Discuss whether the standard deviation of a portfolio is, or is not, a weighted average of the standard deviations of the assets in the portfolio. Fully explain your answer. What will be an ideal response? ANSWER The standard deviation of a portfolio is not a weighted average of the standard deviations of the […]
Date: September 19th, 2020
An inventory turnover ratio of 7.2 compared to an industry average of 5.1 is likely to indicate that A) the firm is selling a product mix that includes more high margin items. B) the firm has higher sales than the industry average. C) the firm’s products are in inventory for fewer days before they are […]
Date: September 19th, 2020
Which of the following is NOT a valid theory that attempts to explain the shape of the term structure of interest rates? A) the Fisher Effect theory B) the unbiased expectations theory C) the liquidity preference theory D) the market segmentation theory ANSWER A
Date: September 19th, 2020
Which of the following did NOT contribute to the Great Recession of 2007-2009? A) The collapse of the U.S. housing market. B) The tremendous growth of the sub-prime lending market. C) The liquidity crisis that resulted when banks became unwilling to lend into a collapsing market. D) All of the above contributed to the Great […]
Date: September 19th, 2020
Which of the following forms of business organization has the greatest ability to attract new capital? A) Sole proprietorship B) “C” Corporation C) General partnership D) “S” Corporation ANSWER B
Date: September 19th, 2020
Your son will be attending an expensive university in 12 years. You deposit $5,000 per year for 12 years, beginning today. How much money will be in the college fund 12 years from now if the fund earns 8% per year? What will be an ideal response? ANSWER $102,476.48
Date: September 19th, 2020
Peabody Books Inc wishes to borrow $182,000 today for the purchase of publishing materials. They have an agreement with their commercial banker that they can borrow money at an annual rate of 4.75%. How much will the firm owe if they repay the loan in exactly one year? A) $8,645 B) $173,747.02 C) $182,000 D) […]
Date: September 19th, 2020
In terms of costs to organize each, which of the following sequences is correct, moving from highest to lowest cost? A) General partnership, sole proprietorship, limited partnership, corporation. B) Sole proprietorship, general partnership, limited partnership, corporation. C) Corporation, limited partnership, general partnership, sole proprietorship. D) Sole proprietorship, general partnership, corporation, limited partnership. ANSWER […]
Date: September 19th, 2020
Investment A has an expected return of 14% with a standard deviation of 4%, while investment B has an expected return of 20% with a standard deviation of 9%. Therefore, A) rational investors could pick either A or B, depending on their level of risk aversion. B) a rational investor will pick investment B because […]
Date: September 19th, 2020
It is typically easy to determine a precise mix of optimal debt and equity. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
