Test bank for advanced corporate finance 1st edition by ogden

TEST BANK
ADVANCED CORPORATE FINANCE:
Policies and Strategies

Joseph P. Ogden
State University of New York, Buffalo

Frank C. Jen
State University of New York, Buffalo

Philip F. O’Connor
Southern Utah University

Prentice Hall, Upper Saddle River, New Jersey 07458

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© 2002 Prentice Hall, Inc.
A Simon & Schuster Company
Upper Saddle River, New Jersey 07458

All rights reserved. No part of this book may be
Reproduced, in any form or by any means,
Without permission in writing from the publisher.

Printed in the United States of America

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ISBN

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Ogden, Jen, and O’Connor: Advanced Corporate Finance

Copyright © 2002 Prentice hall Inc. All rights reserved.

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PREFACE
This test bank has been prepared for professors using the textbook, Advanced Corporate
Finance: Policies and Strategies, by Ogden, Jen, and O’Connor, Prentice Hall, 2000. The test
bank provides, for each chapter, sets of multiple-choice questions and essay questions. For each
multiple-choice question, the correct answer is highlighted with an asterisk (*), and if the
question involves numerical calculations, the applicable formula is provided.
Joseph P. Ogden

Ogden, Jen, and O’Connor: Advanced Corporate Finance

Copyright © 2002 Prentice hall Inc. All rights reserved.

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CONTENTS
Chapter 1………………………………………………………………………………………
Chapter 2………………………………………………………………………………………
Chapter 3………………………………………………………………………………………
Chapter 4………………………………………………………………………………………
Chapter 5………………………………………………………………………………………
Chapter 6………………………………………………………………………………………

Chapter 7………………………………………………………………………………………
Chapter 8………………………………………………………………………………………
Chapter 9………………………………………………………………………………………
Chapter 10……………………………………………………………………………………..
Chapter 11……………………………………………………………………………………..
Chapter 12……………………………………………………………………………………..
Chapter 13……………………………………………………………………………………..
Chapter 14……………………………………………………………………………………..
Chapter 15……………………………………………………………………………………..
Chapter 16……………………………………………………………………………………..
Chapter 17……………………………………………………………………………………..
Chapter 18……………………………………………………………………………………..
Chapter 19……………………………………………………………………………………..

Ogden, Jen, and O’Connor: Advanced Corporate Finance

Copyright © 2002 Prentice hall Inc. All rights reserved.

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CHAPTER 1
Empirical Perspectives on
the Financial Characteristics
of Publicly Traded U.S.
Nonfinancial Firms
Multiple Choice Questions
___ 1. For public U.S. nonfinancial firms in composite, the fractions of current assets and non-current
assets (all in book values; year-end 2000) are approximately:
Current Non-current
Assets
Assets
a. 1/3
2/3 *
b. 1/2
1/2
c. 2/3
1/3
___ 2. For public U.S. nonfinancial firms in composite, the fractions of liabilities (current plus noncurrent), and equities (all in book values, year-end 2000) are approximately:

Liabilities
Equities
a.
1/3
2/3
b.
1/2
1/2
c.
2/3
1/3 *
___ 3. Over the years 1981-2000, 4,770 nonfinancial firms exited the U.S. markets for publicly traded
equity. Which of the following was the most frequent reason for a firm’s exit?
a. Merger or acquisition *
b. Bankruptcy or liquidation
c. The firm reverted to private equity ownership
d. The firm changed its listing to a foreign stock exchange
___ 4. What average annual proportion of the total number of public U.S. nonfinancial firms at year-end
1980 exited over the years 1981-2000 (i.e., the average attrition rate)?
a. 5.9% *
b. 15.9%
c. 25.9%
d. 35.9%
___ 5. Which category of composite assets (for public U.S. nonfinancial firms) showed the largest
proportional decrease over the years 1980-2000?
a. cash and equivalents
b. inventories
c. net PP&E *
d. other non-current assets

Ogden, Jen, and O’Connor: Advanced Corporate Finance

Copyright © 2002 Prentice hall Inc. All rights reserved.

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___ 6. Throughout the period 1980-2000, the composite proportion of the TA of U.S. nonfinancial firms
accounted for by net PP&E generally ___(i)____, and the proportion of TA financed by equity
___(ii)___ fairly steadily.
___(i)___
___(ii)___
a. decreased
increased
b. increased
decreased *
c. increased
also increased
d. decreased
also decreased
___ 7. Which category of liabilities & equities had the smallest proportion in every year from 19802000?
a. current liabilities
b. debt
c. other non-current liabilities
d. common stock
e. preferred stock *
___ 8. For public U.S. nonfinancial firms over the years 1980-2000, the composite market-to-book
equity ratio generally:
a. increased from 1980-2000. *

b. decreased from 1980-2000.
c. remained stable from 1980-2000.
___ 9. Which groups of U.S. nonfinancial firms have the highest composite proportions of PP&E to TA?
a. S&P Industrials
b. S&P MidCaps
c. S&P SmallCaps
d. S&P Transports and Utilities *
___ 10. According to the composite sources-and-uses data presented in Chapter 1, the main net source of
funds for U.S. nonfinancial firms over the years 1980-2000 is:
a. proceeds from debt offerings.
b. proceeds from equity offerings.
c. retained earnings (net cash flow from operations). *
d. sales of investments (net of increases in investments).
___ 11. Over the 20-year period of 1980-2000, the composite dividend yield of public U.S. nonfinancial
firms has generally:
a. increased.
b. decreased. *
c. remained.
___ 12. The ownership structures of most publicly traded U.S. nonfinancial firms is better characterized
by the term:
a. closely held
b. diffuse *

Ogden, Jen, and O’Connor: Advanced Corporate Finance

Copyright © 2002 Prentice hall Inc. All rights reserved.

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