Revenue Management in Hospitality
Midterm Exam
Course Introduction
Revenue Management in Hospitality introduces students to the strategic methods and analytical tools used to maximize profitability in the hospitality industry. The course explores concepts such as forecasting demand, dynamic pricing, inventory control, and segmentation strategies applied to hotels, resorts, and other hospitality sectors. Emphasis is placed on integrating data analysis with decision-making processes, understanding market trends, and utilizing technology to drive revenue optimization. Students will develop the skills to assess competitive environments, set rate structures, and implement effective distribution channel management, equipping them to contribute to sustainable financial performance within hospitality organizations.
Recommended Textbook
Hospitality Financial Management 1st Edition by Robert E.
Chatfield
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12 Chapters
393 Verified Questions
393 Flashcards
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Chapter 1: Introduction
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Sample Questions
Q1) The three major decisions of financial management involve
A)investing, financing, and payment of dividends.
B)investing, reporting, and financing.
C)financing, diversifying, and payment of dividends.
D)investing, classifying, and financing.
Answer: A
Q2) Which of the following is the difficulty in forming a Subchapter S Corporation?
A)The owners cannot be residents of the United States.
B)There can be no more than 75 owners.
C)The stock must have a very low par value.
D)The company must promise to pay dividends quarterly.
Answer: B
Q3) Preferred stock is a security that has the features of both debt and equity. A)True
B)False
Answer: False
Q4) The value of dividends is not affected by the date they are received.
A)True
B)False
Answer: False
Page 3
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Chapter 2: Financial Markets and Financial Instruments
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Sample Questions
Q1) A measure of uncertainty in stock returns is
A)weighted average.
B)mean.
C)correlation coefficient.
D)standard deviation.
Answer: D
Q2) You manage a McDonald's in Germany. At the beginning of the year, the exchange rate was $1 = 1Euro. At the end of the year, the exchange rate is $1 = .90Euro. You report profits of 450,000 Euros. How much have your profits increased in terms of dollars from the exchange rate change during the year?
A)10%
B)90%
C)11.11%
D)unkown from information given
Answer: C
Q3) The current yield of a bond is the rate of return on a bond if you hold it until maturity. A)True
B)False
Answer: False
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Page 4
Chapter 3: Review of Financial Statements and Selected Ratios
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Sample Questions
Q1) The DuPont ratio shows that return on assets is a function of A)current ratio and debt ratio.
B)profit margin and asset turnover.
C)profit margin and inventory turnover.
D)debt ratio and number of times interest earned.
Answer: B
Q2) The DuPont ratio is a combination of two ratios. These are the profit margin and the solvency ratio.
A)True
B)False
Answer: False
Q3) The uniform system of accounts helps managers organize the statement of cash flows.
A)True
B)False
Answer: False
Q4) The balance sheet is good for a period of time.
A)True
B)False
Answer: False
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Chapter 4: The Relationship Between Risk and Return
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Sample Questions
Q1) The best definition of risk averse is
A)never taking risks.
B)only taking small risks.
C)being compensated for taking risks.
D)none of the above.
Q2) Beta is a measure of:
A)total risk.
B)unsystematic risk.
C)systematic risk.
D)none of the above.
Q3) The idea of diversification is to maintain a level of return and decrease your risk. A)True
B)False
Q4) The normal distribution contains one-third of the outcomes to the right of the mean. A)True B)False
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6
Chapter 5: Time Value of Money
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Sample Questions
Q1) What happens to the present value of an annuity as the interest rate increases?
A)It decreases.
B)It stays the same.
C)It increases.
D)All of the above.
Q2) Suppose you are investing money at a 10% annual nominal interest rate. To earn as much as possible, which one of the following compounding periods should you prefer?
A)daily
B)weekly
C)monthly
D)annually
Q3) If an interest rate is compounded monthly, the annual nominal rate is greater than the effective annual rate.
A)True
B)False
Q4) An infinite annuity is called a perpetuity.
A)True
B)False
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Chapter 6: Fixed Income Securities: Bonds and Preferred Stock
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Sample Questions
Q1) Corporate bonds are generally considered perpetual.
A)True
B)False
Q2) The consequences to a corporation for failure to pay preferred dividends are more serious than for failure to pay interest on a bond.
A)True
B)False
Q3) Which of the following allows the investor to demand repayment for a bond prior to maturity?
A)put feature
B)call feature
C)sinking fund feature
D)cumulative feature
Q4) What is the value of a $1,000 par value zero-coupon bond maturing in 10 years to an investor requiring a 7% rate of return?
