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FINC400
Week 4
The quiz is accessible once and is available for the duration of 1.5-hours. Please do not exit from the quiz unless it has been completed, as it will not be accessible again.
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4.0 Points |
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[removed] A.is unaffected. |
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[removed] B.goes down. |
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[removed] C.goes up. |
| [removed] A. True[removed] B. False |
4.0 Points
The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.
| Question 4 of 25 |
(point) The longer the time to maturity:
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[removed] A.the greater the price increase from an increase in interest rates. |
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[removed] B.the less the price increase from an increase in interest rates. |
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[removed] C.the greater the price increase from a decrease in interest rates. |
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[removed] D.the less the price decrease from a decrease in interest rates. |
| Question 5 of 25 |
(point)
As the interest rate increases, the interest factor (IF) for the present value of $1 increases.
| Question 6 of 25 |
Financial capital does not include
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[removed] A.stock. |
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[removed] B.bonds. |
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[removed] C.preferred stock. |
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[removed] D.working capital. |
| Question 7 of 25 |
The growth rate for the firm’s common stock is 7%. The firm’s preferred stock is paying an annual dividend of $3. What is the preferred stock price if the required rate of return is 8%?
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[removed] A.$3.00 |
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[removed] B.$37.50 |
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[removed] C.$50.00 |
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[removed] D.none of these |
| Question 8 of 25 |
In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.
[removed] A. True[removed] B. False
| Question 9 of 25 |
The calculation of the cost of capital depends upon historical costs of funds.
| Question 10 of 25 |
(point) The calculation of the cost of capital depends upon historical costs of funds.
| Question 11 of 25 |
As the interest rate increases, the interest factor (IF) for the present value of $1 increases.
| Question 12 of 254.0 Points
(point) An annuity may be defined as [removed] A.a payment at a fixed interest rate. [removed] B.a series of payments of unequal amount. [removed] C.a series of yearly payments. [removed] D.a series of consecutive payments of equal amounts. Reset Selection uestion 13 of 254.0 Points As the time period until receipt increases, the present value of an amount at a fixed interest rate [removed] A.decreases. [removed] B.remains the same. [removed] C.increases. [removed] D.Not enough information to tell. Question 14 of 254.0 Points (point) Within the capital asset pricing model [removed] A.the risk-free rate is usually higher than the return in the market. [removed] B.the higher the beta the lower the required rate of return. [removed] C.beta measures the volatility of an individual stock relative to a stock market index. [removed] D.two of the above are true. Question 15 of 254.0 Points The risk premium is primarily concerned with business risk, financial risk, and inflation risk. [removed] A. True[removed] B. Falseuestion 16 of 254.0 Points When inflation rises, preferred stock prices fall. [removed] A. True[removed] B. False |
| uestion 17 of 25 |
(point) If the inflation premium for a bond goes up, the price of the bond
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[removed] D.need more information. |
| uestion 18 of 25 |
The cost of capital for each source of funds is dependent on current market conditions and expected rates of return.
| Question 19 of 25 |
(point) The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.
| uestion 20 of 25 |
The time value of money concept becomes less critical as the prime rate increases.
| Question 21 of 25 |
If a single amount were put on deposit at a given interest rate and allowed to grow, its future value could be determined by reference to the future value of $1 table.
| Question 22 of 25 |
The risk premium is equal to the required yield to maturity minus both the real rate of return and the inflation premium.
| Question 23 of 25 |
The required return by investors is important to financial managers for all of the following reasons except:
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[removed] A.It influences the firm’s cost of financing |
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[removed] B.It influences their stock price |
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[removed] C.It is the primary driver of their financial ratios |
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[removed] D.It helps when pricing new issues of securities |
| uestion 24 of 25 |
Lewis, Schultz and Nobel Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate of 30 percent, what is the yield on the debt?
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[removed] A.4.41% |
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[removed] B.9.0% |
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[removed] C.1.89% |
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[removed] D.6.43% |
| Question 25 of 254.0 Points
You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today? [removed] A.Present value of an annuity of $1 [removed] B.Future value of an annuity [removed] C.Present value of $1 [removed] D.Future value of $1 |
