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VERCO.JSC                       CÔNG TY CỔ PHẦN TÁI CẤU TRÚC DOANH NGHIỆP VIỆT                        

                                            Trụ sở : Tầng 1 tòa Sunrise Building 2, KĐT Sài Đồng, Long Biên, Hà Nội

                                              Điện thoại: 0438.533 533 – Fax: 0436.525 808 – Web: verco.vn

Số:……………

               Hà Nội, ngày…….tháng……..năm 2017

Part 1:
There are 13 questions in this test. Please do not forget

to fill in the correct test version number on the answer
sheet. Good luck.

1) Financial risk refers to the:

       
     a.  risk of owning equity securities.

b.  risk faced by equityholders when debt is used.

c.  general business risk of the firm.

d.     possibility   that   interest   rates   will

increase.

2) The benefits of portfolio diversification are highest

when the individual securities have returns that are:

a.  perfectly positively correlated.

b.  perfectly negatively correlated.

c.  perfectly uncorrelated.

d.  less than perfectly correlated.

3) When   financial   disaster   is   looming,   management   may

borrow   to   invest   in   projects   having   a   negative
expected NPV because:

a.  the firm's beta is now negative.

b.  taxes are no longer a concern.

c.   the interest tax shield will cover the loan

costs.
      

d.  the lender bears all the risk.

4) In   general,   equity   is   considered   a   __________

investment   than   debt,   because   payments   on   debt   are
__________.

a.  safer; lower

b.  safer; less certain

c.  riskier; guaranteed by the company

d.     riskier;   guaranteed   by   the   federal

government

5) Which   of   the   following   statements   is   correct   for   a

project with a positive NPV?

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VERCO.JSC                       CÔNG TY CỔ PHẦN TÁI CẤU TRÚC DOANH NGHIỆP VIỆT                        

                                            Trụ sở : Tầng 1 tòa Sunrise Building 2, KĐT Sài Đồng, Long Biên, Hà Nội

                                              Điện thoại: 0438.533 533 – Fax: 0436.525 808 – Web: verco.vn

Số:……………

               Hà Nội, ngày…….tháng……..năm 2017

a.  IRR exceeds the cost of capital.

b.     Accepting   the   project   has   an   indeterminate

effect on shareholders.
      

c.     The   discount   rate   exceeds   the   cost   of

capital.
      

d.  The profitability index equals one.

6) When   corporate   taxes   and   the   cost   of   financial

distress   are   taken   into   consideration,   the   market
value   of   a   firm   equals   the   value   if   all-equity

financed   __________   the   PV   of   the   tax   shield
__________ the costs of financial distress.

a.  plus; plus

b.  minus; plus

c.  plus; minus

d.  minus; minus

7) When   projects   are   mutually   exclusive,   selection

should be made according to the project with the:

a.  highest IRR.

b.  lowest IRR.

c.  incremental cash flows.

d.  highest NPV.

8) A stock's beta measures the:

a.  average return on the stock.

b.   variability in the stock's returns compared

to that of the market portfolio.
      

c.    difference between  the return  on the  stock

and return on the market portfolio.
      

d.  market risk premium on the stock.

9) Your   broker   suggests   that   you   can   make   consistent,

excess profits by ________   purchasing   stocks   on   the
20th of the month and selling them on the last day of

the month. If this is true, then:

a.     the   market   is   only   semi-strong-form

efficient.

b.     the   market   violates   even   weak-form

efficiency.

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VERCO.JSC                       CÔNG TY CỔ PHẦN TÁI CẤU TRÚC DOANH NGHIỆP VIỆT                        

                                            Trụ sở : Tầng 1 tòa Sunrise Building 2, KĐT Sài Đồng, Long Biên, Hà Nội

                                              Điện thoại: 0438.533 533 – Fax: 0436.525 808 – Web: verco.vn

Số:……………

               Hà Nội, ngày…….tháng……..năm 2017

c.     insiders   will   be   the   only   investors   to

profit.

d.  prices follow a random walk.

10)

  If   a   stock's   price   decreased   during   the   past

week, what is the most likely prediction about this

week's price change?

a.   Price will reverse last week's loss and go

up.

b.  Price will continue last week's decline.

c.  Price will stand still until new information

is released.
      

d.   Either direction of price change is equally

likely.

11)

  If   the   coupon   rate   is   lower   than   current

interest rates, then the yield to maturity will be:

a.  lower than current interest rates.

b.  equal to the coupon rate.

c.  higher than the coupon rate.

d. lower than the coupon rate.

12)

 The major benefit of diversification is to:

a.  increase the expected return.

b.     increase   the   size   of   the   investment

portfolio.

c.  reduce brokerage commissions.

d.  reduce the expected risk.

13)

  ABC Corporation has fallen upon hard times and

dividends   on   their   non-cumulative,   preferred   stock
have   not   been   paid   for   three   years.   Which   of   the

following is true?

a.     Common   shareholders   must   now   receive

three years' worth of dividends.

b.     Preferred   shareholders   must   now   receive

three years' worth of dividends.

c.     The   corporation   must   fold   if   preferred

shareholders are not paid.

d.     Common   shareholders   have   not   received

dividends for three years.

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