FIN 605 (FIN605)

Module 5 Quiz The capital budgeting process is very important to the firm because it:  Highlights the impacts of a project on net income  Indicates the net cash flows available for employee education  Essentially plots the company’s future direction  Is used in working capital analysis Which of the following are (is) generally considered problems associated with cash flow estimation?  Uncertainty about the future cash flow and the introduction of bias into the estimatio...

Quiz 4 A zero coupon bond is a bond that  will sell for a premium  is a premium value bond  has a high current yield  originally sold at a discount The common stock of Kyocera currently sells for $88.50 and its current dividend is $1.10. Determine the implied growth rate for Kyocera assuming that an investor’s required rate of return is 14% and that earnings and dividends are expected to grow at a constant rate.  12.3%  13.9%  13.8%  12.6% Normally the cou...

Quiz 3 Investors generally are considered to be a risk ___ because they expect to be compensated for assuming risk.  Averse  Seekers  Adverse  Takers Dana has a portfolio of 8 securities, each with a market value of $5,000. The current beta of the portfolio is 1.28 and the beta of the riskiest security is 1.75. Dana wishes to reduce her portfolio beta to 1.15 by selling the riskiest security and replacing it with another security with a lower beta. What must be the beta of ...

Quiz 2 You wish to save $500,000 in the next 25 years. You notice that a corporate bond fund earns about 11 percent per year and that is where you put your savings. How much must you save each year to obtain your goal?  $20,000.00  $2,000.00  $4,370.13  $3,749.98 If the present value of a given sum is equal to its future value, then  there is no inflation  the discount rate must be very high  none of the answers is correct  the discount rate must be zero If y...

Quiz 1 Insider trading is defined as  a zero-plus game  an individual buying or selling on the basis of material nonpublic information  an individual buying or selling using non-SEC disclosure rules  an individual using proper trading rules The primary objective of the firm is:  social responsibility  profit maximization  long run survival  shareholder wealth maximization If a firm shows an accounting net income, then  it will be able to repay all current l...