Finance 200 Midterm
The future value of a lump-sum investment will increase if you: decrease the interest rate. decrease the number of compounding periods. increase the time period. decrease the time period. decrease the lump-sum amount.
increase the time period
The systematic risk principle states that the expected return on a risky asset depends only on the asset's _____________blank risk. unique diversifiable asset-specific market unsystematic
market
Which one of the following is a capital structure decision? determining the optimal inventory level establishing the preferred debt-equity level selecting new equipment to purchase setting the terms of sale for credit sales determining when suppliers should be paid
Establishing the preferred debt-equity level
Which one of the following will increase the present value of a lump-sum future amount to be received in 15 years? an increase in the time period an increase in the interest rate a decrease in the future value a decrease in the interest rate ahanging to compound interest from simple interest
a decrease in the interest rate
The shareholders of Qiang's Markets would benefit if the firm were to be acquired by Better Foods. However, Weil's board of directors rejects the acquisition offer. This is an example of: a corporate takeover. a capital structure issue. a working capital decision. an agency conflict. a compensation issue.
an agency conflict
Which one of the following statements is correct? the APR is equal to the EAR for a loan that charges interest monthly. the EAR is always greater than the APR. the APR on a monthly loan is equal to (1 + monthly interest rate)12raise to the power of 12 − 1. the APR is the best measure of the actual rate you are paying on a loan. the EAR, rather than the APR, should be used to compare both investment and loan options.
the EAR, rather than the APR, should be used to compare both investment and loan options.
Which one of the following is a correct statement, all else held constant? the present value is inversely related to the future value. the future value is inversely related to the period of time. the period of time is directly related to the interest rate. the present value is directly related to the interest rate. the future value is directly related to the interest rate.
the future value is directly related to the interest rate
A credit card has an annual percentage rate of 12.9 percent and charges interest monthly. The effective annual rate on this account: will be less than 12.9 percent. can either be less than or equal to 12.9 percent. is 12.9 percent. can either be greater than or equal to 12.9 percent. will be greater than 12.9 percent.
will be greater than 12.9 percent.