FIN 335 Final
The percentage of debt and equity utilized by a firm is called the:
capital structure weight.
1. Percentage returns: I. easily convey the return for each dollar invested. II. relay information about a security more easily than dollar returns do. III. vary with the amount invested. IV. can be easily separated into dividend and capital gain yields.
D. I, II, and IV only
. Suppose that you could buy 27 Russian rubles or 108 Japanese yen last year for $1. Today, $1 will buy you 28 rubles or 104 yen. Over the past year, the:
Russian ruble depreciated against the U.S. dollar
Which one of the following is a logical statement if the pre-tax cost of debt is decreasing for a firm?
The firm will have a tendency to increase its capital structure weight of debt.
Which one of the following had the lowest standard deviation for the period of 1926 through 2004?
U.S. Treasury bill
The concept that the difference in interest rates between two countries is equal to the percentage difference between the forward exchange rate and the spot exchange rate is called:
interest rate parity
An American Depositary Receipt is defined as a security:
issued in the U.S. which represents shares of a foreign stock.
Assume that you can currently exchange 1 U.S. dollar for 11 Mexican pesos. Also assume that the inflation rate will be 4 percent annually in the U.S. and 3 percent in Mexico. Given these assumptions, you should expect to receive _____ Mexican pesos for 1 U.S. dollar two years from now.
less than 11
Which one of the following supports the argument that financial markets are semistrong form efficient?
only company insiders have a marketplace advantage
The concept that exchange rates vary to keep purchasing power constant among currencies is referred to as:
purchasing power parity.
Over the period of 1926 through 2004:
small-company stocks outperformed large-company stocks.
An agreement to exchange two currencies is called a(n):
swap
The foreign exchange market is the market where:
various currencies are traded.
