Suppose a Polish zloty is selling for $0.3159 and a British pound is selling for $ XXXXXXXXXXWhat is the exchange rate (cross rate) of the Polish zloty to the British pound? That is, how many Polish...

Answer
Week 08 Quiz
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Question #1 (1 point)
Suppose a Polish zloty is selling for $0.3159 and a British pound is selling for $1.5186. What is
the exchange rate (cross rate) of the Polish zloty to the British pound? That is, how many Polish
zlotys are equal to a British pound?
3.9264
4.2601
4.5325
4.8072
I Zloty = $0.3159
Therefore 1 $ = 1/0.3159
1Pound =$1.5186
Polish Zloty equal to pound will be = 1.5186/.3159
=4.8072
Answer D) 4.8072
Question #2 (1 point)
In 2012, Plate craft Inc.’s stock had been selling at $46.00 a share. Their dividend yield was 2.5%
and they had expected earnings per share of $2.05. What was Plate craft’s dividend payout ratio
in 2012?
68.7%
63.5%
56.1%
72.3%
Dividend per share =46*2.5% =1.15
Dividend payout = 1.15/2.05
= 56.1%
Answer C) 56.1%
Question #3 (1 point)
When the inflation rate differential between two countries changes, the exchange rate also
adjusts to co
espond to the relative purchasing powers of the countries.
True
False
Answer True
Question #4 (1 point)
What is the primary purpose of a stock split?
to lower the price of a security into a more popular trading range
to increase a company’s retained earnings
to decrease the number of shares being traded
all of the above
Answer A) to lower the price of a security into a more popular trading range
Question #5 (1 point)
Which of the following are explanations for U.S. firms moving all or part of their operations to
foreign soil?
to avoid import tariffs when selling their products in other countries
to take advantage of lower production costs

to minimize tax liability in the US by postponing tax payments until income has been
epatriated

all of the above
Answer B) to take advantage of lower production costs
Question #6 (1 point)
Assume the 180-day forward rate for the dolla
pound is $1.5409 and the spot rate is $1.5428.
The 180-day forward contract in British pounds would therefore be selling at
0.493% discount
0.493% premium
0.246% discount
0.246% premium
Annualized premium on cu
ency British pound =F-S/S*100*12/n
= 1.5409-1.5428/1.5428*100*12/6
= .246 % premium
Answer D) .246% Premium
Question #7 (1 point)
The decision of a company to declare a 10% stock dividend should result in
no change in the company’s net worth
a 1% increase in the company’s net worth
a 10% increase in the company’s net worth
a 10% decrease in the company’s net worth
Answer a)
no change in the company’s net worth
Question #8 (1 point)
One possible strategy for a company to minimize foreign exchange risk would be to encourage
quick collection of bills in weak cu
encies by offering sizable discounts, while extending liberal
credit in strong cu
encies.
False
True
Answer True
Question #9 (1 point)
You will receive the upcoming quarterly dividend if you buy stock on the ex-dividend date.
False
True
Answer False
Question #10 (1 point)
Roth bard Industries earned $900,000 last year and paid out 30% of earnings in dividends. By
how much did the company’s retained earnings increase?
$270,000
$540,000
$360,000
$630,000
Net Income = $900,000
Less Dividend paid @30% = $270,000
Increase in Retained earnings =$630,000
Answer D ) $630,000
Question #1 (1 point)
You are considering purchasing a new piece of equipment for $21,000 which
will generate a cash inflow of $4,500 per year for 6 years. What is the internal
ate of return?
6.6%
8.8%
7.7%
Payback Period
= Cash Outflow / Annual cash Inflow
= $21,000 / $4,500
= 4.67 Years
This value lies between 7& 8%
By solving we get IRR =7.7%
9.9%
IRR = 7.7%
Answer C) 7.7%
Question #2 (1 point)
In 2011, Heisenberg Inc.’s stock had been selling at $25.00 a share. Their dividend yield was
3.5% and they had expected earnings per...