The acceleration clause in a loan agreement allows the lender to A) collect the entire unpaid balance immediately if you miss a payment. B) add on new collateral to an existing installment loan. C) collect all unpaid interest immediately if you miss a payment. D) step up your monthly payments from, say, $100 a month […]
Date: September 19th, 2020
Rural Hydroponics has total equity of $560,000; sales of $2,250,000; current assets of $700,000; and total liabilities of $435,000. What is Rural Hydroponics’ total asset turnover? A) 2.26 B) 3.21 C) 4.02 D) 5.51 ANSWER A
Date: September 19th, 2020
Given the anticipated rate of inflation (i) of 1.7% and the real rate of interest (R) of 1.4%, find the nominal rate of interest (r). What will be an ideal response? ANSWER r = R + i + Ri r = .014 + .017 + (.014 )(.017 ) r = .031 + .000238 […]
Date: September 19th, 2020
You are about to purchase a new car from a dealer who has a new and unusual payment plan. You have the choice to pay $28,000 cash today or $31,000 in four years. If you have the opportunity to borrow the cash price value of the car at a rate of 2.5% and repay the […]
Date: September 19th, 2020
The required rate of return for an asset is equal to the risk-free rate plus a risk premium. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The Rule of 78 is sometime used to calculate the A) interest refunded on early repayment of a loan. B) term of the loan. C) monthly payment on the loan. D) balloon payment at the end of the loan. ANSWER A
Date: September 19th, 2020
The T-bill return is used in the CAPM model as the risk-free rate. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
In a sole proprietorship, the owner is personally responsible without limitation for the liabilities incurred by the company. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
You wish to accumulate $10,000 by depositing $481.46 per month into a savings account that earns 4.75% compounded monthly. How many monthly deposits must you make? What will be an ideal response? ANSWER 20
Date: September 19th, 2020
The ________ is the premium to compensate for the price change expected to occur over the life of the bond or investment instrument. A) default-risk premium B) maturity premium C) inflation-risk premium D) real risk-free interest rate premium ANSWER C
Date: September 19th, 2020
