The return on the market portfolio is currently 12%. Mobile Phone Corporation stockholders require a rate of return of 30% and the stock has a beta of 3.2. According to CAPM, determine the risk-free rate. A) 4.64% B) 6.50% C) 3.82% D) 9.80% ANSWER C
Date: September 19th, 2020
If Cathy deposits $12,000 into a bank account that pays 6% interest compounded quarterly, what will the account balance be in seven years? A) 19,112 B) 19,344 C) 18,207 D) 18,001 ANSWER C
Date: September 19th, 2020
Bronson Building Products Inc estimates that FCFF in the coming year will be $1,600,000, year two will be 15% greater than year one, and year three will be 10% greater than year two. Bronson has a cost of capital of 12%. Estimate the firm’s terminal value FCFF as of year three if cash flows are […]
Date: September 19th, 2020
The interest rate used to discount bond cash flows to determine the bond price is known as the: A) coupon rate. B) yield to maturity. C) compound rate. D) coupon yield. ANSWER B
Date: September 19th, 2020
Zero coupon bonds have which of the following features? A) annual interest payments B) semi-annual interest payments C) no interest payments D) Any of the above may apply. ANSWER C
Date: September 19th, 2020
Complete Table 13-1 by filling in each of the missing values (there are 18 total missing values). What will be an ideal response? ANSWER Explanation:
Date: September 19th, 2020
Which of the following is the slope of the security market line? A) It varies, and it is steeper for riskier securities. B) beta C) the market risk premium D) one ANSWER C
Date: September 19th, 2020
If you marginal tax rate is likely to be lower in your retirement years, you should A) prefer a tax-deductible IRA to Roth IRA. B) prefer a Roth IRA to a tax-deductible IRA. C) be indifferent between investing in a tax-deductible IRA or a Roth IRA. D) prefer a non-tax advantaged investment to either a […]
Date: September 19th, 2020
To compound $100 quarterly for 20 years at 8%, we must use A) 10 periods at 4%. B) 40 periods at 4%. C) 80 periods at 2%. D) 5 periods at 12%. ANSWER C
Date: September 19th, 2020
Effective budgeting in an expense area will lead to a zero variance at year end. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
