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FIN 370 Week 1 Apply: Finance and Financial Statement
Analysis Homework
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FIN 370 Week 1 Apply: Finance and Financial Statement Analysis
Homework Review the Week 1 “Practice: Finance and Financial
Statement Analysis Quiz” in Connect®. Complete the Week 1
“Apply: Finance and Financial Statement Analysis Homework” in
Connect®. Note: You have only one attempt available to complete
this assignment. Grades must be transferred manually to eCampus by
your instructor. Don’t worry, this might happen after your due date.
Which of the following is the firm’s highest-level financial manager?
corporate
these must effectively distribute capital between investors and
companies? M
financial institutions Which of the
Financial
managers double- Accountants
are focused on what happe Both accountants and
financial managers use total quality management systems to
Financial managers are focused on what
happened in the past. This is a general term for securities like stocks,
bonds, and other assets that represent ownership in a cash flow.
financial asset
financial markets The portion of a company’s profits that are
kept by the company rather than distributed to the stockholders as
cash dividends is referre institutional
retained

earnings. A potential future negative impact to value and/or cash
flows is often discussed in terms of probability of loss and the
expected magnitude o
coefficient of
variation. Which of the following is defined as a group of securities
that exhibit similar characteristics, behave similarly in the
marketplace, and are subject to the same laws and regulations?
risk This subarea of
finance is important for adapting to the global economy. Multiple
financial institutions and
international finance For corporations,
maximizing the value of owner’s equity can also be stated as Multiple
maximizing retained earnings.
maximizing earnings per
share. Which of the following is NOT a function of the board of
design
c provide reports to the auditors
hire the CEO This is the set of laws, policies, incentives, and
monitors designed to handle the issues arising from the separation of
corporate g
agency theory
An
advantage of sole proprietorships is that the owner has complete
S corporation
An angel investor differs from a venture capitalist because of the

size of investment. Which statement is
They
offer s
All of these choices are correct. From a taxation perspective, the
form of business organization with the highest business level taxes is
partnership. Corporate stakeholders include all
auditors. From the perspective of
ownership risk, the best form of business organization is the Multiple
S
corporation. Which of the following is NOT considered a hybrid
all of these choices are correct.
limited liability company
limited liability partnership Which of these is the system of
incentives and monitors that tries to overcome the agency problem?
checks and
Balance board of
Directors When determining a form of business organization, all of
the tax
the owners’ risks. All of the following are an
a
the shareholder elects a board
a CEO
manages the firm. Restrict a
special type of stock that can be converted into corporate bonds after
a special type of stock
that is not transferable from the current holder to others until specific
conditions are a special type of stock that is a result of
offering an employee stock ownership plan. Which of the following
refer to ratios that measure the relationship between a firm’s liquid (or

current) assets and its current liabilities? Multiple Choi liquidity
internal- - market value Which of
the following measures the number of days accounts receivable are
average payment pe
average collection period
Which ratio measures the number of dollars of operating earnings
available to meet the firm’s interest dollars and other fixed charges?
fixed- basic earning
ROA Which ratio measures
the operating return on the firm’s assets irrespective of financial
basic earning
return on assets A firm
has EBIT of $1,000,000 and depreciation expense of $400,000. Fixed
charges total $600,000. Interest expense totals $70,000. What is the
firm’s fixed-
2.33 times Which of these
ratios measure the extent to which the firm uses debt (or financial
liquidity
equity ratios A strong liquidity position means that
Mu the firm is able to meet its short-term
the firm pays out a large portion of its net income in
the firm uses little debt in its capital
the firm pays its creditors on time. Which type of
ratio measures the dollars of current assets available to pay each
dollar of current liabilities? rev: 08_14_2018_QC_CS-133354
internal- cross-section
quick or acid-test A firm has EBIT of $300,000 and depreciation
expense of $12,000. Fixed charges total $44,000. Interest expense
totals $7,000. What is the firm’s cash coverage ratio? Multiple Choice
4.91 times
Incorrect Which of the following measures the number of dollars of

