Free CPA FIN Practice Test & Real Exam Questions

Aralia Co and Corylus Co both pay a constant dividend of $0.30 per share. Aralia Co has a beta of 1.2 and Corylus Co has a beta of 0.9. The market share price of Aralia Co is $3.70 and the market share price of Corylus Co is $3.80.
The market rate of return is 8% and the risk free rate is 5%.
Based on the Capital Asset Pricing Model (CAPM) analysis, which ONE of the following combinations (underpriced/overpriced) concerning the market price of the shares of Aralia Co and Corylus Co is correct?

An analysis of the financial statements of a business reveals the following financial ratios:
1.A higher than average inventory holding period
2.A higher than average payment period for trade payables
3.A lower than average current ratio
4.A lower than average sales to working capital ratio
Which TWO of the above is consistent with a business being over-capitalized?

Arcturus Co has recently purchased goods costing $12,000 from a supplier. The supplier has offered credit terms of 3/15, net 40. If a cash discount is taken, payment will be made on the last possible day. The opportunity cost of funds for Arcturus Co is 30%.
What is the net saving, or net cost, at the normal time of payment of taking a cash discount?

Ulmus Co, a company listed on a major stock exchange, received a confidential letter from a rival company on 30 April 2009 offering to buy all the shares in Ulmus Co at a premium of 25% on their current market value. At a private meeting, convened on the same day, the directors of Ulmus Co agreed to accept the offer and made a public announcement of this decision on 2 May 2009.
Which ONE of the following combinations of possible share price reactions (increase/no effect) would you expect on 2 May 2009 under the semi-strong and strong forms of market efficiency?

Pecking order theory states that, when financing new investment opportunities, a business will prefer to use:
1.Internal finance rather than external finance.
2.Equity rather than debt.
Which ONE of the following combinations (true/false) concerning the above statements is correct?

The following statements concerning sources of finance have recently been made:
1) Under a finance lease arrangement, thelesseris responsible for servicing and maintaining the leased equipment.
2) Under an invoice discounting arrangement, the invoice discounter undertakes responsibility for collecting the debts.
Which ONE of the following combinations (true/false) is correct?

The following amounts are taken from a company's latest financial statements:
Sales revenue$3,074,000 Cost of Sales$1,884,000 Inventories$160,000 Trade receivables$514,000 Trade Payables$325,000
Based on the above amounts, what is the cash cycle of the company? (Assume one year is 365 days)

Tamen Group Plc, a large conglomerate with businesses in a variety of different sectors, is considering a bid to acquire one of its manufacturing businesses. The senior managers in charge of the manufacturing businesses would leave Tamen Co in order to run that business as an independent company.
Which of the following terms would best describe this situation?