Corporate Finance Trivia Quizzes for Practice

61. What is the "weighted average cost of capital" (WACC)?

1. The average interest rate a company pays on its debt
2. The total capital invested in a company, including debt and equity
3. The weighted average rate of return a company must earn on its investments
4. The minimum rate of return required by shareholders

62. Which of the following best describes "capital gains"?

1. The profit from the sale of an asset
2. The interest earned on bonds
3. The dividend income received from stocks
4. The amount invested in a business

63. What is the "liquidity ratio"?

1. A ratio that compares a company's current assets to its current liabilities
2. A ratio that measures a company's profitability
3. A ratio that measures a company’s efficiency in using assets
4. A ratio that measures a company's total debt

64. What is a key assumption of the "Modigliani-Miller" theory of capital structure?

1. The firm is always able to reduce taxes through debt financing
2. There are no taxes or bankruptcy costs in an efficient market
3. The firm can never raise equity capital
4. A company always retains full control when issuing debt

65. Which of the following is a characteristic of "venture capital"?

1. It involves large amounts of debt financing for large companies
2. It provides equity financing for early-stage, high-risk companies
3. It is typically used to finance government projects
4. It is only available to publicly traded companies

66. What is the "cost of capital"?

1. The minimum return required to satisfy all of a company's investors
2. The cost of issuing new stocks or bonds
3. The interest rate paid on short-term loans
4. The cost of goods sold

67. What does "financial statement analysis" help an analyst determine?

1. The intrinsic value of a company's stock
2. The company's future profitability
3. The company's past performance and financial health
4. The company’s future dividend payouts

68. What is the key characteristic of a bond?

1. It is a short-term investment instrument
2. It represents equity ownership in a company
3. It is a form of debt used by corporations
4. It can be converted into stock

69. Which of the following is a "hybrid security"?

1. A stock option
2. A bond with a convertible feature
3. A fixed dividend-paying stock
4. A short-term commercial paper

70. What does "earnings per share" (EPS) measure?

1. The profit available to shareholders divided by the number of shares
2. The company's total earnings from operations
3. The percentage return on total equity
4. The operating profit margin of the company

71. Which of the following methods of investment appraisal takes into account the time value of money?

1. Payback period
2. Internal rate of return (IRR)
3. Return on investment (ROI)
4. Discounted payback period

72. What is the formula for the "debt-to-equity ratio"?

1. Total debt / Total equity
2. Total liabilities / Total assets
3. Net income / Equity
4. Long-term debt / Shareholder equity

73. Which of the following best defines "financial leverage"?

1. The use of equity to finance a firm’s assets
2. The use of debt to increase the potential return on equity
3. The use of retained earnings to finance a firm's expansion
4. The use of short-term financing to meet liquidity needs

74. Which of the following is a typical characteristic of a "preferred stockholder"?

1. The right to vote in shareholder meetings
2. A fixed dividend payout
3. A variable dividend based on earnings
4. A high degree of risk due to the volatility of the stock

75. What does "price-to-earnings" (P/E) ratio compare?

1. The market price of a company’s stock with its earnings per share
2. A company’s debt to its equity
3. The market capitalization of a company with its revenue
4. The company’s dividend payout with its total assets