sal fixed
fixed asset turnover ratio The
the amount of
the amount of long-
the amount of
current versus long-term debt on the balance sheet. A firm reported
year-end cost of goods sold of $10 million. It listed $2 million of
inventory on its balance sheet. Using a 365-day year, how many days
73
18.25 days Tops N Bottoms Corp.
reported sales for 2018 of $50 million. Tops N Bottoms listed $4
million of inventory on its balance sheet. Using a 365-day year, how
many days did Tops N Bottoms’ inventory stay on the premises? How
many times per year did Tops N Bottoms’ inventory turn over?
29.2 days, 0.0345 times
0.08 days, 12.5 times,
12.5 days, 29.2 times, respectively Which ratio
measures how many days inventory is held before the final product is
inventory turnover
inventory intensity ratio Which ratio
measures the number of dollars of operating earnings available to
meet each dollar of interest obligations on the firm’s debt? Multiple
cash coverage ratio
fixed-charge coverage ratio You are considering a stock
investment in one of two firms (LotsofDebt, Inc. and LotsofEquity,
Inc.), both of which operate in the same industry. LotsofDebt, Inc.
finances its $100 million in assets with $90 million in debt and $10
million in equity. LotsofEquity, Inc. finances its $100 million in
assets with $10 million in debt and $90 million in equity. What are
the debt ratio, equity multiplier, and debt-to-equity ratio for the two
firms? Multiple C LotsofDebt: 90 percent, 10 times, 9 times,
respectively; and LotsofEquity: 10 percent, 1.11 times, 0.1111 times,

LotsofDebt: 10 percent, 1.11 times, 0.1111 times,
respectively; and LotsofEquity: 90 percent, 10 times, 9 times,
respect LotsofDebt: 90 percent, 1.11 times, 0.1111 times,
LotsofDebt: 10 percent, 10 times, 9 times,
respectively A firm has an ACP of 38 days and its annual sales are
$5.3 million. What is its account receivable balance? Multiple Choice
$692,098
Tina’s Track Supply’s market-to-book ratio is currently 4.5 times and
PE ratio is 10.5 times. If Tina’s Track Supply’s common stock is
currently selling at $100 per share, what is the book value per share
$9.5238, $22.2222,
$450, $1,050,
$22.2222, $9.5238, respectively Bree’s Tennis
Supply’s market-to-book ratio is currently 9.4 times and PE ratio is 20
times. If Bree’s Tennis Supply’s common stock is currently selling at
$20.50 per share, what is the book value per share and earnings per
$1.025,
$2.1809, $1.025, respectively An investor wanting large returns
high
cur
high ROAs. Which of the following measures the operating
return on the firm’s assets, irrespective of financial leverage and
basic earnings
profit margin For publicly
traded firms, which of these ratios measure what investors think of the
liquidity
price value
ratios According to the list provided in the textbook, which of the
following is NOT one of the cautions in using ratios to evaluate firm
performance? rev: 07_10_2017_QC_CS-

The firm has
sea The firm had a one-
The firm has a different capital structure. To interpret financial
ratios, managers, analysts, and investors use which of the following
cross- time-industry
analysis Last year Mocha Java, Inc. had an ROA of 10 percent, a
profit margin of 5 percent, and sales of $25 million. What is Mocha
$1.25m
$12m. Last year Rain Repel Corporation had an ROE
of 10 percent and a dividend payout ratio of 80 percent. What is the
2.04
percent 44.44 percent 1.11 percent
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FIN 370 Week 1 Apply: Week 1 Exercise
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FIN 370 Week 1 Apply: Week 1 Exercise Review the Week 1
“Knowledge Check” in Connect® in preparation for this assignment.
Complete the Week 1 “Exercise” in Connect®. Note: You have only
one attempt available to complete this assignment. Grades must be
transferred manually to eCampus by your instructor. Don’t worry, this
Learn: McGraw-
Hill Connect® Access Maximizing owners’ equity value means
carefully considering all of the following EXCEPT Multiple Choice
how best to return the profits from those projects to the owners
how to best bring
how best to increase the firm’s risk.

Not all cash a company generates will be returned to the investors.
Which of the following will NOT reduce the amount of capital
retained earnings As individual legal entities, corporations
assume liability for their own debts, so the shareholders hold Multiple
joint liability.
only limited liability. For corporations, maximizing the value of
maximizing
maximizing net income.
Which of the following is not an impact of the slowdown occurring in
lower demand in materials such as steel, iron ore, and coppe
money
going out of Manhattan, New York What is the debt ratio for a firm
58.51 percent
71.43 percent Which of the
following refer to ratios that measure the relationship between a
firm’s liquid (or current) assets and its current liabilities? Multiple
internal- cross-
section For publicly traded firms, which of these ratios measure what
investors think of the company’s future performance and risk?
market value ratios Which of the
following is the maximum growth rate that can be achieved by
financing asset growth with new debt and retained earnings? Multiple
retained earnings growth rate To interpret
financial ratios, managers, analysts, and investors use which of the
f time series
time-
cross-industry analysis

