In the context of the CAPM and assuming investors’ past expectations have been fulfilled, the average historical market risk premium is a useful initial estimate of the expected future market risk premium. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The cost of giving up a cash discount under the terms of sale 5/20 net 120 (assume a 360-day year) is ________. A) 15 percent B) 18.9 percent C) 15.8 percent D) 20 percent ANSWER B
Date: September 19th, 2020
The value of real option analysis comes from the value of time (to wait and make a decision) and from the riskiness of the project. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
In a 2-for-1 stock split, the number of shares outstanding decreases by fifty percent and the stock’s per share par value will double. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The process whereby every transaction or event has at least two accounting entries is known as: A) the accounting equation. B) ledger accounting. C) double-entry bookkeeping. D) the cash equation. ANSWER C
Date: September 19th, 2020
The CAPM incorporates the risk-free rate with the market risk premium and beta, a relative risk measure. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The simple accounting equation may be written as: A) liabilities = assets + equity. B) assets = liabilities + equity. C) equity = liabilities + assets. D) assets = liabilities – equity. ANSWER B
Date: September 19th, 2020
The appropriate hurdle rate for a particular project reflects the perceived riskiness of the project. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Reverse stock splits are initiated when a stock is selling at a very low price to appear respectable. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following adjustments net income is NOT correct if you want to calculate cash flow from operating activities? A) Add back depreciation B) Add increases in accounts payable C) Add increases in accounts receivable D) Deduct increases in inventory ANSWER C
Date: September 19th, 2020
