Financial literacy

1. The summary results of the sensitivity analysis for a residual income valuati

1. The summary results of the sensitivity analysis for a residual income valuation are presented in the table below. Based upon this information, which of the following must be tr…

1. The table below shows the cost, C(m), of a taxi ride as a function of the num

1. The table below shows the cost, C(m), of a taxi ride as a function of the number of miles, m, traveled. m= 0 1 2 3 4 5 C(m)= 0 7.5 10 12.5 15 17.5 (a) Estimate C(4.50). C(4.50)…

1. The target cost of a product a. includes product costs but not period costs.

1. The target cost of a product a.   includes product costs but not period costs. b.   is determined before the target price is established. c.   is the difference between the tar…

1. The term most closely associated with quality of life is a. wealth. b. consum

1. The term most closely associated with quality of life is a. wealth. b. consumption. c. education. d. standard of living. e. money. ____ 2. A ____ is an example of a real asset.…

1. The term most closely associated with quality of life is a. wealth. b. consum

1. The term most closely associated with quality of life is a. wealth. b. consumption. c. education. d. standard of living. e. money. ____ 2. A ____ is an example of a real asset.…

1. The term “leaving money on the table” refers to the situation where an invest

1. The term “leaving money on the table” refers to the situation where an investment banking house makes a very low bid for the right to underwrite a firm’s new stock offering. Th…

1. The test of an agent\'s express authority is: A. the justifiable belief of th

1. The test of an agent's express authority is: A. the justifiable belief of the agent B. the specific language used by the principal in granting the authority. appearance of auth…

1. The three pillars of Basel II address operational risk through a)Additional r

1. The three pillars of Basel II address operational risk through a)Additional regulatory capital requirements b)additional supervisory scrutiny of management and capital charges …

1. The three possible outcomes of an investemtn are listed below. All outcomes a

1. The three possible outcomes of an investemtn are listed below. All outcomes are equally likely. Calculate the average profit variation and the standard deviation of this invesm…

1. The total book value of WTC’s equity is $50 million and book value per share

1. The total book value of WTC’s equity is $50 million and book value per share outstanding is $10. The stock of WTC is currently selling for a price of $75 per share and the beta…

1. The total book value of WTC’s equity is $60 million and book value per share

1. The total book value of WTC’s equity is $60 million and book value per share outstanding is $10. The stock of WTC is currently selling for a price of $25 per share and the beta…

1. The total market value of BHP’s assets is $60,000,000. These assets are finan

1. The total market value of BHP’s assets is $60,000,000. These assets are financed by $30,000,000 worth of issued bonds and $30,000,000 worth of issued ordinary shares. The bonds…

1. The unlevered firm expects to earn $250,000 in net operating income each year

1. The unlevered firm expects to earn $250,000 in net operating income each year for the foreseeable future. It has a tax rate of 40% and has a capitalization rate of 8% equal to …

1. The valuation of stocks is more difficult than the valuation of bonds because

1. The valuation of stocks is more difficult than the valuation of bonds because a) The appropriate discount rate is more difficult to determine for stocks than it is for bonds b)…

1. The value of currently unused warehouse space that will be used as part of a

1. The value of currently unused warehouse space that will be used as part of a new capital budgeting project is an opportunity cost. a sunk cost. irrelevant to the investment dec…

1. The weighted average cost of capital is defined as the weighted average of a

1. The weighted average cost of capital is defined as the weighted average of a firm's: return on its investments. cost of equity and its aftertax cost of debt. pretax cost of deb…

1. The yield-to-maturity on a bond is the interest rate you earn on your investm

1. The yield-to-maturity on a bond is the interest rate you earn on your investment if interest rates do not change. If you actually sell the bond before it matures, your realized…

1. There are four stocks XI, X2, X3 and X4. Each share of Xi, X2, X3 and X4 has

1. There are four stocks XI, X2, X3 and X4. Each share of Xi, X2, X3 and X4 has a payoff of 0 with probability 0.5 and 2 with probability 0.5. The payoffs of XI, X2, X3 and X4 are…

1. There is an inverse relationship between bonds\' quality ratings and their re

1. There is an inverse relationship between bonds' quality ratings and their required rates of return. Thus, the required return is lowest for AAA-rated bonds, and required return…

1. There is sometimes a ranking problem among NPV and IRR when selecting among m

1. There is sometimes a ranking problem among NPV and IRR when selecting among mutually exclusive investments. This ranking problem only occurs when Select one: a. the NPV is grea…

1. Think of something you want or need for which you currently do not have the f

1. Think of something you want or need for which you currently do not have the funds. It could be a vehicle, boat, horse, jewelry, property, vacation, college fund, retirement mon…

1. This is the average of the possible returns weighted by the likelihood of tho

1. This is the average of the possible returns weighted by the likelihood of those returns occurring. efficient return expected return market return required return This is the re…

1. This is the average of the possible returns weighted by the likelihood of tho

1. This is the average of the possible returns weighted by the likelihood of those returns occurring. efficient return expected return market return required return This is the re…

1. Thomas invests $121 in an account that pays 6 percent simple interest. How mu

1. Thomas invests $121 in an account that pays 6 percent simple interest. How much money will Thomas have at the end of 4 years? $144.11 $150.04 $157.30 $142.78 $152.76 2 Beatrice…

1. Thomas is an employer with one employee, Sarah. Sarah\'s wages are $19,450, a

1. Thomas is an employer with one employee, Sarah. Sarah's wages are $19,450, and the state unemployment tax rate is 5.4 percent. Calculate the following amounts for Thomas: a. FU…

1. Three groups of proposals are presented to management for selection. Proposal

1. Three groups of proposals are presented to management for selection. Proposals with the same first letter are mutually exclusive. The available proposals are listed below. Prop…

