Bcor 340 Final
When calculating CAPM, what do we use in place of the risk-free rate?
10-year Treasury Bond Return
What is the difference between (i) APR and (ii) EAR?
(i)based on simple interest; (ii) takes compound interest into acco
A mortgage is:
A type of loan from a bank or another institution that helps a borrower purchase a real estate asset, usually a home.
Paying accounts payable with cash will result in: a. Decrease in current asset b. Decrease in current liability c. Increase in equity-to-assets ratio d. All of above
All of Above
Which of the following will increase a bond's yield to maturity (YTM)? A.) Higher inflation rate B.) Higher likelihood of bond issuer's bankruptcy C.) Lower bond liquidity D.) All of the above
All of the above
Calculating net worth of a person requires:
Assets and Liabilities
What is the order of who gets paid first during a corporate liquidation?
Bondholders, preferred stockholders, common stockholders
A bond from Rose corporation has a credit rating of AAA, an a bond from Carnation corporation has a credit rating of BBa. Which bond has higher risk and higher return?
Carnation corporation has higher risk, and higher return, due to having a BBa rating.
What is the most widespread type of credit that many consumers use in order to pay for everyday expenditures?
Credit Cards
Why is a dollar today worth more than a dollar in the future?
Inflation rates increase prices over time, which means that each dollar you own today will buy more in the present time than it will in the future.
Price-to-Earnings ratio is often used to gauge the relative cost of one stock to another with respect to earnings. The average P-to-E (or P/E) is 15 to 25 for most companies in the market. If a company is trading with a P/E of 85, should you buy the stock?
Provided other shares in the market are still trading at the average P/E, this company's stock is relatively expensive and should not be bought at this time unless there is some reason to rationalize such a price multiple (such as large expected sales growth in the future)
You are deciding between investing in long-term treasury bonds and corporate stocks. Which of the following is the correct relation between risk and reutrn?
Stocks have a higher level of risk compared to bonds and a higher return on average.
Which of the following best descrives the risk and return of a portfolio that is 100% invested in long-term treasuries?
The portfolio is low risk and low return.
Amortizing a loan means:
To periodically pay off interest and outstanding principal through maturity.
Which of the following enjoys limited liability? (check all that apply) a. A limited liability corporation (LLC) b. A limited partnership c. A general partnership d. A S-Corporation
a. A limited liability corporation (LLC) b. A limited partnership d. A S-Corporation
According to the Financial Accounting Standards Board (FASB), which of the following is a cash flow from a "financing" activity?
a. cash outflow to shareholders as dividends.
Interest Rates on Adjustable-Rate Mortgages:
are typically below the interest rate on a comparable fixed-rate loan
Rent and vehicle insurance payments are examples of
fixed expenses
A major advantage of the corporate form of organization is:
limited owner liability.
The long-run objective of financial management is to:
maximize the value of the firm's common stock in the long-run.
A(n)________would be an example of a principal, while a(n)__________would be an example of an agent.
shareholder; manager
Market Risk Premium (or MRP) can be calculated as:
the difference between the expected market return and the risk-free rate.
In a car lease, residual value refers to
what the vehicle is worth at the end of the lease
