Question 1
5 / 5 points
Which of the following items is NOT included in current assets?
Bonds.
Short-term, highly liquid, marketable securities.
Accounts receivable.
Cash.
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If a company owns bonds then they would be considered a long term ass
n1
5 / 5 points
If you randomly select stocks and add them to your portfolio, which of the following statements best
describes what you should expect?
Question options:
Adding more such stocks will increase the portfolio's expected rate of return.
Adding
concept
stion 1
stion 3
5 / 5 points
If investors' aversion to risk rose, causing the slope of the SML to increase, this would have a greater
impact on the required rate of return on equity, r s, than on the interest rate on long-term debt, rd, for most
f
Question 1
0 / 5 points
Assume that the risk-free rate is 5%. Which of the following statements is CORRECT?
Question options:
If a stock's beta doubled, its required return under the CAPM would also double
If a stock's beta doubled, its required return un
nancialstatements
n1
5 / 5 points
The balance sheet is a financial statement that measures the flow of funds into and out of various accounts
over time, while the income statement measures the firm's financial position at a point in time.
True
False
Hide
ept
n1
5 / 5 points
Of the following investments, which would have the lowest present value? Assume that the effective
annual rate for all investments is the same and is greater than zero.
Investment A pays $250 at the end of every year for the next 10 ye
cept
n1
5 / 5 points
If Wolves Entertainment Company is acting in the best interests of stockholders (following
the primary goal of the firm), which of the following is the optimal (best) capital structure for
the firm?
Debt = 40%, Equity = 60%, EPS = $2.
bQuestion 1
5 / 5 points
Which one of the following is a source of cash?
increase in accounts receivable
decrease in common stock
decrease in inventory
decrease in accounts payable
decrease in long-term debt
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Sources of cash are decreases in
Question 1
5 / 5 points
Stocks A and B have the following data. The market risk premium is 6.0% and the risk-free rate is 6.4%.
Assuming the stock market is efficient and the stocks are in equilibrium, which of the following
statements is CORRECT?
Beta
A
ept
n1
n2
5 / 5 points
A U.S. Treasury bond will pay a lump sum of $1,000 exactly 3 years from today. The nominal interest
rate is 6%, semiannual compounding. Which of the following statements is CORRECT?
The PV of the $1,000 lump sum has a higher present
sconcept
n1
5 / 5 points
Other things held constant, which of the following will not affect the quick ratio? (Assume
that current assets equal current liabilities.)
Fixed assets are sold for cash.
Cash is used to purchase inventories.
Cash is used to pay
ept
n1
5 / 5 points
The present value of a set of cash flows is
the sum of the present value of the individual cash flows.
the sum of individual cash flows which are then discounted.
not equal to the sum of the present value of the individual cash flows.
sconcept
n1
5 / 5 points
The current ratio and inventory turnover ratios both help us measure the firm's liquidity. The current ratio
measures the relationship of a firm's current assets to its current liabilities, while the inventory turnover
ratio gives
ept
n1
0 / 5 points
The greater the number of compounding periods within a year, then (1) the greater the future value of a
lump sum investment at Time 0 and (2) the smaller the present value of a given lump sum to be received
at some future date.
True
Fa
ncept
n1
8 / 8 points
One of the basic relationships in interest rate theory is that, other things held constant, for a
given change in the required rate of return, the the _ time to maturity, the the
_ change in price.
longer; smaller.
shorter; larger.
l
n1
5 / 5 points
The principle of diversification tells us that:
Question options:
concentrating an investment in two or three large stocks will eliminate all of the unsystematic risk.
concentrating an investment in three companies all within the same indu
Practice Quiz 5
Ch 5
September 19, 2012
BA530
You have access to a project that requires a $12,000 initial investment. The project will
then return cash flows for 6 years, starting at $2,000 in year 1 and increasing at 9% per
year.
1. Create a spreadsheet
BA530, Practice Quiz 6, Chapters 6,
October 1, 2012
The president of COMPU corp. has asked you to evaluate the proposed acquisition of a new
computer network system. After an extensive analysis (for which the company paid a
consultant $5,000), the company
BA530, Practice Quiz 6, Chapters 6,
October 1, 2012
The president of COMPU corp. has asked you to evaluate the proposed acquisition of a new
computer network system. After an extensive analysis (for which the company paid a
consultant $5,000), the company
Practice Quiz 5
Ch 5
September 19, 2012
BA530
You have access to a project that requires a $12,000 initial investment. The project will
then return cash flows for 6 years, starting at $2,000 in year 1 and increasing at 9% per
year.
1. Create a spreadsheet
sconcept
n1
5 / 5 points
The current ratio and inventory turnover ratios both help us measure the firm's liquidity. The current ratio
measures the relationship of a firm's current assets to its current liabilities, while the inventory turnover
ratio gives
ept
n1
5 / 5 points
Which of the following statements regarding a 20-year monthly payment amortized mortgage with a
nominal interest rate of 10% is CORRECT?
Exactly 10% of the first monthly payment represents interest.
The monthly payments will increase o
Question 1
5 / 5 points
The present value of a future sum increases as either the discount rate or the number of periods per year
increases, other things held constant.
True
False
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Present value= Future Value/(1+interest rate)^Number of compo
Question 1
8 / 8 points
A sinking fund is managed by a trustee for which one of the following
purposes?
converting bonds into equity securities
paying preferred dividends
reducing coupon rates
paying interest payments
early bond redemption
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e
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.949827
R Square 0.902171
Adjusted R 0.900484
Standard E 0.013004
Observatio
60
ANOVA
df
Regression
Residual
Total
Intercept
S&P 500
SS
MS
F Significance F
1 0.090448 0.090448 534.8684 5.80E-031
58 0.009808