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0 out of 2 points The shorter the length of time between a present value and its corresponding future value, Answer Selected Answer: the lower the present value, relative to the future value.
Question 2
0 out of 2 points As the interest rate increases, the present value of an amount to be received at the end of a fixed period Answer Selected Answer: increases.
Question 3
2 out of 2 points The concept of time value of money is important to financial decision making because Answer Selected Answer: all of the above
Question 4
2 out of 2 points An annuity may be defined as Answer Selected Answer: a series of consecutive payments of equal amounts.
Question 5
2 out of 2 points
As the time period until receipt increases, the present value of an amount at a fixed interest rate Answer Selected Answer: decreases.
Question 6
2 out of 2 points As the discount rate becomes higher and higher, the present value of inflows approaches Answer Selected Answer: 0
Question 7
0 out of 2 points In determining the future value of a single amount, one measures Answer Selected Answer: the present value of periodic payments at a given interest rate.
Question 8
2 out of 2 points The higher the rate used in determining the future value of a $1 annuity, Answer Selected Answer: the greater the future value at the end of a period.
Question 9
2 out of 2 points As the compounding rate becomes lower and lower, the future value of inflows approaches Answer Selected Answer:
Question 10
0 out of 2 points A dollar today is worth more than a dollar to be received in the future because Answer Selected Answer: inflation will reduce purchasing power of a future dollar.
Question 1
2 out of 2 points Increasing the number of periods will increase all of the following except Answer Selected Answer: the present value of $1.
Question 2
2 out of 2 points As the time period until receipt increases, the present value of an amount at a fixed interest rate Answer Selected Answer: decreases.
Question 3
2 out of 2 points Babe Ruth Jr. has agreed to play for the Cleveland Indians for $3 million per year for the next 10 years. What table would you use to calculate the value of this contract in today's dollars? Answer Selected Answer: Present value of an annuity
Question 4
2 out of 2 points An annuity may be defined as Answer Selected Answer: a series of consecutive payments of equal amounts.
Question 5
2 out of 2 points The shorter the length of time between a present value and its corresponding future value, Answer Selected Answer: the higher the present value, relative to the future value.
Question 6
2 out of 2 points What is generally the largest source of short-term credit small firms? Answer Selected Answer: Trade credit
Question 7
2 out of 2 points The higher the rate used in determining the future value of a $1 annuity, Answer Selected Answer: the greater the future value at the end of a period.
Question 8
2 out of 2 points
In determining the future value of a single amount, one measures Answer Selected Answer: the future value of an amount allowed to grow at a given interest rate.
Question 9
2 out of 2 points A dollar today is worth more than a dollar to be received in the future because Answer Selected Answer: the dollar can be invested today and earn interest.
Question 10
2 out of 2 points As the interest rate increases, the present value of an amount to be received at the end of a fixed period Answer Selected Answer: decreases.
Question 1
2 out of 2 points The cost of capital for common stock is ke=(D1/Po)+g. What are the assumptions of the model? Answer Selected Answer: All of the above are assumptions of the model.
Question 2
2 out of 2 points The return measure that an investor demands for giving up current use of funds, without adjusting for purchasing power changes or the real rate of return, is the
Question 3
2 out of 2 points The market allocates capital to companies based on Answer Selected Answer: all of the above
Question 4
2 out of 2 points Stock valuation models are dependent upon Answer Selected Answer: expected dividends, future dividend growth and an appropriate discount rate.
Question 5
2 out of 2 points The risk premium is likely to be highest for Answer Selected Answer: gold mining expedition.
Question 6
2 out of 2 points The value of a common stock is based on its Answer Selected Answer: value of future benefits to the holder.
Question 7
2 out of 2 points Preferred stock has all but which of the following characteristics? Answer Selected Answer: the same binding contractual obligation as debt
Question 8
2 out of 2 points If a company's stock price (Po) goes up, and nothing else changes, Ke(the required rate of return) should Answer Selected Answer: go down.
Question 9
2 out of 2 points Valuation of financial assets requires knowledge of Answer Selected Answer: a and b
Question 10
2 out of 2 points Will an increase in inflation have a larger impact on the price of a bond or preferred stock? Answer Selected Answer: the preferred stock.