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FINA 3313 FINAL FACT SHEET - 1 Which of the following...

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1. Which of the following values would most likely interest a shareholder? A. Book value of equity. B . Market value of equity. C. Historical cost of equity. D. Retained earnings component of equity. 2. How much will accumulate in an account with an initial deposit of $1000, and which earns 10% interest compounded quarterly for three years? 3. Assume your uncle recorded his salary history during a 40-year career and found that it had increased ten-fold. If inflation averaged 4% annually during the period, how would you describe his purchasing power, on average? 4. A share of IBM stock is purchased by an individual investor for $75 and later sold to another investor for $125. Who profits from this sale? 5. Which of the following presents the correct relationship? As the coupon rate of a bond increases, the bond's: A. face value increases. B. current price decreases. C . interest payments increase. D. maturity date is extended. 6. How does a bond dealer generate profits when trading bonds? 7. When riskier corporations issue bonds that include a default premium, the promised yield will sometimes be: 8. If the 7s of 2005 are offered at 102:23, then the price of a $1,000 bond would be: 9. Which of the following is correct for a bond currently selling at a premium to par? A. Its current yield is higher than its coupon rate. B . Its current yield is lower than its coupon rate.
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C. Its yield to maturity is higher than its coupon rate. D. Its default risk is extremely low. 10. The difference between an NPV break-even level of sales and an accounting break-even level of sales is: A . the consideration of opportunity cost. B. the consideration of depreciation expense. C. allowing the sales level to vary in response to changes in demand. D. the inclusion of income taxes
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