==============================================
FIN 370 Week 1 Practice: Finance and Financial Statement
Analysis Quiz
www.uopfin370.com
FIN 370 Week 1 Practice: Finance and Financial Statement Analysis
Quiz Complete the Week 1 “Practice: Finance and Financial
Statement Analysis Quiz” in Connect®. Note: You have unlimited
attempts available to complete practice assignments. The highest
scored attempt will be recorded. These assignments have earlier due
dates, so plan accordingly. Grades must be transferred manually to
eCampus by your instructor. Don’t worry, this might happen after
your due date. Which of the following is the firm’s highest-level
board of
directors Which of these must effectively distribute capital between
investors and companies? Multi
financial
institutions Which of the following statements is correct? Multiple
Financial managers double-check the accountant’s
Accountants are focused on what happened in the
Both accountants and financial managers use total quality
Financial managers are
This is a general term for
securities like stocks, bonds, and other assets that represent ownership
financial markets The portion of a company’s
profits that are kept by the company rather than distributed to the

stockholders as cash dividends is referred
venture
retained earnings. A potential future negative impact to
value and/or cash flows is often discussed in terms of probability of
loss and the expected magnitude of the loss. This is called Multiple
coefficient of
variation. Which of the following is defined as a group of securities
that exhibit similar characteristics, behave similarly in the
marketplace, and are subject to the same laws and regulations?
investments What is the difference in
risk This subarea of
finance is important for adapting to the global economy. Multiple
financial institutions and
international finance For corporations,
maximizing the value of owner’s equity can also be stated as Multiple
share. Which of the following is NOT a function of the board of
design
com provide reports to the auditors
hire the CEO This is the set of laws, policies, incentives, and
monitors designed to handle the issues arising from the separation of
corporate gov
agency theory
An
advantage of sole proprietorships is that the owner has complete
Partnerships have unlimited liability. Agency problems
S

An angel investor differs from a venture capitalist
size of investment.
Which statement is incorrect regarding hybrid organizations? Multiple
They offer s They offer limited risk to
They offer the same type of control as a sole
All of these choices are correct. From a
taxation perspective, the form of business organization with the
highest business level taxe S corporation.
partnership. Corporate
auditors.
From the perspective of ownership risk, the best form of business
S corporation. Which of the
following is NOT considered a hybrid organization? Multiple Choice
all of these choices are correct. S
limited liability
partnership Which of these is the system of incentives and monitors
checks and Balance Security
board of Directors When determining a
form of business organization, all of the following are considered
the physical location of the
the owners’ risks. All of the following are an example of a
a financial
the shareholder elects a board
a CEO
manages the firm. Restrict a
special type of stock that can be converted into corporate bonds after
a special type of stock
that is not transferable from the current holder to others until specific

conditions are a special type of stock that is a result of
offering an employee stock ownership plan. Which of the following
refer to ratios that measure the relationship between a firm’s liquid (or
current) assets and its current liabilities? Multiple Choi
internal- cross- market value Which of
the following measures the number of days accounts receivable are
average payment pe
average collection period
Which ratio measures the number of dollars of operating earnings
available to meet the firm’s interest dollars and other fixed charges?
fixed- basic earning
ROA Which ratio measures
the operating return on the firm’s assets irrespective of financial
basic earning
return on assets A firm
has EBIT of $1,000,000 and depreciation expense of $400,000. Fixed
charges total $600,000. Interest expense totals $70,000. What is the
firm’s fixed-
2.33 times Which of these
ratios measure the extent to which the firm uses debt (or financial
liquidity
equity ratios A strong liquidity position means that
Mu the firm is able to meet its short-term
the firm pays out a large portion of its net income in
the firm uses little debt in its capital
the firm pays its creditors on time. Which type of
ratio measures the dollars of current assets available to pay each
dollar of current liabilities? rev: 08_14_2018_QC_CS-133354
internal- cross-section
quick or acid-test A firm has EBIT of $300,000 and depreciation
expense of $12,000. Fixed charges total $44,000. Interest expense

