Pricing preferred stock is most similar to pricing ________. A) constant growth common stock B) a perpetuity C) a zero-coupon bond D) a three-month Treasury bill ANSWER Answer: B
Date: September 19th, 2020
In working capital management, risk is measured by the probability that a firm will be ________. A) unable to pay annual dividends to stockholders B) unable to pay its bills as they come due C) unable to repay its long-term obligations D) unable to earn profits from day-to-day operations ANSWER B
Date: September 19th, 2020
An investment banker’s fees are part of the ________ realized for issuing new debt or equity. A) flotation costs B) opportunity costs C) revenues D) benefits ANSWER Answer: A
Date: September 19th, 2020
If a firm increases its current assets relative to total assets, ________. A) it increases return and reduces risk B) it increases return and increases risk C) it reduces return and reduces risk D) it reduces return and increases risk ANSWER C
Date: September 19th, 2020
Technological advances allow a firm’s earnings to grow over time because they increase the productivity of: a. labor. b. capital. c. both labor and capital. ANSWER C
Date: September 19th, 2020
Use the security market line to determine the required rate of return for the following firm’s stock. The firm has a beta of 1.25, the required return in the market place is 10.50%, the standard deviation of returns for the market portfolio is 25.00%, and the standard deviation of returns for your firm is also […]
Date: September 19th, 2020
The riskiness of a future cash flow is measured by ________ , and these are all components of the SML. A) the firm’s standard deviation, correlation, and the market risk premium B) beta, the market risk premium, and the firm’s standard deviation C) the market risk premium, beta, and correlation D) beta, the market risk […]
Date: September 19th, 2020
Use the dividend growth model to determine the required rate of return for equity. Your firm recently paid a dividend of $2.25 per share, has a recent price of $40.20 per share, and anticipates a growth rate in dividends of 3.00% per year for the foreseeable future. A) 8.76% B) 8.60% C) 8.44% D) There […]
Date: September 19th, 2020
Your firm has just issued a 20-year $1,000.00 par value, 10% annual coupon bond for a net price of $964.00. What is the yield to maturity? Use a financial calculator to determine your answer. A) 10.60% B) 11.10% C) 10.44% D) 10.16% ANSWER Answer: C Explanation: C) Mode = P/Y = 1; C/Y […]
Date: September 19th, 2020
Your firm has just issued a 20-year $1,000.00 par value, 6% coupon semiannual bond for a net price of $964.00. What is the yield to maturity? Use a financial calculator to determine your answer. A) 3.16% B) 7.33% C) 6.32% D) 6.00% ANSWER Answer: C Explanation: C) Mode = P/Y = 2; C/Y […]
Date: September 19th, 2020
