The components of risk premium includes business risk, financial risk, interest rate risk, liquidity risk, and tax risk. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A flat yield curve indicates generally cheaper long-term borrowing costs than short-term borrowing costs. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The reason for a difference in the yield between a Aaa corporate bond and an otherwise identical Baa bond is the risk premium; other things being equal. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The market segmentation theory suggests that the shape of the yield curve is determined by the supply and demand for funds within each maturity segment. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
When preparing the retained earnings statement, ________ is(are) subtracted in order to derive at the ending balance of retained earnings. A) net profits after taxes B) interest expense C) depreciation D) dividends ANSWER D
Date: September 19th, 2020
A firm has the following accounts and financial data for 2014: The firm’s earnings per share for 2014 is ________. A) $0.5335 B) $0.5125 C) $0.3204 D) $0.3024 ANSWER D
Date: September 19th, 2020
The liquidity preference theory suggests that the shape of the yield curve is determined by the supply and demand for funds within each maturity segment. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The liquidity preference theory suggests that short-term interest rates should be lower than long-term interest rates. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A firm had the following accounts and financial data for 2014: The firm’s net profit after taxes for 2014 is ________. A) -$206.40 B) $213.80 C) $320.40 D) $206.25 ANSWER C
Date: September 19th, 2020
The expectations theory suggests that the shape of the yield curve reflects investors expectations about future interest rates. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