totals $7,000. What is the firm’s cash coverage ratio? Multiple Choice
4.91 times
Incorrect Which of the following measures the number of dollars of
sal fixed
fixed asset turnover ratio The
the amount of
the amount of long-
the amount of
current versus long-term debt on the balance sheet. A firm reported
year-end cost of goods sold of $10 million. It listed $2 million of
inventory on its balance sheet. Using a 365-day year, how many days
73
18.25 days Tops N Bottoms Corp.
reported sales for 2018 of $50 million. Tops N Bottoms listed $4
million of inventory on its balance sheet. Using a 365-day year, how
many days did Tops N Bottoms’ inventory stay on the premises? How
many times per year did Tops N Bottoms’ inventory turn over?
29.2 days, 0.0345 times
0.08 days, 12.5 times,
12.5 days, 29.2 times, respectively Which ratio
measures how many days inventory is held before the final product is
inventory turnover
measures the number of dollars of operating earnings available to
meet each dollar of interest obligations on the firm’s debt? Multiple
cash coverage ratio
fixed-charge coverage ratio You are considering a stock
investment in one of two firms (LotsofDebt, Inc. and LotsofEquity,
Inc.), both of which operate in the same industry. LotsofDebt, Inc.
finances its $100 million in assets with $90 million in debt and $10
million in equity. LotsofEquity, Inc. finances its $100 million in
assets with $10 million in debt and $90 million in equity. What are

the debt ratio, equity multiplier, and debt-to-equity ratio for the two
firms? Multiple C LotsofDebt: 90 percent, 10 times, 9 times,
LotsofDebt: 10 percent, 1.11 times, 0.1111 times,
respect LotsofDebt: 90 percent, 1.11 times, 0.1111 times,
LotsofDebt: 10 percent, 10 times, 9 times,
respectively A firm has an ACP of 38 days and its annual sales are
$5.3 million. What is its account receivable balance? Multiple Choice
Track Supply’s market-to-book ratio is currently 4.5 times and PE
ratio is 10.5 times. If Tina’s Track Supply’s common stock is
currently selling at $100 per share, what is the book value per share
$9.5238, $22.2222,
$450, $1,050,
$22.2222, $9.5238, respectively Bree’s Tennis
Supply’s market-to-book ratio is currently 9.4 times and PE ratio is 20
times. If Bree’s Tennis Supply’s common stock is currently selling at
$20.50 per share, what is the book value per share and earnings per
$1.025,
$2.1809, $1.025, respectively An investor wanting large returns
high
cur
high ROAs. Which of the following measures the operating
return on the firm’s assets, irrespective of financial leverage and
basic earnings
profit margin For publicly traded
firms, which of these ratios measure what investors think of the
liquidity
price value

ratios According to the list provided in the textbook, which of the
following is NOT one of the cautions in using ratios to evaluate firm
performance? rev: 07_10_2017_QC_CS-
The firm has
sea The firm had a one-
The firm has a different capital structure. To interpret financial
type of benchmarks? Multiple Choice competitive analysis time
cross- time-industry
analysis Last year Mocha Java, Inc. had an ROA of 10 percent, a
profit margin of 5 percent, and sales of $25 million. What is Mocha
$1.25m.
$12m. Last year Rain Repel Corporation had an ROE
2.04
percent 44.44 percent 1.11 percent
==============================================
FIN 370 Week 1 Practice: Week 1 Knowledge Check
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FIN 370 Week 1 Practice: Week 1 Knowledge Check Complete the
Week 1 “Knowledge Check” in Connect®. Note: You have unlimited
attempts available to complete this practice assignment. The highest
your due date. MC Qu. 1-14 Which of the following managers
would… Which of the following managers would NOT use finance?

marketing
-
11 Which of the following is defined… Which of the following is
defined as a group of securities that exhibit similar characteristics,
behave similarly in the marketplace, and are subject to the same laws
market instruments
investments financial markets asset classes MC Qu. 1-63 An angel
investor differs from a… An angel investor differs from a venture
investment time frame.
MC Qu. 1-18 This type of business organization is… This type of
business organization is entirely legally independent from its owners.
Multiple Choice hybrid organizations partnership sole proprietorship
public corporations MC Qu. 1-67 Which of these is the system…
Which of these is the system of incentives and monitors that tries to
overcome the agency problem? Multiple Choice checks and Balances
Security Exchange Commission board of Directors corporate
Governance MC Qu. 1-54 From the perspective of control, the…
From the perspective of control, the best form of business
organization is the Multiple Choice corporation. partnership. S
corporation. sole proprietorship. MC Qu. 1-19 Which of the following
is… Which of the following is NOT considered a hybrid
organization? Multiple Choice limited liability partnership limited
liability company limited partnership all of these choices are . S
corporation MC Qu. 1-1 The increase in oil production in… The
increase in oil production in the United States characterizes which of
the following key financial concepts presented in this book? Multiple
Choice the Rule of 72 time value of money capital budgeting risk and
return MC Qu. 1-59 All of the following are an… All of the following
are an example of a fiduciary relationship EXCEPT Multiple Choice
a CEO manages the
the shareh a bank
employee manages deposits. MC Qu. 3-85 Which ratio assesses how

