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MBA EXIT NEWEST 2025 ACTUAL EXAM
COMPLETE 200 QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS)
|ALREADY GRADED A+ ||BRAND NEW!!
Which security will have the higher risk premium? - CORRECT ANSWER-Although security A has lower total risk, it carries greater systematic risk. Therefore, security A will command a higher risk premium and required return
What is the WACC? - CORRECT ANSWER -the weighted average of the after-tax component costs of debt and equity where the weights reflect the mix of funding sources
The WACC is the ____(min/max) rate of return that a firm must earn to satisfy investors - CORRECT ANSWER -minimum
The WACC is the _____(min/max) rate of return that a firm must earn for its value to not fall. - CORRECT ANSWER - minimum
The component cost of internal equity is an ____ cost. - CORRECT ANSWER -opportunity
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Is the component cost of internal equity directly observable? - CORRECT ANSWER -no
How is the component cost often estimated? - CORRECT ANSWER-- using the capital asset pricing model (CAPM_.
What is the Capital Asset Pricing Model? (CAPM) - CORRECT ANSWER-RS = RF + βS[RM - RF] where RS = cost of equity, RF = risk-free rate of return, RM = return to the market, βS = beta coefficient. RM - RF is the market risk premium.
Example of component cost being mathematically found - CORRECT ANSWER -Assume βi = 1.1, E(RM) = 0.12 = 12%, and RF = 0.07 = 7%. Assume the historical market risk premium and current market risk premium are equal. What is the cost of equity?
RS = RF + βS[RM - RF] = 7% + 1.1[12% −7%] = 7% +
1.1[12% −7%] = 7% + 1.1[5%] = 7% + 5.5% = 12.5%
How can the WACC be calculated? - CORRECT ANSWER -as WACC = (B/V)(RB)(1 - tc) + (S/V)RS
Where B = the value of long-term debt, S = the value of equity, V = total long-term capitalization = B + S, RS is the cost of 2 / 4
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equity, RB is the before-tax cost of debt, and TC = the corporate tax rate.
Example of the WACC being calculated.
Mouse House, Inc. has a debt/asset ratio of 0.4 and an equity/asset ratio of 0.6, a before-tax cost of debt of 6 percent, a component cost of equity of 9 percent and the company's tax rate is 25%. The accounting values for debt and equity exactly reflect Mouse House's capital structure on a market value basis.What is Mouse House's weighted average cost of capital (WACC)? - CORRECT ANSWER -WACC = (B/V)(RB)(1 - tc) +
(S/V)RS = (0.4)(6%)(1 - 0.25) + (0.6)(9%) = 1.8% + 5.4% =
7.2%
What is the marketing concept? - CORRECT ANSWER -an organization should seek to achieve its goals by serving its customers.
What is the purpose of the marketing concept? - CORRECT ANSWER-to rivet the attention of organizations on serving customer needs and wants.
What is market orientation? - CORRECT ANSWER -to rivet the attention of organizations on serving customer needs and wants. 3 / 4
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What is product orientation? - CORRECT ANSWER -focuses on making products and then trying to sell them to customers.
What is the focus of an organization with market orientation? - CORRECT ANSWER --locating new opportunities
What is the focus of an organization with product orientation? - CORRECT ANSWER --technology and cost cutting
What is the principal task of an organization with a market orientation? - CORRECT ANSWER -- not to manipulate customer to do what suits its interest but rather to find effective and efficient means to satisfy the interests of customers.
What makes for effective marketing? - CORRECT ANSWER - Effective marketing requires that customers come first in organizational decision making.
What step should organization focus on early-on? - CORRECT ANSWER-building long-term customer relationships in which an initial sale is only an early step in the relationship, not an end goal.
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