1. One of the four most fundamental factors that affect the cost of money as discussed
in the text is the expected rate of inflation. If inflation is expected to be relatively high, then interest rates
will tend to be relatively low, other things he
1. If a firm raises capital by selling new bonds, it could be called the issuing firm,
and the coupon rate is generally set equal to the required rate on bonds of equal risk.
2. Sinking funds are provisions included in bond ind
Stock and Bonds. You are considering three investments. The first is a 12-year bond that is selling at $1200
(par=$1000, 12% coupon interest), and your required rate of return on it is 10%. The second is a preferred stock
($100 par value) that sells for $
1. The primary reason the annual report is important in finance is that it is used
by investors when they form expectations about the firms future earnings and dividends, and
the riskiness of those cash flows.
2. Companies typically provid
1. The NYSE is defined as a spot market purely and simply because it has a physical location. The
NASDAQ, on the other hand, is not a spot market because it has no one central location.
2. Primary markets are large and important, while se
Compounding 1. The process for converting present values into future values is called _.
2. This process (from #1) requires knowledge of the values of three of four time-
value-of-money variables. Which is not one of these variables?
a. The present valu
1. Capital is sometimes defined as funds supplied to a firm by investors.
2. The cost of capital used in capital budgeting should reflect the average cost of the
various sources of investor-supplied funds a firm uses to acquire
1. A proxy is a document giving one party the authority to act for another party,
including the power to vote shares of common stock. Proxies can be important tools relating to control of
2. The preemptive right gives current
1. A firm should never accept a project if its acceptance would lead to an increase in
the firms cost of capital (its WACC).
2. Because present value refers to the value of cash flows that occur at different
points in time,
WHAT IS BEHAVIORAL-BASED INTERVIEWING?
Its based on the belief that past behavior and performances predict future behavior and
Behavioral based interviewing questions focuses in on job related behavioral based