efficiently a… Which ratio assesses how efficiently a firm uses its
current
fixed asset average collection period MC Qu.
3-90 A firm reported working capital of… A firm reported working
capital of $5.5 million and fixed assets of $20 million. Its fixed asset
turnover was 1.2 times. What was the firm’s sales to working capital
ratio
5.19 times MC Qu. 3-103 Which ratio measures the number
of… Which ratio measures the number of dollars of operating cash
available to meet each dollar of interest and other fixed charges that
the fir fixed-
times interest
earned MC Qu. 3-25 You are evaluating the balance sheet… You are
evaluating the balance sheet for Blue Jays Corporation. From the
balance sheet you find the following balances: cash and marketable
securities = $200,000, accounts receivable = $800,000, inventory =
$1,000,000, accrued wages and taxes = $250,000, accounts payable =
$400,000, and notes payable = $300,000. What are Blue Jays’ current
3.07692, 1.05263, 0.30769
MC Qu. 3-6 Which of the following ratios measure… Which of the
following ratios measure how efficiently a firm uses its assets, as well
as how efficiently the firm manages its accounts payable? Multiple
quick or acid- internal-
asset management MC Qu. 3-20 For publicly traded firms,
which of… For publicly traded firms, which of these ratios measure
what investors think of the company’s future performance and risk?
market value ratios MC Qu. 3-116 Which
ratio measures the overall return… Which ratio measures the overall
return on the firm’s assets including financial leverage and taxes?

profit margin MC Qu. 3-112 The maximum growth rate that
can… The maximum growth rate that can be achieved by financing
asset growth with internal financing or retained earnings is called the
sustainable growth
operating expansion rate. MC Qu. 3-22
Which of the following is the… Which of the following is the
maximum growth rate that can be achieved by financing asset growth
sustainable
retained earnings growth rate MC Qu. 3-23 To
interpret financial ratios, managers, analysts,… To interpret financial
cross- time-in
competitive analysis MC Qu. 3-42 Last year Poncho Villa
Corporation had… Last year Poncho Villa Corporation had an ROA
13.64 perc 33.33
1.19 percent
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FIN 370 Week 2 Apply: Time Value of Money Homework
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FIN 370 Week 2 Apply: Time Value of Money Homework Review
the Week 2 “Practice: Time Value of Money Quiz” in Connect®.
Complete the Week 2 “Apply: Time Value of Money Homework” in
Connect®. Note: You have only one attempt available to complete
assignments. Grades must be transferred manually to eCampus by

With regard to money deposited in a bank, future values are Multiple
larger than
smaller than
present values. Time value of money concepts can be used by
CFOs and CEOs to make business d
All of these
investors calculating a return on an investment.
$100 to be received in the future is worth more than that today
$100 to be received
in the future is worth less than that today since it could be invested
Discounting is finding the future value of an
The Rule of 72 calculates the
compounded return on investments. What is the future value of
$2,000 deposited for one year earning 6 percent interest rate annually?
$2.000 How
much would be in your savings account in 10 years after depositing
$50 today if the bank pays 7 percent interest per year? Multiple
$98.36 Which of the
following statements is incorrect with respect to time lines? Multiple
Cash flows we receive are called inflows and denoted with
A helpful tool for organizing our analysis is the
Cash flows we pay out are called outflows and designated with a
negative number. What is the future value of $700 deposited for one
$700 Approximately what
interest rate is needed to double an investment over six years?
17 percent What is the present value of a $750 payment made in
$646.96 How are present