A)$622.75
B)$508.35
C)$385.54
D)$513.16
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Chapter 7: Common Stock
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Sample Questions
Q1) Lapidus Restaurants Incorporated currently pays a $5.00 common stock dividend. The dividend is expected to remain at $5.00 and not expected to grow in the future. What is the current value of Lapidus Restaurants common stock to an investor requiring an 11% rate of return?
A)$100.00
B)$83.33
C)$50.45
D)$45.45
Q2) Into which two parts is a firm's earnings divided?
A)dividends and debt repayments
B)dividends and tax payments
C)dividends and addition to retained earnings
D)dividends and interest payments
Q3) If a corporation has two classes of common stock, what is typically unique about the second or class B common stock?
A)It has superior voting rights.
B)It has inferior dividend payments.
C)It has no voting rights.
D)It has superior dividend payments.
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Page 9
Chapter 8: Cost of Capital
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Sample Questions
Q1) Penny's Budget Gourmet Restaurants has a current capital structure that is 70% equity, 20% debt, and 10% preferred stock. This is considered optimal. Penny is considering a $100 million capital budgeting project. Penny has estimated the following: After-tax cost of debt: 7.0%
Cost of preferred stock: 8.0%
Cost of internal equity: 13.0%
Cost of external equity: 15.0%
Penny expects to have $40 million of new retained earnings available to finance this project. What is Marion's cost of capital for this project?
A)12.10%
B)10.75%
C)11.90%
D)12.45%
Q2) If a project is to be 100% financed with debt, then the cost of debt-not the weighted average cost of capital-should be used to evaluate the project.
A)True B)False
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Chapter 9: Introduction to Capital Budgeting and Cash
Flow Estimation
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Sample Questions
Q1) Why do a project's net cash flows not include additional interest expense?
A)Interest expense is a sunk cost and thus not relevant.
B)Interest expense is not an actual cash expense.
C)Interest expense is an indirect cost and thus not relevant.
D)Interest expense is taken into account by the use of a required rate of return used in the decision method.
Q2) A project is expected to increase a firm's sales revenue by $50,000 annually, increase it cash expenses by $20,000 annually, and increase its depreciation by $15,000 annually. Given this information, what is the project's expected annual net cash flow? Use a 40% effective tax rate.
A)$24,000
B)$9,000
C)$21,000
D)$33,000
Q3) Capital budgeting decisions are based upon cost-benefit analysis. A project's net investment is compared to the project's net cash flows in order to make a decision.
A)True
B)False
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Chapter 10: Capital Budgeting Decision Methods
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Sample Questions
Q1) A project's net present value is a measure of a project's contribution to firm value.
A)True
B)False
Q2) A capital budgeting project has a net investment of $550,000 and is expected to generate net cash flows of $200,000 annually for 7 years. What is the payback period?
A)5.5 years
B)2.25 years
C)2.55 years
D)2.75 years
Q3) A capital budgeting project has a net investment of $1,000,000 and is expected to generate net cash flows of $350,000 annually for 4 years. What is the internal rate of return?
A)22.11%
B)14.96%
C)2.48%
D)26.43%
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Chapter 11: An Introduction to Hotel Valuation
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Sample Questions
Q1) Biased appraisals was a significant problem in the 1980s. A)True B)False
Q2) The highest and best use for a parcel of land is always a commercial use.
A)True B)False
Q3) Federal regulations now require appraisals to be commissioned by the A)buyer. B)lender. C)seller. D)broker.
Q4) A neighborhood is defined as an area with a wide variety of land uses. A)True B)False
Q5) When completing the sales comparison approach, inferior properties are adjusted downward.
A)True B)False
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Chapter 12: Capital Structure
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Sample Questions
Q1) Which of the following is most likely to cause a firm to use less financial leverage?
A)currently low profits, but a large need for new funds
B)concern for the firm's Moodys and S & P bond ratings
C)low business risk
D)avoidance of a corporate takeover
Q2) Increasing financial leverage decreases the volatility of owners' returns.
A)True
B)False
Q3) The desire to maintain excess borrowing capacity will tend to increase the use of debt financing in a firm's capital structure.
A)True
B)False
Q4) How does high business risk affect firm risk?
A)Higher business risk increases the volatility of capital structure.
B)Higher business risk increases the volatility of EBIT.
C)Higher business risk increases the volatility of financial costs.
D)Higher business risk increases the volatility of the firm's asset structure.
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