetbeta.greaterthanlessthanequaltosometimesgreaterthanandsometimeslessthanNoneoftheabove.Difficultylevel:MediumTopic:ASSETANDEQUITYBETASType:CONCEPTShave a lo

29、werAllelseequal,amoreliquidstockwillbetamarketpremiumcostofcapitalBothAandB.BothAandC.Difficultylevel:ChallengeTopic:LIQUIDITYType:CONCEPTSTwostockmarketbasedcostsofliquiditythataffectsthecostofcapitalarethe:bid-askspreadandthespecialistspread.marketimpactcostandthebrokeragecosts.investoropportunity

30、costandthebrokeragecosts.bid-askspreadandthemarketimpactcosts.Noneoftheabove.Difficultylevel:MediumTopic:LIQUIDITYType:CONCEPTSWhenaspecialistiscaughtinthemiddleofatradebetweeninformedanduniformedtraders,whicheffectivelyeliminatesthespreadorcausesaloss,issubjectto:marketimpactcosts.adverseselection.

31、brokersquotationbias.increasingthenumberofuninformedtraders.Noneoftheabove.Difficultylevel:ChallengeTopic:ADVERSESELECTIONType:CONCEPTSAllelseequal,newshareholderswillthecapitalgainsofexistingshareholders.diluteholdconstantincreaseAlloftheaboveItisimpossibletotell.Difficultylevel:MediumTopic:CAPITAL

32、GAINSType:CONCEPTSThefollowingaremethodstoestimatethemarketriskpremium:usehistoricaldatatoestimatefutureriskpremium.usethedividenddiscountmodeltoestimateriskpremium.usethebondvaluationmodeltoestimategrowthinbondpriceswithdifferentcostsofcapital.AandB.AandC.Difficultylevel:MediumTopic:MARKETRISKPREMI

33、UMType:CONCEPTSBetaistheslopeofthe:A.efficientfrontier.marketportfolio.securitymarketline.characteristicline.Noneoftheabove.Difficultylevel:MediumTopic:BETAType:CONCEPTSTwostocksthathavethesamebetahavethesamecorrelationbecause:may;becausecorrelationmeasuresthesensitivityoftheS&Ptothemarketportfolio.

34、will;becausecorrelationmeasuresthetightnessoffitaroundtheregressionline.maynot;becausecorrelationmeasuresthetightnessoffitaroundtheregressionline.maynot;becausecorrelationmeasuresthesensitivitytochange.E.Noneoftheabove.Difficultylevel:MediumTopic:BETAANDCORRELATIONType:CONCEPTSWhenusingthecostofdebt

35、,therelevantnumberisthe:pre-taxcostofdebtsincemostcorporationspaytaxesatthesametaxrate.pre-taxcostofdebtsinceitistheactualratethefirmispayingbondholders.post-taxcostofdebtsincedividendsaretaxdeductible.post-taxcostofdebtsinceinterestistaxdeductible.Noneoftheabove.Difficultylevel:MediumTopic:COSTOFDE

36、BTType:CONCEPTSJacksConstructionCo.has80,000bondsoutstandingthataresellingatparvalue.Bondswithsimilarcharacteristicsareyielding8.5%.Thecompanyalsohas4millionsharesofcommonstockoutstanding.Thestockhasabetaof1.1andsellsfor$40ashare.TheU.S.Treasurybillisyielding4%andthemarketriskpremiumis8%.Jackstaxrat

37、eis35%.WhatisJacksweightedaveragecostofcapital?7.10%7.39%10.38%10.65%11.37%R=.04+(1.1.08)=.128Debt:80,000$1,000=$80mCommon:4m$40=$160mTotal=$80m+$160m=$240mWACC=$16mx.128x.085x(l-.35)=0853S3+.01841710375=1038%I$240m)I$24clm)Difficultylevel:MediumTopic:WEIGHTEDAVERAGECOSTOFCAPITALType:PROBLEMSPetersA