1. Three put options on a stock have the same expiration date and strike prices

1. Three put options on a stock have the same expiration date and strike prices of $55, $60, and $65. the market prices are$3, $5, and $8, respectively. what is the profit of the …

1. Tiffany’s utility function is given by the formula U(x1, x2) = min{2x1, 800x2

1. Tiffany’s utility function is given by the formula U(x1, x2) = min{2x1, 800x2}. If x1 = x2, which commodity will have a greater marginal utility? a. x1 b. It is not possible to…

1. Times are rough for Auger Biotech. Having raised $85 million in an initial pu

1. Times are rough for Auger Biotech. Having raised $85 million in an initial public offering of its stock early in the year, the company is poised to launch its product. If Auger…

1. Timothy Clum is in the 25 percent tax bracket and is considering the tax cons

1. Timothy Clum is in the 25 percent tax bracket and is considering the tax consequences of investing $2,000 at the end of each year for 30 years, assuming the investment earns 8 …

1. To complete your last year in business school and then go through law school,

1. To complete your last year in business school and then go through law school, you will need $20,000 per year for 4 years, starting next year (that is, you will need to withdraw…

1. To help finance a major expansion, a company sold a noncallable bond several

1. To help finance a major expansion, a company sold a noncallable bond several years ago that now has 15 years to maturity. This bond has a 10.25% annual coupon, paid semiannuall…

1. Today is Kristin’s birthday and she decides to start saving for her 3-year lo

1. Today is Kristin’s birthday and she decides to start saving for her 3-year long MBA education. She will start the MBA program on her 28th birthday. She will need $25,000 to pay…

1. Today is your 25th birthday. You will begin making equal deposits on each bir

1. Today is your 25th birthday. You will begin making equal deposits on each birthday until your 65th birthday into an account that earns 6%. The first deposit will be made today.…

1. Today you deposited $5000 into a savings account paying 12% interest. How muc

1. Today you deposited $5000 into a savings account paying 12% interest. How much should you have in 15 years? 2. A loaf of bread today costs $1.28. If grocery prices are going up…

1. Today you opened up a local bank account. Your plan is make five $1,000 contr

1. Today you opened up a local bank account. Your plan is make five $1,000 contributions to this account. The first $1,000 contribution will occur today and then every six months …

1. Today, ABC Bank (seller) has made a \"three against nine\" FRA, with XYZ Bank

1. Today, ABC Bank (seller) has made a "three against nine" FRA, with XYZ Bank (buyer). Notional amount on the FRA is $10,000,000 and the agreement rate on the FRA is 4.9%. Actual…

1. Today, Citibank made a $5,000,000 loan to Kramerica Industries, an entreprene

1. Today, Citibank made a $5,000,000 loan to Kramerica Industries, an entrepreneurial firm founded and run by Cosmo Kramer. The loan’s maturity is 2 years, and it is repriced ever…

1. Today, your dream car costs $61,100. You feel that the price of the car will

1. Today, your dream car costs $61,100. You feel that the price of the car will increase at an annual rate 2.1 percent. If you plan to wait 5 years to buy the car, how much will i…

1. Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These b

1. Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 30-year life when issued and the annual interest payment was then 14 percent. This retur…

1. Tom is a single taxpayer, and incurs $ 2,500 of Business expenses in being an

1. Tom is a single taxpayer, and incurs $ 2,500 of Business expenses in being an accountant. a) How would Tom treat his business deductions if he was self employed? b)How would To…

1. Tom won the jackpot of Powerball. He will receive $50,000 per quarter for 20

1. Tom won the jackpot of Powerball. He will receive $50,000 per quarter for 20 years. If you can earn 9 percent on your money, what is this prize worth to you today?   A. $1,712,…

1. Tom’s Gift Shop is experiencing some inventory control problems. Tom currentl

1. Tom’s Gift Shop is experiencing some inventory control problems. Tom currently orders 5,000 units 5 times each year to handle annual demand of 25,000 units. Each order costs $1…

1. Toni adds $ 3,000 to her savings on the first day of each year. Tim adds $ 3,

1. Toni adds $ 3,000 to her savings on the first day of each year. Tim adds $ 3,000 to his saving on the last day of each year. They both earn a 9% rate of return. What is the dif…

1. Tony\'s Pizzeria plans to issue bonds with a par value of $1,000 and 10 years

1. Tony's Pizzeria plans to issue bonds with a par value of $1,000 and 10 years to maturity. The coupon rate on this bond is 9 percent annually, with interest being paid semiannua…

1. Torczyner, a diamond salesman, registered as a guest at the Hilton Hotel in D

1. Torczyner, a diamond salesman, registered as a guest at the Hilton Hotel in Denver, Colorado. He placed his diamonds in the hotel safe when he did not need them for business pu…

1. Torczyner, a diamond salesman, registered as a guest at the Hilton Hotel in D

1. Torczyner, a diamond salesman, registered as a guest at the Hilton Hotel in Denver, Colorado. He placed his diamonds in the hotel safe when he did not need them for business pu…

1. Trade Restriction Effects on Exchange Rates. Assume that the Japanese governm

1. Trade Restriction Effects on Exchange Rates. Assume that the Japanese government relaxes its controls on imports by Japanese companies. Other things being equal, how should thi…

1. Trader A enters into futures contracts to buy 1 million euros for 1.4 million

1. Trader A enters into futures contracts to buy 1 million euros for 1.4 million dollars in three months. Trader B enters in a forward contract to do the same thing. The exchange …

1. Tricia and Troy are starting a pharmacy. After meeting with their attorney an

1. Tricia and Troy are starting a pharmacy. After meeting with their attorney and accountant, they decide they want to begin using the simplest form of business organization they …