values affected by changes in interest rates? Multiple Cho
One would need to know the future value in order to determine
The higher the interest rate, the larger the present
The lower the interest rate, the larger the present
Present values are not affected by changes in interest
rates. Approximately how many years does it take to double a $300
investment when interest rates are 8 percent per year? Multiple
9 years
Approximately what rate is needed to double an investment over five
8
15.8 percent The process of figuring out how much an
amount that you expect to receive in the future is worth today is called
multiplying.
compounding. Approximately what interest rate is needed to
12
9 percent You double
your money in five years. The reason your return is not 20 percent per
it is probably a “fad”
it
it does not reflect the
effect of compounding. Determine the interest rate earned on a $1,500
0.89 percent
When calculating the number of years needed to grow an investment
the lower the
interest rate, the shorter the time period needed to achieve the growth.
the interest rate has nothing to do with the length of the time
the higher the interest
rate, the shorter the time period needed t
the Rule of 72 is the only way to calculate the time period
needed to achieve the growth. Level sets of frequent, consistent cash
budgets.
loans. When saving for future expenditures, we can add the

________ of contributions over time to see what the total will be
time value to money In order to
discount multiple cash flows to the present, one would use Multiple
the appropriate tax
the appropriate discount
rate. What is the future value of a $500 annuity payment over eight
years if interest rates are 14 percent?
$6,241.09 What is the future
value of an $800 annuity payment over 15 years if the interest rates
$1,917.25 What is the present value, when
interest rates are 6.5 percent, of a $100 payment made every year
$1,000.00 Your credit rating and current economic conditions
whether you get simple or
com
how long
compounding will affect you. What is the present value of a $300
annuity payment over 5 years if interest rates are 8 percent? Multiple
Choice
present value of an ordinary, 4-year annuity is $1,000 and interest
rates are 6 percent, what is the present value of the same annuity due?
$1,040.00 If the present value of an ordinary, 10-year annuity is
$25,000 and interest rates are 7 percent, what is the present value of
$25,000.00 Compounding
monthly versus annually causes the interest rate to be effectively
is affected
is independent of the monthly compounding. Loan
amortization schedules show Multip both the principal

the interest paid per period
the principal
balance paid per period only. The simple form of an annualized
interest rate is called the annual percentage rate (APR). The effective
less accurate measure of
concept that is only
more accurate measure of the interest rate paid for monthly
measure that only applies to mortgages.
==============================================
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might happen after your due date. You are offered a choice between
$770 today and $815 one year from today. Assume that interest rates
are 4 percent. Which do you prefer? Multiple Choice $770 today at 3
percent interest rates $815 one year from today They are equivalent to
each other. $770 todayIf an average home in your town currently
costs $250,000, and house prices are expected to grow at an average
rate of 3 percent per year, what will a house cost in eight years?
Multiple Choice $255,033.41 $316,692.52 $314,928.01 $255,043.97
Which of the following statements is incorrect with respect to time
lines? Multiple Choice Cash flows we pay out are called outflows and

designated with a negative number. Cash flows we receive are called
inflows and denoted with a positive number. A helpful tool for
organizing our analysis is the time line. Interest rates are not included
on our time lines. People borrow money because they expect Multiple
Choice interest rates to rise. the time value of money to apply only if
they are saving money. their purchases to give them the satisfaction in
the future that compensates them for the interest payments charged on
the loan. that consumers don’t need to calculate the impact of interest
on their purchases. When your investment compounds, your money
will grow in a(n) __________ fashion. Multiple Choice exponential
static linear implied What is the future value of $1,000 deposited for
one year earning 5 percent interest rate annually? Multiple Choice
$1,050 $2,050 $1,000 $1,005 If an average home in your town
currently costs $350,000, and house prices are expected to grow at an
average rate of 3 percent per year, what will an average house cost in
“5” years? Multiple Choice $507,500.00 $405,745.93 $405,168.75
$402,500.00 A deposit of $500 earns 5 percent the first year, 6
percent the second year, and 7 percent the third year. What would be
the third year future value? Multiple Choice $615.62 $595.46 $671.02
$634.91 If an average home in your town currently costs $300,000,
and house prices are expected to grow at an average rate of 5 percent
per year, what will an average house cost in 10 years? Multiple
Choice $483,153.01 $507,593.74 $488,688.39 $450,000.00 We call
the process of earning interest on both the original deposit and on the
earlier interest payments Multiple Choice multiplying. discounting.
compounding. computing. How much would be in your savings
account in 7 years after depositing $100 today if the bank pays 5
percent interest per year? Multiple Choice $140.71 $814.20 $735.00
$135.00 What is the future value of $2,500 deposited for one year
earning a 14 percent interest rate annually? Multiple Choice $2,550
$3,150 $2,950 $2,850 What is the future value of $600 deposited for
four years earning an 11 percent interest rate annually? Multiple
Choice $803.61 $910.84 $792.90 $899.23 What is the present value

