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D076 OA Questions and Correct Answers & Latest Updated

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What does the term legal describe? Encourage manipulation of accounting procedures to optimize the company's profit Release managers who do not attempt to maximize immediate shareholder value Set strict covenants that the company cannot uphold if it chooses a risky project An action that is in ...

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  • August 25, 2024
  • 35
  • 2024/2025
  • Exam (elaborations)
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  • d076 oa questions and correct answers latest up

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1|Page: 2024/2025 Grade A+




D076 OA Questions and Correct Answers &
Latest Updated
What does the term legal describe?




Encourage manipulation of accounting procedures to optimize the company's profit

Release managers who do not attempt to maximize immediate shareholder value

Set strict covenants that the company cannot uphold if it chooses a risky project

An action that is in accordance with the laws and rules set by an authority.


o :## An action that is in accordance with the laws and rules set by an authority.



What does high inventory turnover relative to the industry and competitors indicate?




Models are required by the SEC when a firm plans to issue additional stock on the public

market.

The firm holds too much inventory and its successful selling its good and services.

Models allow users to see the complex relationships between sales and other aspects of the

business.

The firm does not hold enough inventory and is making its customers wait longer to receive

their purchased goods.


o :## The firm does not hold enough inventory and is making its customers wait longer to
receive their purchased goods.




Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update

,2|Page: 2024/2025 Grade A+


What is the ratio that tells you on average how long it takes for a firm to collect accounts

receivable.




Average Benchmarking

Opportunity cost

Average collection period

Leading indicator


o :## Average collection period



Three different names are used for interest rate for different purposes and perspectives:




Discount rate, required rate, and cost of capital.

Required rate, correlated indicator, opportunity cost

Cost of capital, interest rate, and renew rate

required rate, discount method, cost of interest


o :## Discount rate, required rate, and cost of capital.



What is the main purpose of charging interest?




interest can be a good tool because it summarizes the required return, but it is a detriment

because it requires a larger cost of capital.




Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update

,3|Page: 2024/2025 Grade A+


The higher risk an investor takes, the higher return the investor expects to receive.

Compounding interest can be a good tool to understand the time value of money, but it is a

detriment because it does not take inflation into account.

It allows borrowers to pay to use the assets of another entity to accomplish their own goals.


o :## It allows borrowers to pay to use the assets of another entity to accomplish their own
goals.



The required rate of return is also known as the BLANK in the context of corporate finance.




Inflation

Hurdle rate

Opportunity cost

Risk


o :## Hurdle rate.



The BLANK is the rate of return or compensation that an investor or lender will accept for

investments such as stocks, bonds, or loans.




Hurdle rate

Inflation

Opportunity cost

Required rate of return



Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update

, 4|Page: 2024/2025 Grade A+

o :## Required rate of return



BLANK Is the possibility that the realized or actual return will differ from the expected

return?




Hurdle rate.

Inflation

Opportunity cost

Risk


o :## Risk



Which components of an interest rate is an indicator of inflation and opportunity cost?




Capital growth rate

Risk-free rate

Sustainable growth rate

Sales growth rate


o :## Risk-free rate



What is the name for the interest rate expressed on an annual basis?




Sustainable growth rate


Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update

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