5/16/22, 11:24 AM VCM Midterm Exam

VCM Midterm Exam Total points 49/85

The exam consists of questions carefully designed to help you self-assess your
comprehension of the topics covered during the Prelim.

The exam is comprised of 4 parts: Identification, Morse Type: True or False, Multiple Choice
and Problem Solving.

Kindly read through each questions carefully and answer the following questions to the best
of your ability.

For any questions/clarifications, please feel free to reach out to me.

"In everything he did he had great success, because the LORD was with him. - 1 Samuel
18:14."

Name *

Jhanel Kathlene C. Bandiola

Course & Year *

BSA-3

Identify whether the key characteristic describes common stock (CS) or 1/1
preferred stock (PS).                                      1. Source of financing which
places minimum constraints on the firm.

CS
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PS

2.  Used often in mergers. 1/1

CS

PS

3. Potential dilution of earnings and voting power. 1/1

CS

PS

4. Fixed financial obligation. 1/1

CS

PS

5. Increases the firm’s borrowing power. 1/1

CS

PS

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6. May have cumulative and participating features. 1/1

CS

PS

7. May be convertible into another type of security. 1/1

CS

PS

8. Last to receive earnings or distribution of assets in the event of 1/1

bankruptcy.

CS

PS

9. Frequently includes a call feature. 1/1

CS

PS
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10. Entitled to received remaining assets in the event of a liquidation. 1/1

CS

PS

True or False (Morse Type) 1:                                                                                     1/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAveq… 4/44
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True or False (Morse Type) 2:                                                                                     0/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

Correct answer

First statement is False, second statement is True.

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAveq… 5/44
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True or False (Morse Type) 3:                                                                                     0/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

Correct answer

First statement is True, second statement is False.

True or False (Morse Type) 4:                                                                                     1/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAveq… 6/44
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Both statements are True.

Both statements are False.

True or False (Morse Type) 5:                                                                                     0/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

Correct answer

Both statements are True.

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAveq… 7/44
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True or False (Morse Type) 6:                                                                                     0/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

Correct answer

Both statements are True.

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAveq… 8/44
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True or False (Morse Type) 7:                                                                                     0/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

Correct answer

First statement is True, second statement is False.

True or False (Morse Type) 8:           0/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAveq… 9/44
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Both statements are True.

Both statements are False.

Correct answer

First statement is False, second statement is True.

True or False (Morse Type) 9:   0/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

Correct answer

First statement is False, second statement is True.

True or False (Morse Type) 10:   1/1

First statement is True, second statement is False.

First statement is False, second statement is True.

B th t t t T
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Both statements are True.

Both statements are False.

True or False (Morse Type) 11:   1/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

True or False (Morse Type) 12: 0/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 11/44
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Correct answer

First statement is True, second statement is False.

True or False (Morse Type) 13: 0/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

Correct answer

First statement is True, second statement is False.

True or False (Morse Type) 14: 1/1

First statement is True, second statement is False.

i i l d i
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First statement is False, second statement is True.

Both statements are True.

Both statements are False.

True or False (Morse Type) 15: 1/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

True or False (Morse Type) 16: 1/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 13/44
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True or False (Morse Type) 17: 0/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

Correct answer

First statement is False, second statement is True.

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 14/44
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True or False (Morse Type) 18: 0/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

Correct answer

First statement is False, second statement is True.

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True or False (Morse Type) 19: 0/1

First statement is True, second statement is False.

First statement is False, second statement is True.

Both statements are True.

Both statements are False.

Correct answer

First statement is True, second statement is False.

True or False (Morse Type) 20: 1/1

First statement is True, second statement is False.

First statement is False, second statement is True.

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 16/44
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Both statements are True.

Both statements are False.

Multiple Choice 1: 1/1

Multiple Choice 2: 1/1

b
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Multiple Choice 3 1/1

Multiple Choice 4 1/1

c
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c

Multiple Choice 5 1/1

Multiple Choice 6 1/1

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 19/44
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c

Multiple Choice 7 0/1

Correct answer

Multiple Choice 8 1/1

a
https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 20/44
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Multiple Choice 9 1/1

Multiple Choice 10 1/1

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 21/44
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Multiple Choice 11 1/1

Multiple Choice 12 1/1

c
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c

Multiple Choice 13 0/1

Correct answer

Multiple Choice 14 1/1

b
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Multiple Choice 15 1/1

Multiple Choice 16 1/1

c
https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 24/44
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Multiple Choice 17 0/1

Correct answer

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 25/44
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Multiple Choice 18 0/1

Correct answer

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 26/44
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Multiple Choice 19 0/1

Correct answer

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 27/44
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Multiple Choice 20 1/1

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 28/44
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Multiple Choice 21 1/1

Multiple Choice 22 0/1

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 29/44
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d

Correct answer

Multiple Choice 23 1/1

Multiple Choice 24 1/1

d
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d

Multiple Choice 25 0/1

Correct answer

Multiple Choice 26 1/1

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5/16/22, 11:24 AM VCM Midterm Exam
b

Multiple Choice 27 1/1

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 32/44
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Multiple Choice 28 0/1

Correct answer

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 33/44
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Multiple Choice 29 1/1

Multiple Choice 30 1/1

c
https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 34/44
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Multiple Choice 31 1/1

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 35/44
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Multiple Choice 32 1/1

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 36/44
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Multiple Choice 33 1/1

Multiple Choice 34 1/1

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Multiple Choice 35 1/1

Multiple Choice 36 1/1

b
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b

Multiple Choice 37 1/1

Multiple Choice 38 1/1

c
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Multiple Choice 39 0/1

Correct answer

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 40/44
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Multiple Choice 40 1/1

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Problem Solving 1. ···/5

a.) 11,600,000 / 2,000,000 shares = $5.80/ share

b.) Preferred stock $500,000 $500,000 $500,000

Common Stock 2,000,000* 2,000,000 2,100,000**

Paid-in-Capital 10,000,000 10,000,000 11,900,000

Retained earnings 11,600,000 8,600,000 9,600,000

_________________________________________________

Total S.E. $24,100,000 $21,100,000 $24,100,000

* (4,000,000 shares @ $0.50 par)

** (2,100,000 shares @ $1 par)

c.) 1) $10/ share

2) $19.05

Solution on #2:

2,000,000 shares x 20/share = $40,000,000

https://docs.google.com/forms/d/e/1FAIpQLSeAs6Y8icKaAPooY81v6fkL35zS9FLw5Vm4n2WIuHZVuy7aww/viewscore?pli=1&pli=1&viewscore=AE0zAgAve… 42/44
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market value

2,100,000 shares x ?/ share= 40,000,000

market value

Problem Solving 2 ···/5

(a) $83.02

Sol. P= 4.89/(0.1089 - 0.05) = $83.02

(b) $108.26

Sol. P= 5.24/(0.1134 - 0.065) = $108.26

(c) Yes. Mr. M Company should make the change because it will maximize share prize.

Problem Solving 3 ···/5

(a) 10% x 100 = 10

10/0.115= 86.96

(b) As the risk free rate increases the required rate of return will increase from the current
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(b) As the risk free rate increases, the required rate of return will increase from the current
11.5%. Thus, the price of the preferred stock will decrease from 86.96.

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