of a $250 payment in one year when the discount rate is 6 percent?
Multiple Choice $250.00 $245.00 $235.85 $265.00 What is the
present value of a $750 payment made in three years when the
discount rate is 5 percent? Multiple Choice $868.22 $647.88 $712.50
$646.96 Approximately how many years does it take to double a $600
investment when interest rates are 6 percent per year? Multiple
Choice 12 years 8 years 0.08 year 8.33 years Approximately what rate
is needed to double an investment over five years? Multiple Choice 8
percent 14.4 percent 15.8 percent 12.2 percent Which of the following
statements is correct? Multiple Choice Discounting is finding the
future value of an original investment. $100 to be received in the
future is worth more than that today since it could be invested and
earn interest. The Rule of 72 calculates the compounded return on
investments. $100 to be received in the future is worth less than that
today since it could be invested and earn interest. Approximately what
interest rate is needed to double an investment over four years?
Multiple Choice 4 percent 100 percent 25 percent 18 percent What is
the present value of a $600 payment in one year when the discount
rate is 8 percent? Multiple Choice $555.56 $575.09 $525.87 $498.61
A dollar paid (or received) in the future is Multiple Choice not
comparable to a dollar paid (or received) today. worth as much as a
dollar paid (or received) today. worth more than a dollar paid (or
received) today. not worth as much as a dollar paid (or received)
today. What is the present value of a $500 payment in one year when
the discount rate is 5 percent? Multiple Choice $475.00 $476.19
$525.00 $500.00 Approximately what interest rate is needed to double
an investment over eight years? Multiple Choice 8 percent 100
percent 9 percent 12 percent What is the present value of a $200
payment made in three years when the discount rate is 8 percent?
Multiple Choice $158.77 $515.42 $251.94 $150.00 When calculating
the number of years needed to grow an investment to a specific
amount of money Multiple Choice the interest rate has nothing to do
with the length of the time period needed to achieve the growth. the

higher the interest rate, the shorter the time period needed to achieve
the growth. the lower the interest rate, the shorter the time period
needed to achieve the growth. the Rule of 72 is the only way to
calculate the time period needed to achieve the growth. Determine the
interest rate earned on a $1,500 deposit when $1,680 is paid back in
one year. Multiple Choice 89.00 percent 12.00 percent 0.89 percent
1.12 percent Determine the interest rate earned on a $200 deposit
when $208 is paid back in one year. Multiple Choice 2 percent 4
percent 104 percent 8 percent Determine the interest rate earned on a
$500 deposit when $650 is paid back in one year. Multiple Choice
0.77 percent 30.0 percent 77.0 percent 1.30 percent Which of the
following will increase the future value of an annuity? Multiple
Choice The number of periods increases. The amount of the annuity
increases. The interest rate increases. All of these choices are correct.
Level sets of frequent, consistent cash flows are called Multiple
Choice loans. budgets. bills. annuities. The length of time of the
annuity is very important in accumulating wealth within an annuity.
What other factor also has this effect? Multiple Choice the future
value interest rate for compounding the time line the present value
When moving from the left to the right of a time line, we are using
Multiple Choice compound interest to calculate future values.
discounted cash flows to calculate present values. simple interest to
calculate future values. only payments to calculate future values. In
order to discount multiple cash flows to the present, one would use
Multiple Choice the appropriate simple rate. the appropriate discount
rate. the appropriate compound rate. the appropriate tax rate. What is
the future value of a $500 annuity payment over eight years if interest
rates are 14 percent? Multiple Choice $6,750.14 $6,241.09 $6,809.72
$6,616.38 What is the future value of an $800 annuity payment over
15 years if the interest rates are 6 percent? Multiple Choice $1,917.25
$7,002.99 $18,620.78 $12,720.00 When saving for future
expenditures, we can add the ________ of contributions over time to
see what the total will be worth at some point in time. Multiple

