1. A money market is the market for _. a. common stock b. long-term bonds c. short-term debt securities d. both A and B. 2. Which of the following is an example of a secondary market transaction? a. Mr. and Mrs. MBA take out a mortgage to buy a house. b.
Which of the following is not an input in a company's WACC?
Which of the following would be a reasonable estimate for a company's before-tax cost of debt?
Why did AT&T have identical current and quick ratios?
AT&T reported no short-term debt on their balance sheets.
AT&T reported no accounts receivable on their balance sheets.
AT&T reported no accounts payable on their balance sheets.
1. What is the relevant risk measure for a stock to be added or held in a well-diversified portfolio?
none of the above
2. Which of the following is true for a stock whose returns a
Pre-flight week 4
1. How is a bond's value determined?
a. By finding the present value of the bond's expected coupon payments at the bond's
required rate of return.
b. By finding the present value of the bond's expected coupon payments and par value at
Pre-flight Week 3
1. Which of the following is an example of a capital market security?
A corporate bond that matures in 10 months.
2. Which of the following is an example of a primary market transa
Assets and equity on a non-financial company's balance sheet are reported at
Which of the following defines net cash flow?
net income minus dividends
Derivatives and Risk Management
Learning Objectives & Agenda
Understand what are call and put options.
Understand what are options contracts and
how they can be used to reduce risk.
Understand what factors impact an options
THE BASICS OF
Capital Budgeting Decision Criteria
Net Present Value (NPV)
Internal Rate of Return (IRR)
Modified Internal Rate of Return (MIRR)
Capital Budgeting Overview
Capital Budgeting is the set of valuation techniques
for real asset investment decisions.
Capital Budgeting Steps
estimating expected future cash flows for the
proposed real asset investment (Chap 12)
estimating the firms co
Which of the following is true if a company misses a dividend payment on cumulative preferred stock?
The current preferred stock dividend payment must be made before a common stock
dividend payment can be made.
The current common stock