Financial literacy

1. The next dividend payment by ECY, Inc, will be S3.20 per share. The dividends

1. The next dividend payment by ECY, Inc, will be S3.20 per share. The dividends are anticipated to maintain a growth rate of 6 percent, forever. If ECY stock currently sells for …

1. The next year the common stock of Gold Corp will pay a dividend of 2.10 per s

1. The next year the common stock of Gold Corp will pay a dividend of 2.10 per share. If the company is growing at a rate of 4.03 percent per year and your required rate of return…

1. The nominal interest rate is equal to the real risk-free rate, plus an inflat

1. The nominal interest rate is equal to the real risk-free rate, plus an inflation premium, plus a default risk premium, plus a liquidity premium, plus a maturity risk premium. 2…

1. The notional principal amount under an interest rate swap is never paid by ei

1. The notional principal amount under an interest rate swap is never paid by either counterparty. Select one: True False 2. A(n) _________________ is an agreement between two par…

1. The outstanding bonds of Tech Express are priced at $989 and mature in 8 year

1. The outstanding bonds of Tech Express are priced at $989 and mature in 8 years. These bonds have a 6 percent coupon, a yield-to-maturity of 6.18 percent and pay interest annual…

1. The peso/pound exchange rate is Mex$16/£ while the euro/pound exchange rate i

1. The peso/pound exchange rate is Mex$16/£ while the euro/pound exchange rate is €1.15/£ . You also observe that the actual peso/euro cross exchange rate is Mex$12/€ . Find the t…

1. The phenomenon of compounding connotes which of the following? A Investment o

1. The phenomenon of compounding connotes which of the following? A Investment of principal for a prolonged period B Interest earned over a prolonged period C Earning income on pr…

1. The portfolio managers of a firm determined that over the next year interest-

1. The portfolio managers of a firm determined that over the next year interest-sensitive assets are in the amount of $1.5 billion while interest-sensitive liabilities are in the …

1. The portfolio managers of a firm determined that over the next year interest-

1. The portfolio managers of a firm determined that over the next year interest-sensitive assets are in the amount of $1.5 billion while interest-sensitive liabilities are in the …

1. The portfolio managers of a firm determined that over the next year interest-

1. The portfolio managers of a firm determined that over the next year interest-sensitive assets are in the amount of $1.5 billion while interest-sensitive liabilities are in the …

1. The portfolio managers of a firm determined that over the next year interest-

1. The portfolio managers of a firm determined that over the next year interest-sensitive assets are in the amount of $1.5 billion while interest-sensitive liabilities are in the …

1. The possibility of political risk may be excluded when an investor considers

1. The possibility of political risk may be excluded when an investor considers maximizing expected returns. True or False 2. The Eurobond market has which of the following charac…

1. The potential return on the Butterfield Corp. stock has the following distrib

1. The potential return on the Butterfield Corp. stock has the following distribution: Prob.               Return .05                   -15% .10                   -5% .15         …

1. The potential risks in a real estate investment include: (A) Liquidity risk,

1. The potential risks in a real estate investment include: (A) Liquidity risk, capital markets risk, legislative risk (B) Business risk, financial risk, management risk (C) Inter…

1. The present value of a perpetuity is the promised constant cash payment divid

1. The present value of a perpetuity is the promised constant cash payment divided by the interest rate (i). a. True b. False 2. The APR (annual percentage rate) is defined as the…

1. The present value of a single future sum: a. increases as the number of disco

1. The present value of a single future sum: a. increases as the number of discount periods increases. b. is generally larger than the future sum c. depends upon the number of dis…

1. The price of a Big Mac “in the U.S. is $2.50”; the price in France is 3.45 eu

1. The price of a Big Mac “in the U.S. is $2.50”; the price in France is 3.45 euros. The current official exchange rate (ExOfficial) is 1.15€/$. a. Use the Purchasing Power Parity…

1. The price of a credit default swap (CDS) on a AAA-rated bond would be higher

1. The price of a credit default swap (CDS) on a AAA-rated bond would be higher than the price of an otherwise identical BB-rated bond. True False 2. Suppose you hold a share of s…

1. The price of a four-month GE call option with an exercise price of $35 is $6.

1. The price of a four-month GE call option with an exercise price of $35 is $6. The current price of GE stock is $40 per share. The call holder exercises the call at expiration w…

1. The price of a four-month GE call option with an exercise price of $35 is $6.

1. The price of a four-month GE call option with an exercise price of $35 is $6. The current price of GE stock is $40 per share. The call holder exercises the call at expiration w…

1. The price of a stock is $60. The price of a one-year European put option on t

1.    The price of a stock is $60. The price of a one-year European put option on the stock with a strike price of $30 is quoted as $6 and the price of a one-year European call op…

1. The primary advantages of the modified internal rate of return (MIRR) over th

1.       The primary advantages of the modified internal rate of return (MIRR) over the internal rate of return (IRR) include which of the following? 2.       Which of the followi…

1. The primary goal of financial management is: a-Maximize current sales b-Maxim

1. The primary goal of financial management is: a-Maximize current sales b-Maximize the current value of each common stock. c-Minimize operational costs 2. Earnings per share are …

1. The primary method by which a firm may hedge itself against the operating exp

1. The primary method by which a firm may hedge itself against the operating exposure is a. diversification b. forward contract hedge c. money market hedge d. options contract hed…

1. The primary regulator of securities markets in the United States is: a. Feder

1. The primary regulator of securities markets in the United States is: a. Federal Reserve Bank b. Department of the Treasury c. Internal Revenue Service d. Securities and Exchang…

1. The principal of the time value of money is probably the single most importan

1. The principal of the time value of money is probably the single most important concept in financial management. One of the most frequently encountered applications involves the…

