Ron leases a car from Uptown Motors and pays $225 a month as a lease payment. Which one of the following terms applies to Ron?

Ron leases a car from Uptown Motors and pays $225 a month as a lease payment. Which one of the following terms applies to Ron?    A.  lessee B.  lessor C.  guarantor D.  trustee E.  manager Refer to section 27.1

2.	The party who owns a leased asset is called the:    A.  lessee. B.  lessor. C.  guarantor. D.  trustee. E.  manager. Refer to section 27.1

3.

Kate is leasing some equipment from Ajax Leasing for a period of one-year. Ajax pays the maintenance, taxes, and insurance costs for this equipment. The life of the equipment is 7 years. Which type of lease does Kate have?    A.  open B.  straight C.  operating D.  financial E.  tax-oriented Refer to section 27.1

Last month, Keyser Design acquired all of the assets and liabilities of Tenor Machine Works

1.

Last month, Keyser Design acquired all of the assets and liabilities of Tenor Machine Works. The combined firm is known as Keyser Design. Tenor Machine Works no longer exists as a separate entity. This acquisition is best described as a:    A.  merger. B.  consolidation. C.  tender offer. D.  spinoff. E.  divestiture. Refer to section 26.1

2.

The Cat Box acquired The Dog House. As part of this transaction, both firms ceased to exist in their prior form and combined to create an all-new entity, Animal World. Which one of the following terms best describes this transaction?    A.  divestiture B.  consolidation C.  tender offer D.  spinoff E.  conglomeration Refer to section 26.1

3.

The Daily News published an ad today wherein it announced its desire to purchase shares of a competing newspaper, the Oil Town Gossip. Which one of the following terms is best described by this announcement?    A.  merger request B.  consolidation C.  tender offer D.  spinoff E.  divestiture Refer to section 26.1

If an acquisition does not create value and the market is smart, then the:

45.

Which of the following represent potential gains from an acquisition? I. increased use of debt II. lower costs per unit produced III. strategic beachhead IV. diseconomies of scale    A.  II and III only B.  I and IV only C.  I, II, and III only D.  I, III, and IV only E.  I, II, III, and IV Refer to section 26.4

46.

The value of a target firm to the acquiring firm is equal to:    A.  the value of the target firm as a separate entity plus the incremental value derived from the acquisition. B.  the purchase cost of the target firm. C.  the value of the merged firm minus the value of the target firm as a separate entity. D.  the purchase cost plus the incremental value derived from the acquisition. E.  the incremental value derived from the acquisition. Refer to section 26.4

47.

If an acquisition does not create value and the market is smart, then the:    A.  earnings per share of the acquiring firm must be the same both before and after the acquisition. B.  earnings per share can change but the stock price of the acquiring firm should remain constant. C.  price per share of the acquiring firm should increase because of the growth of the firm. D.  earnings per share will most likely increase while the price-earnings ratio remains constant. E.  price-earnings ratio should remain constant regardless of any changes in the earnings per share. Refer to section 26.5

48.

An acquisition completed simply to diversify a firm will:    A.  create excessive synergy in almost all situations. B.  lower systematic risk and increase the value of the firm. C.  benefit the firm by eliminating unsystematic risk. D.  benefit the shareholders by providing otherwise unobtainable diversification. E.  generally not add any value to the firm. Refer to section 26.5

49.

Which one of the following statements is correct?    A.  An increase in the earnings per share as a result of an acquisition will increase the price per share of the acquiring firm. B.  The price-earnings ratio will remain constant as a result of an acquisition which fails to create value. C.  If firm A acquires firm B then the number of shares in AB will equal the number of shares of A plus the number of shares of B. D.  If no value is created when firm A acquires firm B, then the total value of AB will equal the value of A plus the value of B. E.  Diversification is one of the greatest benefits derived from an acquisition. Refer to section 26.5

Travis owns a stock that is currently valued at $45.80 a share. He is concerned that the stock price may decline so he just purchased

1.

Travis owns a stock that is currently valued at $45.80 a share. He is concerned that the stock price may decline so he just purchased a put option on the stock with an exercise price of $45. Which one of the following terms applies to the strategy Travis is using?    A.  put-call parity B.  covered call C.  protective put D.  straddle E.  strangle Refer to section 25.1

2.

Put-call parity is defined as the relationship between which of the following variables? I. risk-free asset II. underlying stock price III. call option IV. put option    A.  I and II only B.  II and III only C.  II, III, and IV only D.  I, II, and III only E.  I, II, III, and IV Refer to section 25.1

3.	Assume the price of Westward Co. stock increases by one percent. Which one of the following measures the effect that this change in the stock price will have on the value of the Westward Co. options?    A.  theta B.  vega C.  rho D.  delta E.  gamma Refer to section 25.3

4.	Which one of the following defines the relationship between the value of an option and the option's time to expiration?    A.  theta. B.  vega. C.  rho. D.  delta. E.  gamma. Refer to section 25.3