True or False: Under simple interest, interest is earned only on the original principal, not on previously accumulated interest. True   /   False

True or False: Retained earnings increase when a company pays dividends to its shareholders. True   /   False

Part II — Ratio Analysis and Forecasting Questions 17–36  |  Chapters 5–9 Chapter 5: Liquidity and Solvency Ratios A firm has current assets of $240,000 and current liabilities of $150,000. Its current ratio is: A) 0.63 B) 1.60 C) 2.40 D) $90,000

A 10-year bond with a face value of $1,000 pays an annual coupon of 6%. If the market yield is also 6%, the bond will trade at: A) A discount (below $1,000) B) Par ($1,000) C) A premium (above $1,000) D) Cannot be determined without additional information

 If a company’s P/E ratio is significantly higher than its industry average, this most likely suggests: A) The company is in financial distress and its earnings are declining B) Investors expect the company to have higher future earnings growth relative to its peers C) The company has a lower stock price than its competitors D) The company pays a higher dividend than its competitors

An investor wants to have $50,000 in 5 years. If the annual discount rate is 6%, compounded annually, approximately how much must be invested today? A) $35,000.00 B) $37,362.83 C) $40,000.00 D) $42,500.00

 A company has net income of $150,000 and 50,000 weighted-average shares of common stock outstanding. What is its basic earnings per share (EPS)? A) $0.33 B) $3.00 C) $7,500,000 D) $30.00

In the DuPont analysis, return on equity (ROE) is decomposed into which three components? A) Net profit margin × Asset turnover × Equity multiplier B) Gross margin × Current ratio × Debt-to-equity ratio C) EPS × P/E ratio × Dividend payout ratio D) Revenue growth × Operating leverage × Financial leverage

The electron flow motor rule states that the ___ points in the direction of the electron current flow in the conductor.

Most of the hydrogen and oxygen used as fuel recombine to form a by-product (waste) that is ___.