38、udioShophasacostofdebtof7%,acostofequityof11%,andacostofpreferredstockof8%.Thefirmhas104,000sharesofcommonstockoutstandingatamarketpriceof$20ashare.Thereare40,000sharesofpreferredstockoutstandingatamarketpriceof$34ashare.Thebondissuehasatotalfacevalueof$500,000andsellsat102%offacevalue.Thetaxrateis3

39、4%.WhatistheweightedaveragecostofcapitalforPetersAudioShop?6.14%6.54%8.60%9.14%9.45%Debt:$500,0001.02=$.51mPreferred:40,000$34=$1.36mCommon:104,000$20=$2.08mTotal=$.51m+$1.36m+$2.08m=$3.95mWACC=/$2pl-36m。十。丁,_.34)V,057924+.027544I$355mJI$工95m)十005965=09I43S=9.14percentDifficultylevel:MediumTopic:WEI

40、GHTEDAVERAGECOSTOFCAPITALType:PROBLEMSPhilsCarvings,Inc.wantstohaveaweightedaveragecostofcapitalof9%.Thefirmhasanafter-taxcostofdebtof5%andacostofequityof11%.Whatdebt-equityratioisneededforthefirmtoachieveitstargetedweightedaveragecostofcapital?.0.67.09=We.11+(1-Ve).05)=.11We+.05-.05We;.04

41、=.06We;W=66.67%;Wd=1-We=100%-66.67%=33.33%;Debt-equityratio=33.33%66.67%=.50Difficultylevel:MediumTopic:WEIGHTEDAVERAGECOSTOFCAPITALType:PROBLEMSJakesSoundSystemshas210,000sharesofcommonstockoutstandingatamarketpriceof$36ashare.Lastmonth,Jakespaidanannualdividendintheamountof$1.593pershare.Thedivide

42、ndgrowthrateis4%.Jakesalsohas6,000bondsoutstandingwithafacevalueof$1,000perbond.Thebondscarrya7%coupon,payinterestannually,andmaturein4.89years.Thebondsaresellingat99%offacevalue.Thecompanystaxrateis34%.WhatisJakesweightedaveragecostofcapital?5.3%5.8%6.3%6.9%7.2%Debt:6,000$1,000.99=$5.94mCommon:210,

43、000$36=$7.56mTotal=$5.94m+$7.56m=$13.50mR = ($1.5931.04)$36+.04=.08602Enter 4.89990N I/YPVSolve for7.2507010(10PMT FVWACC?=r $7.56m$13,50m.08602“Km xiO725o Xil-34) j = 0+817 + 02105 = 06922 = 6.9崛Difficultylevel:MediumTopic:WEIGHTEDAVERAGECOSTOFCAPITALType:PROBLEMSTheConsolidatedTransferCo.isanall-e

44、quityfinancedfirm.A.B.C.DE.Thebetais.75,themarketriskpremiumis8%andtherisk-freerateis4%.WhatistheexpectedreturnofConsolidated?7%8%9%10%13%.04+0.75(.08)=.10=10%Difficultylevel:EasyTopic:CAPMType:PROBLEMSAssumingtheCAPMorone-factormodelholds,whatisthecostofequityforafirmifthefirmsequityhasabetaof1.2,t

45、herisk-freerateofreturnis2%,theexpectedreturnonthemarketis9%,andthereturntothecompanysdebtis7%?10.4%10.8%12.8%14.4%Noneoftheabove.Rs=Rf+(Rm-Rf)=.02+1.2(.09-.02)=.104=10.4%Difficultylevel:MediumTopic:CAPMType:PROBLEMSThecostofequityforRyanCorporationis8.4%.Iftheexpectedreturnonthemarketis10%andtherisk-freerateis5%,thentheequitybetais.0.480.681.251.68(.10 - .05);= .68Impossibletocalculatewithinformationgiven.Rs=Rf+(Rm-Rf);.084=.05+Difficultylevel:MediumTopic:EQUITYBETAType:PROBLEMSSuppos