An annuity is a(n):
A. level stream of perpetual cash flows.
B. level stream of cash flows occurring for a fixed period of time.
C. increasing stream of perpetual cash flows.
D. increasing stream of cash flows occurring for a fixed perio
The stated interest payment, in dollars, made on a bond each period is called the bond's:
B. face value.
D. yield to maturity.
E. coupon rate.
The principal amount of a bond that is repaid at the end o
A security issued in the United States that represents shares of a foreign stock and allows that stock to be
traded in the United States is called a(n):
A. American Depository Receipt.
B. Yankee bond.
C. Yankee stock.
The amount an investment will be worth after one or more periods of time is the _ value.
The process of accumulating interest on an investment over time to earn more interest i
The bonds issued by Jordache Jewelers bear a 7.5 percent coupon, payable semiannually. The bonds
mature in 13 years and have a $1,000 face value. Currently, the bonds sell at par. What is the yield to
A. 7.33 percent
A contract that grants its owner the right to buy or sell a specified asset at an agreed-upon price on or
before a given date is called a(n):
Exercising an option is the act o
The excess return required from a risky asset over that required from a risk-free asset is called the:
A. risk premium.
B. geometric premium.
C. excess return.
D. average return.
The average squared difference between th
The person generally directly responsible for overseeing the tax management, cost accounting, financial
accounting, and data processing functions is the:
D. chairman of the board.
E. chief execut
The return shareholders require on their investment in a firm is called the:
A. dividend yield.
B. cost of equity.
C. capital gains yield.
D. cost of capital.
E. income return.
The return lenders require on loaned funds to a firm is
A 7 percent preferred stock pays a total of _ a year in dividends per share. Assume dividends are
Preferred shareholders are granted:
A. the right to dividends prior to c
The long-range time period, usually the next two to five years, over which the financial planning process
focuses is known as the:
A. planning horizon.
B. planning strategy.
C. planning agenda.
E. current financing period.
The length of time between the acquisition of inventory and the collection of cash from receivables is
A. operating cycle.
B. inventory period.
C. accounts receivable period.
D. accounts payable period.
E. cash cycle.
The return on a risky asset which is anticipated being earned in the future is called the _ return.
A group of assets, such as stocks and bonds, held by an investor is cal
Activities of a firm which require the spending of cash are known as:
A. sources of cash.
B. uses of cash.
C. cash payments.
D. cash receipts.
E. cash on hand.
The sources and uses of cash over a stated period of time are reflected on
A payment made out of a firm's earnings to its owners in the form of either cash or stock is called a:
E. stock split.
A payment made by a firm to its owners from sour
The use of personal borrowing to change the overall amount of financial leverage to which an individual
is exposed is called:
A. homemade leverage.
B. restructured leverage.
C. the weighted average cost of capital.
D. restructured priva
What is venture capital?
A. equity funds from internal sources used to finance high-risk projects
B. capital raised from issuing equity securities in order to retire debt securities
C. financing for new firms which generally entails hig
Forecasting risk is defined as the:
A. possibility that some proposed projects will be rejected.
B. process of estimating future cash flows relative to a project.
C. possibility that errors in projected cash flows will lead to incorrect
The financial statement summarizing the value of a firm's equity on a particular date is the:
A. income statement.
B. balance sheet.
C. statement of cash flows.
D. cash flow statement.
E. dividend statement.
A current asset is best de
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They arrive at the same answer but
entering data can be differen