The expected return on a riskless asset is greater than zero due to A) an expected return for taxes. B) an expected return for opportunity costs. C) an expected return for delaying consumption. D) irrational investors who believe risk is always present. ANSWER C
Date: September 19th, 2020
A timeline identifies the timing and amount of a stream of cash flows, along with the interest rate it earns. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following is an example of both a capital market and a primary market transaction? A) Microsoft common stock owned by an individual investor is sold to another investor. B) Ford Motor Company sells a new issue of common stock to raise funds through a public offering. C) No transactions occur in both […]
Date: September 19th, 2020
A firm’s financing costs include A) interest expense B) depreciation expense. C) costs of goods sold. D) both A and B. ANSWER A
Date: September 19th, 2020
Timelines are used for simple time value of money problems, but cannot be used for more complex problems. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Joe, a risk-averse investor, is trying to choose between investment A and investment B. If investment A is riskier than investment B and Joe selects investment A anyway, then A) the expected return for investment A will be higher than the expected return for investment B. B) the actual return for investment A will be […]
Date: September 19th, 2020
All of the following securities are sold in money markets EXCEPT A) commercial paper. B) 3-month U.S. Treasury bills. C) 6-month certificates of deposit. D) common stock. ANSWER D
Date: September 19th, 2020
Common-sized income statements A) compare companies with the same level of net income. B) compare companies with the same level of total sales. C) assist in the comparison of companies of different sizes. D) show each income statement account as a percentage of total assets. ANSWER C
Date: September 19th, 2020
Corporation A decides to borrow $1,000,000 and use the money to buy back $1,000,000 of its common stock. The corporation pays 6% interest on its borrowed funds which exactly equals the amount of the dividend it used to pay on the common stock it repurchased. Therefore, A) Corporation A’s net income will increase due to […]
Date: September 19th, 2020
If you only earned interest on your initial investment, and not on previously earned interest, it would be called simple interest. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
