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Question;In response to the same external force, the return on one;investment may increase while the return on another investment may decrease.;True;False;Points Received: 1 of 1;Comments;Question 2. Question;The coefficient of variation is used to compare assets with;varying rates of return.;True;False;Points Received: 1 of 1;Comments;Question 3. Question;Which one of the following statements is?;A capital loss is computed as the reduction in;the value of an investment minus the income received from that investment.;The total return from an investment is equal;to the capital gain minus the current income.;IN A capital gain is equal to the;amount paid for an investment minus the proceeds received from the sale of that;investment.;Current income is cash or near-cash that is;periodically received as a result of owning an investment.;Points Received: 0 of 1;Comments;Question 4. Question;Risk is the possibility that the actual rate of return will;vary from the expected rate of return.;True;False;Points Received: 0 of 1;Comments;Question 5. Question;To determine the compounded annual rate of return on;investments held for more than a year, investors typically use the;present-value-based measure known as yield or;holding period return.;internal rate of return.;inflation-adjusted return.;simple return.;Points Received: 1 of 1;Comments;Question 6. Question;The holding period return considers the time value of money.;True;False;Points Received: 1 of 1;Comments;Question 7. Question;Most investors are risk-seeking.;True;False;Points Received: 1 of 1;Comments;Question 8. Question;The internal rate of return is the discount rate that;equates the present value of benefits to the cost of the investment.;True;False;Points Received: 1 of 1;Comments;Question 9. Question;Which one of the following is an internal characteristic;that can affect the value of an investment?;Federal Reserve actions;inflation;war;use of debt financing;Points Received: 1 of 1;Comments;Question 10. Question;The holding period return should NOT be used when analyzing;long-term investments.;True;False;Points Received: 0 of 1;Comments;Question 11. Question;Over the long term, which one of the following has;historically had the highest average annual rate of return?;small-company stocks;long-term government bonds;large-company stocks;long-term corporate bonds;Points Received: 0 of 1;Comments;Question 12. Question;A holding period return is calculated by adding the current;income to the capital gains and dividing this sum by the;average investment value.;beginning investment value.;total income received.;selling price of the investment.;Points Received: 1 of 1;Comments;Question 13. Question;Liquidity risk is defined as the risk of;having to trade a security in a broad market.;not being able to sell an investment;conveniently and at a reasonable price.;having inflation erode the purchasing power of;your investment.;having declining price levels affect the;reinvestment rate of your current income stream.;Points Received: 1 of 1;Comments;Question 14. Question;Ignoring risk, a satisfactory investment is one for which;the present value of benefits is less than the present value of costs.;True;False;Points Received: 1 of 1;Comments;Question 15. Question;The markets in general are paying a 2% real rate of return.;Inflation is expected to be 3%. ABC stock commands a 6% risk premium. What is;the risk-free rate of return?;2%;5%;8%;11%;Points Received: 1 of 1;Comments;Question 16. Question;An ordinary annuity is defined as an annuity for which the;cash flows occur at the beginning of each year or payment period.;True;False;Points Received: 1 of 1;Comments;Question 17. Question;The amount an investor is willing to pay for an investment;should be determined by the past performance of the investment.;IN True;False;Points Received: 0 of 1;Comments;Question 18. Question;In the short term, stock prices tend to decline as inflation;rises.;True;False;Points Received: 1 of 1;Comments;Question 19. Question;An ordinary annuity has cash flows that occur at the;of each time period and are ________ in amount.;beginning, constant;beginning, variable;end, constant;end, variable;Points Received: 0 of 1;Comments;Question 20. Question;The required return on an investment includes a real rate of;return, an inflation premium and an interest premium.;True;False;Points Received: 0 of 1;Comments;Question 21. Question;Internal factors such as the quality of management and the;level of corporate debt affect the rate of return on an individual stock.;True;False;Points Received: 1 of 1;Comments;Question 22. Question;When the cost of an investment exceeds the present value of;its benefits, the investor would be earning a rate of return;greater than the discount rate.;equal to the discount rate.;equal to the compounded rate.;less than the discount rate.;Points Received: 0 of 1;Comments;* Times are displayed;in (GMT-10:00) Hawaii


Paper#45862 | Written in 18-Jul-2015

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