The World Bank’s main goal is to ensure the stability of A) the international monetary and financial system only in developed countries. B) the international monetary and financial system in developing countries. C) the international monetary and financial system in both developed and developing countries. D) only the financial system in both developed and developing […]
The common stock of Big Birds Unlimited has a required return of 8 percent and a growth rate of 4 percent. The last annual dividend was $.60 a share. What is the current price of this stock? A) $7.50 B) $7.80 C) $10.00 D) $15.00 E) $15.60 ANSWER E
According to the internal rate of return method, a firm should accept a project if the ________. A) internal rate of return is less than the cost of capital B) internal rate of return exceeds the cost of capital C) cost of capital exceeds the internal rate of return D) internal rate of return exceeds […]
Ben’s Ice Cream just paid their annual dividend of $.75 a share. The stock has a market price of $32 and a beta of .90. The return on the U.S. Treasury bill is 4 percent and the market has a 12 percent rate of return. What is the cost of equity? A) 7.24 percent B) […]
If the calculated NPV is negative, then which of the following must be true? The discount rate used is: A) Equal to the IRR B) Too high C) Greater than the IRR D) Too low E) Less than the IRR ANSWER C
The text discusses the topic of compounding over a large number of compounding periods. To illustrate, it shows that $1,000 invested at 8% for 40 years (annual compounding) grows to $21,724. But if you could earn 10% instead of 8%, you would earn ________ more at the end of 40 years. A) $4,431 B) 25 […]
On a fixed-rate mortgage, the interest paid each month remains the same over the life of the mortgage. Indicate whether the statement is true or false ANSWER FALSE
Perhaps the greatest disadvantage of using the IRR method to evaluate investment opportunities is: A) dealing with uncertain cash flows from the project. B) the assumption that all cash flows from the project will be reinvested at the IRR. C) the inability to calculate most IRRs without a computer. D) the need to compare IRR […]
The future value of $12,000 invested today at 6% interest compounded annually for 4 years is A) $23,259. B) $15,150. C) $12,190. D) $9,505. ANSWER B
What is the name for the shifting of non-strategic functions to specialist firms to reduce costs? A) outsourcing B) multinational company C) globalization D) transnational corporations ANSWER Answer: A
