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FINC400 I004 quiz 4




Question;FINC400;Week 4;The quiz is accessible once and is available;for the duration of 1.5-hours. Please do not exit from the quiz unless it has;been completed, as it will not be accessible again.;Question 1;of 25;4.0 Points;If the inflation premium for a bond goes up, the price of;the bond; unaffected.;B.goes down.;C.goes up.;D.need more information;Question 2;of 25;4.0 Points;The interest factor for the;present value of a single amount is the inverse of the future value interest;factor.;A. True;B. False;Question 3 of 25;4.0;Points;The time value of money is not a;useful concept in determining the value of a bond or in capital investment;decisions.;A. True;B. False;Question 4 of 25;4.0;Points;(point) The longer the time to;maturity;A.the greater the price increase;from an increase in interest rates.;B.the less the price increase from;an increase in interest rates.;C.the greater the price increase;from a decrease in interest rates.;D.the less the price decrease from a;decrease in interest rates.;Question 5 of 25;4.0 Points;(point) As the interest rate;increases, the interest factor (IF) for the present value of $1 increases.;A. True;B. False;Question 6 of 25;4.0;Points;Financial capital does not;include;A.stock.;B.bonds.;C.preferred stock.;D.working capital.;Question 7 of 25;4.0 Points;The growth rate for the firm's common stock is 7%. The;firm?s preferred stock is paying an annual dividend of $3. What is the;preferred stock price if the required rate of return is 8%?;A.$3.00;B.$37.50;C.$50.00;D.none of these;Question 8 of 25;4.0;Points;In paying off a mortgage loan;the amount of the periodic payment that goes toward the reduction of principal;increases over the life of the mortgage.;A. True;B. False;Question;9 of 25;4.0;Points;The calculation of the cost of;capital depends upon historical costs of funds.;A. True;B. False;Question;10 of 25;4.0;Points;(point) The calculation of the;cost of capital depends upon historical costs of funds.;A. True;B. False;Question 11 of 25;4.0;Points;As the interest rate increases;the interest factor (IF) for the present value of $1 increases.;A. True;B. False;Question;12 of 25;4.0 Points;(point) An annuity may be;defined as;A.a payment at a fixed interest;rate.;B.a series of payments of unequal;amount.;C.a series of yearly payments.;D.a series of consecutive payments;of equal amounts.;Reset Selection;uestion 13 of 25;4.0;Points;As the time period until;receipt increases, the present value of an amount at a fixed interest rate;A.decreases.;B.remains;the same.;C.increases.;D.Not;enough information to tell.;Question 14 of 25;4.0;Points;(point) Within the capital;asset pricing model;A.the;risk-free rate is usually higher than the return in the market.;B.the;higher the beta the lower the required rate of return.;C.beta;measures the volatility of an individual stock relative to a stock market;index.;D.two;of the above are true.;Question 15 of 25;4.0;Points;The risk premium is primarily;concerned with business risk, financial risk, and inflation risk.;A.;True;B.;False;uestion 16 of 25;4.0;Points;When inflation rises, preferred;stock prices fall.;A.;True;B.;False;uestion 17 of 25;4.0;Points;(point) If the inflation premium;for a bond goes up, the price of the bond;;unaffected.;B.goes;down.;C.goes;up.;D.need;more information.;uestion 18 of 25;4.0;Points;The cost of capital for each;source of funds is dependent on current market conditions and expected rates of;return.;A.;True;B.;False;Question 19 of 25;4.0;Points;(point) The time value of money;is not a useful concept in determining the value of a bond or in capital;investment decisions.;A.;True;B.;False;uestion 20 of 25;4.0;Points;The time value of money concept;becomes less critical as the prime rate increases.;A.;True;B.;False;Question;21 of 25;4.0;Points;If a single amount were put on;deposit at a given interest rate and allowed to grow, its future value could be;determined by reference to the future value of $1 table.;A.;True;B.;False;Question 22 of 25;4.0;Points;The risk premium is equal to the;required yield to maturity minus both the real rate of return and the inflation;premium.;A.;True;B.;False;Question 23 of 25;4.0;Points;The required return by investors;is important to financial managers for all of the following reasons except;A.It;influences the firm's cost of financing;B.It;influences their stock price;C.It;is the primary driver of their financial ratios;D.It;helps when pricing new issues of securities;uestion 24 of 25;4.0;Points;Lewis, Schultz and Nobel;Development Corp. has an after-tax cost of debt of 4.5 percent. With a tax rate;of 30 percent, what is the yield on the debt?;A.4.41%;B.9.0%;C.1.89%;D.6.43%;Question 25 of 25;4.0;Points;You are to receive $12,000 at;the end of 5 years. The available yield on investments is 6%. Which table;would you use to determine the value of that sum today?;A.Present;value of an annuity of $1;B.Future;value of an annuity;C.Present;value of $1;D.Future;value of $1


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