Robert invested in stock and received a positive return over a 9-month period. Which of the following types of returns will be greater? A) Holding period return (HPR) B) Effective annual return C) Annual percentage rate D) There is not enough information to make a definitive choice. ANSWER Answer: B Explanation: B) The […]
What are the key decision variables at the firm’s disposal for managing the level of the firm’s accounts receivable balance? What will be an ideal response? ANSWER All firms by their very nature are involved in selling either goods or services. Although some of these sales will be for cash, a large portion […]
Motor Homes Inc (MHI) is presently in a stage of abnormally high growth because of a surge in the demand for motor homes. The company expects earnings and dividends to grow at a rate of 20% for the next 4 years, after which time there will be no growth (g=0 ) in earnings and dividends. […]
One definition of return is: Indicate whether the statement is true or false. ANSWER Answer: TRUE
Finance functions in a two-parameter world of risk and return. Define risk and return in a financial sense and discuss how these two concepts are “joined at the hip.” What will be an ideal response? ANSWER Answer: Investors desire to maximize return and minimize risk. Or put another way, they want to get […]
The holding period return (HPR) is the return measured from the initial purchase to the final sale of the investment without regard to the length of time the investment is held. Indicate whether the statement is true or false. ANSWER Answer: TRUE
Simple interest is akin to the effective annual rate (EAR) and compound interest is akin to the annual percentage rate (APR). Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Simple interest is akin to the annual percentage rate (APR), and compound interest is akin to the effective annual rate […]
The next dividend on Sciorra stock is expected to be $3.10 per share. Dividends are expected to grow at a constant rate of 5% indefinitely. What should the current share price be if Sciorra investors require a return of 15%? A) $32.55 B) $31.00 C) $20.67 D) $21.70 E) $62.00 ANSWER B
Carrying inventory reduces the costs associated with periodic bad debt losses. Indicate whether the statement is true or false ANSWER FALSE
________ is the absence of knowledge of the outcome of an event before it happens. A) Return B) Diversification C) Uncertainty D) Certainty ANSWER Answer: C
