The capital asset pricing model is used to calculate the effect of increase in prices of capital assets due to inflation. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Since the net proceeds from sale of new common stock will be less than the current market price, the cost of new issues will always be less than the cost of existing issues. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
A foreign bond is a bond issued by a foreign corporation or government and is denominated in the investor’s home currency and sold in the investor’s home market. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Long-term debt for CEE in 2013 was ________. (See Table 3.1) A) $30,763 B) $52,372 C) $10,608 D) $41,372 ANSWER A
Date: September 19th, 2020
Gross profit margin measures the percentage of each sales dollar left after a firm has paid for its goods and operating expenses. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Using the Capital Asset Pricing Model (CAPM), the cost of common stock equity is the return required by investors as compensation for a firm’s nondiversifiable risk. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The Gordon model is based on the premise that the value of a share of stock is equal to sum of all future dividends it is expected to provide over an infinite time horizon. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Cash flows that could be realized from the best alternative use of an owned asset are called ________. A) incremental costs B) lost resale opportunities C) opportunity costs D) sunk costs ANSWER C
Date: September 19th, 2020
Under MACRS depreciation, the depreciable value of an asset is equal to the asset’s purchase price minus any installation costs. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The cost of retained earnings is generally higher than both the cost of debt and cost of preferred stock. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
