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    Q1 True or False (Correct The False Statements) (20 Marks) ::applicable Problem

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    Ahemd Osama
    This document contains a series of true/false questions about financial concepts, followed by short essay prompts and practice problems related to financial analysis. Some key topics covered include: wealth vs profit maximization, types of financial markets, differences between financial statements, portfolio risk calculation, net present value analysis, and financial ratio analysis.

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    Q1 True or False (Correct The False Statements) (20 Marks) ::applicable Problem

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    Ahemd Osama
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    This document contains a series of true/false questions about financial concepts, followed by short essay prompts and practice problems related to financial analysis. Some key topics covered include: wealth vs profit maximization, types of financial markets, differences between financial statements, portfolio risk calculation, net present value analysis, and financial ratio analysis.

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    This document contains a series of true/false questions about financial concepts, followed by short essay prompts and practice problems related to financial analysis. Some key topics covered include: wealth vs profit maximization, types of financial markets, differences between financial statements, portfolio risk calculation, net present value analysis, and financial ratio analysis.

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    © All Rights Reserved
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    31 views3 pages

    Q1 True or False (Correct The False Statements) (20 Marks) ::applicable Problem

    Uploaded by

    Ahemd Osama
    This document contains a series of true/false questions about financial concepts, followed by short essay prompts and practice problems related to financial analysis. Some key topics covered include: wealth vs profit maximization, types of financial markets, differences between financial statements, portfolio risk calculation, net present value analysis, and financial ratio analysis.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Q1.

    True or false (correct the false statements)(20 marks)

    1-Wealth maximization is superior to the profit maximization., true

    2-The cost of capital is equal to the interest expense on the money


    borrowed for the project. false( interest + dividend)
    3-secondary markets are the markets in which corporations raise new
    capital. False( primarily)
    4-Inflation can be viewed as unsystematic risk, that unique to a particular
    company or industry. False systematic

    5-The risk of a portfolio is not weighted average of the standard deviation


    of the individual assets in the portfolio. true
    6-The smaller the positive correlation coefficient the lower the risk . true
    7-The portfolio risk will almost be higher than the weighted average of
    standard deviation of the individual assets. false lower
    8-zero correlation coefficient implies that the returns from two securities
    are significantly correlated. False not correlated
    9-the income statement summarizes the revenues and expenses of the firm
    at a specific moment of time. False over period of time
    10-Cash flow is a projection of future cash receipts and cash
    disbursements of the firm. False cash budget
    11-Deducting the cost of goods sold from net sales gives us operating
    income. true
    12-Activity Ratios measure profits to sales and investment. False
    profitability Ratios
    13-A company's liquidity refers to its ability to meet the financial charges.
    False to meet short term obligation
    14-debt ratio shows the extent to which the firm is financed by debt. true
    15- The lower the current ratio, the more liquid the company. False less
    liquid

    essay
    .a the importance of financial analysis –
    b- the basic types of financial securities-
    c-the difference between balance sheet , income statement ,and cash budget.

    :applicable problem
    a-initial investment of SM project is $42,000 and it is expected to generate
    annual cash flows of $10,000, $15,000, $15,000, and $12,000, respectively and the
    company has a minimum desired rate of return of 12%. Compute:a.Net-present
    value-b. Payback period c- the Profitability Index( ch 3)

    -suppose you deposited the $1000 in 4 payments of $250, each year ( 4 years) ,
    how much would you have in your account at year 4 based on 8% annual
    compounding ,(ordinary annuity). ( ch 3)

    b-suppose You are creating a portfolio of Stock D and Stock BW ,You are
    investing $2,000 in Stock BW and $3,000 in Stock D. Remember that the
    expected return and standard deviation of Stock BW is 9% and 13.15%
    respectively. The expected return and standard deviation of Stock D is 8% and
    10.65% respectively. The correlation coefficient between BW and D is 0.75.

    What is the expected return and standard deviation of the portfolio? Ch 4

    c-shown below are selected data from the balance sheet and income statement of
    Garnet Corporation:
    Balance sheet Income statement
    Assets
    Cash $ 200 Net sales 3700
    Account receivables $ 800 Cost of goods 2500
    $ 1200 Gross profit 0000
    Inventory General expenses 840

    Short term securities $ 50 Interests 70


    Prepaid expenses $ 20 Earnings before taxes 0000
    Total current assets 000000 Taxes 100
    Fixed assets $ 750 Net income 190
    Long term investment 50
    Total assets 00000
    Liabilities and equity
    Account payable $ 140 dividends 130
    Short term loans 350
    Accrued taxes $ 130 Retained earrings 60
    Total current liabilities 00000
    Long term loans $ 630
    Total liabilities 0000
    Common stock - $1 par value 420
    -Refer to the above data Calculate- The current ratio( median 2) -The quick
    ratio(median (1) -the debt ratio( -median( .40) –the gross profit rate- the
    inventory turn over (median 4) –the account receivable turn over(median 6) –
    the assets turn over( 1.7) ) the return on investment(median (7%) -.earning
    per share -dividend per share. Ch 5

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