1. The process of selecting among potential major corporate investments is calle

1.The process of selecting among potential major corporate investments is called capital budgeting. True or false 2.The goal of the capital budgeting decisions is to select capita…

1. The purchase and sale of securities after the original issuance occurs in the

1. The purchase and sale of securities after the original issuance occurs in the: (Points : 5)        Primary market.        Secondary market.        Dealer market.        Auction…

1. The quick ratio, measured by current assets less inventories divided by curre

1. The quick ratio, measured by current assets less inventories divided by current liabilities, is also referred to as an "acid test" ratio and provides a measure of a company's a…

1. The rate of return on Cherry Jalopies, Inc., stock over the last five years w

1. The rate of return on Cherry Jalopies, Inc., stock over the last five years was 10 percent, 11 percent,8 percent, 4 percent, and 8 percent. Over the same period, the return on …

1. The rate on 1-year Treasury notes is 5.50%, the rate on 10-year treasury bond

1. The rate on 1-year Treasury notes is 5.50%, the rate on 10-year treasury bonds is 5.85%, and the rate on 10-year AAA rated corporate bonds is 6.60%. The approximate risk premiu…

1. The rate that banks charge when lending ti each other overnight is the A. Dis

1. The rate that banks charge when lending ti each other overnight is the A. Discount rate B. Real risk free rate C. Fed funds rate D. Nominal risk free rate E. Prime rate 2. Stim…

1. The real estate cycle, supply and demand and the integrated real estate syste

1. The real estate cycle, supply and demand and the integrated real estate system: The systems noted above are in the following state: a) Supply and demand for space are in balanc…

1. The real risk free rate of return is currently 1.5%.Inflation is expected to

1. The real risk free rate of return is currently 1.5%.Inflation is expected to be 2% the next two years and 3% the following year.If the Maturity Risk Premium is .5% what is the …

1. The real risk-free rate is 4%. Inflation is expected to be 3% this year and 5

1. The real risk-free rate is 4%. Inflation is expected to be 3% this year and 5% during the next 2 years. Assume that the maturity risk premium is zero. What is the yield on 2-ye…

1. The relationship between a bond\'s price and the yield to maturity is an inve

1. The relationship between a bond's price and the yield to maturity is an inverse relationship. Please explain; make sure you don't simply restate the inverse relationship, but e…

1. The reserve requirement is 0 percent on the first $6.0 million in transaction

1. The reserve requirement is 0 percent on the first $6.0 million in transaction deposits, 3 percent on amounts between $6.0 million and $42.1 million, and 10 percent on amounts a…

1. The return on assets ratio tells us the profit generated by each dollar in as

1. The return on assets ratio tells us the profit generated by each dollar in assets. You will want to compare this ratio to Choice Hotels' historical performance and to Marriott …

1. The revenue cycle is composed of: At-service activities All of the above acti

1. The revenue cycle is composed of: At-service activities All of the above activities Before service activities After-service activities Continuous activities 2. Assume that your…

1. The risk of medical errors has been estimated to cause 98,000 unnecessary dea

1.       The risk of medical errors has been estimated to cause 98,000 unnecessary deaths in hospitals each year.  Do you believe the risk of medical care in ambulatory settings i…

1. The risk-free rate is 3%, the expected market rate of return is 9%, if you ex

1. The risk-free rate is 3%, the expected market rate of return is 9%, if you expect a stock with a beta of 1.5 to offer a rate of return of 12%, you should a) buy the stock becau…

1. The risk-free rate is 6%; Stock A has a beta of 1.0; Stock B has a beta of 2.

1. The risk-free rate is 6%; Stock A has a beta of 1.0; Stock B has a beta of 2.0; and the market risk premium, rM ? rRF, is positive. Which of the following statements is CORRECT…

1. The risk-free rate is currently 3.5%, and one share of stock of a given firm

1. The risk-free rate is currently 3.5%, and one share of stock of a given firm is selling for $50. In one year, the price of the stock is expected to be either $47.50 or $53.75. …

1. The spot and 30day forward rates for the Dutch guilder are $0.3075 and $0.311

1.      The spot and 30day forward rates for the Dutch guilder are $0.3075 and $0.3110, respectively. The guilder is said to be selling at a forward a) premium of 19.51% b) premiu…

1. The spot price for gold is $2,000 per ounce. The dividend yield on the S&P 50

1. The spot price for gold is $2,000 per ounce. The dividend yield on the S&P 500 is 7.0%. The risk-free interest rate is 8.0%. The futures price for gold for a 6-month contra…

1. The standard deviation of return on investment A is 9%, while the standard de

1. The standard deviation of return on investment A is 9%, while the standard deviation of return on investment B is 7%. If the covariance between the returns on A and B is 0.0025…

1. The stock of Milton, Inc., is expected to return 22% annually with a standard

1. The stock of Milton, Inc., is expected to return 22% annually with a standard deviation of 8%. The stock of Eaton, Inc., is expected to return 24% annually with a standard devi…

1. The stock of Milton, Inc., is expected to return 22% annually with a standard

1. The stock of Milton, Inc., is expected to return 22% annually with a standard deviation of 8%. The stock of Eaton, Inc., is expected to return 24% annually with a standard devi…

1. The stock of a technology company has an expected return of 15% and a standar

1. The stock of a technology company has an expected return of 15% and a standard deviation of 20% The stock of a pharmaceutical company has an expected return of 13% and a standa…

1. The stock of the McCall Corporation is currently trading at $42 per share. Th

1. The stock of the McCall Corporation is currently trading at $42 per share. The stock’s volatility as measured by its standard deviation is 20%. If the strike (exercise) price f…