Name : _________________________________________
NIM : _________________________________________

FINAL EXAM
MM - 5009 FINANCIAL MANAGEMENT
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Date: 07 JULY 2012, Time: 13:30 – 16:30 (3 HOURS)
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OPEN BOOK
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TYPE: A
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Exam Instruction: 1. Choose the right answer and record your answer at the answer sheet; 2. The question must be returned and attached to your answer sheet; 3. -------------------------------------------------
Cheating during exam strictly prohibited and caused fail from this course; 4. -------------------------------------------------
Cheating student will not be allowed to take this course in the next semester.

1) The ________ is a weighted average of the cost of funds which reflects the interrelationship of financing decisions.
A) risk premium
B) nominal cost
C) cost of capital
D) risk-free rate
Answer: C

2) The cost to a corporation of each type of capital is dependent upon
A) the risk-free rate of bonds plus the business risk of the firm.
B) the risk-free rate of each type of capital plus the business risk of the firm.
C) the risk-free rate of each type of capital plus the financial risk of the firm.
D) the risk-free rate of each type of capital plus the business risk and the financial risk of the firm.
Answer: D

3) A tax adjustment must be made in determining the cost of
A) long-term debt.
B) common stock.
C) preferred stock.
D) retained earnings.
Answer: A

4) The approximate before-tax cost of debt for a 15-year, 10 percent, $1,000 par value bond selling at $950 is
A) 10 percent.
B) 10.6 percent.
C) 12 percent.
D) 15.4 percent.
Answer: B

5) If a corporation has an average tax rate of 40