Solved by verified expert :What’s the value of a preferred stock if we
assume it has an annual dividend $5
per share and the required rate of return is 20%? ______
compute the real risk-free rate? ______
to nominal risk-free rate
to nominal risk-free rate plus the expected inflation rate
to nominal risk-free rate minus the expected inflation rate
By maximizing the net income of a firm we
will ensure that the price per share of
common stock is maximized, hence shareholders’ wealth will also be maxi-
has $900 millions of current assets, including $300 millions of inventory. It
has $500 millions of current liabilities. What’s the firm’s quick ratio?
discount bond, the coupon interest rate should be greater than its yield to
A firm has a times interest earned
ratio of 2. This means that the firm has twice
as much _______
income as it owes in interest.
expense as it does net income.
before interest and taxes as it does interest expense.
before interest and taxes plus depreciation as it does interest
If we assume a perpetuity pays $100
per year forever. What would the
perpetuity be worth if the required rate of return is 10%? ______
Under straight voting, each share of stock allows the
shareholder one vote, and
each position on the board of directors is voted on separately. But with
cumulative voting, each share of stock allows the stockholder a number of votes
equal to the number of directors being selected. So cumulative voting procedure
helps protect minority shareholders. _____True
You just inherited $10,000. You are
investing this money for two years at 10%
simple interest. In whole dollars, how much money will you have at the end of
the two years?
John purchased 1000 shares of
Facebook common stock at IPO. This transaction
occurs in the:
At maturity, the value of either
premium bond or discount bond is always equal
to its par value. ______
The percentage of a firm’s net
income which is transferred into retained earnings
is known as the _______.
Theresa borrows $800 today in
exchange for one payment of $1,000 five years
from now. This is an example of a(n) ________
selection ambiguity can arise if you rely on the internal rate of return
instead of the net present value (NPV) when
project’s cash flows are non-conventional.
are multiple IRRs.
are mutually exclusive.
of the above.
the following statements is most correct?______
stockholders have claim priority over common stockholders.
big advantage of preferred stock is that preferred stock dividends are tax
deductible for the issuing corporation.
stockholders have claim priority over bondholders.
of the above statements is correct.
things held constant, for a given change in the market interest rate, the
_______the time to maturity of bond, the the change in the bond price.
When evaluating two
mutually-exclusive project, the best method to use is the:
rate of return
the future value of the initial $1,000 investment after 20 years? We
assume the expected annual return is 8%_____
the present value of the $1,000 due in 20 years (FV=$1,000)? We assume
current interest rate is 8%, compounded annually_____
is offering a diamond ring for sale for 36 months at $135 per month.
The retail price of the ring is $3,900. What is the interest rate on this
the value of a 15-year, $1,000 par value, 9% coupon rate bond if the yield
to maturity (YTM) is 9%? ______
the value of a 15-year, $1,000 par value, 9% coupon rate bond if the yield to
maturity (YTM) increases to 12%? ______
Based on the information in Question
35, the bond is a: ______
What’s the value of a 15-year,
$1,000 par value, 9% coupon rate bond if the yield
to maturity (YTM) decreases to 6%? ______
the information in Question 37, the bond is a: ______
stock has the required rate of return at 16%. The most recent dividend paid
D0 = $2.00 and the expected dividend
growth rate g = 5%. What’s the first dividend expected to pay at the end of
on the information from Question 39, What’s the estimated value of the
on the information from Question 39~40, if the current trading price of the
stock on the stock market is $22.28 per share, we should give a _____ recommendation
to the stock.
company has a net working capital of $4,800, total liabilities of $15,900,
long-term debt of $9,500. What is the value of the current assets?
firm is considering a new inventory system that will cost $120,000. The
system is expected to generate positive cash flows over the next four years
in the amounts of $35,000 in year 1, $55,000 in year 2, $65,000 in year 3,
and $40,000 in year 4. The firm’s required rate of return is 9%.
is the payback period of
this project? _______
on the information from Question 43. What is the net present value (NPV)
of the project? _____
on the information from Question 43, what is the internal rate of return
(IRR) of this project?
Based on the information from
Question 43, what is the profitability index (PI) of
A firm has total assets of $13,200,
fixed assets of $8,500, current liabilities of
$2,700, and long-term liabilities of $5,200. What is the total debt ratio?
You want to receive $5,000 per month
in retirement. If you can earn 0.75% per
month and you expect to need the income for 25 years, how much do you need
to have in your account at retirement?
What is the value of a stock that is
expected to pay a constant dividend of $5 per
year if the required return is 10%?
Based on the information from
Question 49, what the value of the stock if the
company starts increasing dividends by 5% per year, beginning with the next