Choice future value present value payment time value to money If the
future value of an ordinary, 7-year annuity is $10,000 and interest
rates are 4 percent, what is the future value of the same annuity due?
Multiple Choice $9,615.38 $10,700.00 $10,000.00 $10,400.00 If the
Multiple Choice $943.40 $1,040.00 $1,000.00 $1,060.00 Your credit
rating and current economic conditions will determine Multiple
Choice whether you get simple or compound interest. the interest rate
that a lender will offer. how long discounting will affect you. how
long compounding will affect you. What is the present value of a
$300 annuity payment over 5 years if interest rates are 8 percent?
Multiple Choice $1,938.96 $440.80 $1,197.81 $204.17 If the future
value of an ordinary, 11-year annuity is $5,575 and interest rates are
5.5 percent, what is the future value of the same annuity due?
Multiple Choice $5,769.06 $5,881.63 $5,619.52 $5,947.88 What is
the present value of a $1,100 payment made every year forever when
interest rates are 4.5 percent? Multiple Choice $11,100 $21,089.37
$22,963.14 $24,444.44 What is the present value of a $600 annuity
payment over 4 years if interest rates are 6 percent? Multiple Choice
$757.49 $3,145.28 $475.26 $2,079.06 What is the present value,
when interest rates are 10 percent, of a $75 payment made every year
forever? Multiple Choice $750.00 $1,000.00 $6.75 $675.00 If the
future value of an ordinary, 4-year annuity is $1,000 and interest rates
are 6 percent, what is the future value of the same annuity due?
Multiple Choice $943.40 $1,060.00 $1,040.00 $1,000.00 A loan is
offered with monthly payments and a 14.5 percent APR. What is the
loan’s effective annual rate (EAR)? Multiple Choice 15.50 percent
15.63 percent 15.13 percent 14.97 percent When you get your credit
card bill, if you make a payment larger than the minimum payment
Multiple Choice you will not affect the payoff time. you are wasting
your current consumption and making TVM not work for you. you
will increase the payoff time. you will reduce the payoff time. The

simple form of an annualized interest rate is called the annual
percentage rate (APR). The effective annual rate (EAR) is a Multiple
Choice less accurate measure of the interest rate paid for monthly
compounding. measure that only applies to mortgages. more accurate
measure of the interest rate paid for monthly compounding. concept
that is only used because the law requires it, and is of no use to a
borrower. Compounding monthly versus annually causes the interest
rate to be effectively higher, and thus the future value Multiple
Choice grows. is independent of the monthly compounding.
decreases. is affected only if the calculation involves an annuity due.
A loan is offered with monthly payments and a 10 percent APR. What
is the loan’s effective annual rate (EAR)? Multiple Choice 12.67
percent 10.00 percent 11.20 percent 10.47 percent
==============================================
FIN 370 Week 2 Practice Time Value of Money Quiz
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FIN 370 Week 2 Practice Time Value of Money Quiz Complete the
Week 2 “Practice: Time Value of Money Quiz” in Connect®. Note:
You have unlimited attempts available to complete practice
assignments. The highest scored attempt will be recorded. These
assignments have earlier due dates, so plan accordingly. Grades must
be transferred manually to eCampus by your instructor. Don’t worry,
this might happen after your due date. You are offered a choice
between $770 today and $815 one year from today. Assume that
interest rates are 4 percent. Which do you prefer? Multiple Choice
$770 today at 3 percent interest rates $815 one year from today They
are equivalent to each other. $770 today If an average home in your

town currently costs $250,000, and house prices are expected to grow
at an average rate of 3 percent per year, what will a house cost in
eight years? Multiple Choice $255,033.41 $316,692.52 $314,928.01
$255,043.97 Which of the following statements is incorrect with
respect to time lines? Multiple Choice Cash flows we pay out are
called outflows and designated with a negative number. Cash flows
we receive are called inflows and denoted with a positive number. A
helpful tool for organizing our analysis is the time line. Interest rates
are not included on our time lines. People borrow money because they
expect Multiple Choice interest rates to rise. the time value of money
to apply only if they are saving money. their purchases to give them
the satisfaction in the future that compensates them for the interest
payments charged on the loan. that consumers don’t need to calculate
the impact of interest on their purchases. When your investment
compounds, your money will grow in a(n) __________ fashion.
Multiple Choice exponential static linear implied What is the future
value of $1,000 deposited for one year earning 5 percent interest rate
annually? Multiple Choice $1,050 $2,050 $1,000 $1,005 If an average
home in your town currently costs $350,000, and house prices are
expected to grow at an average rate of 3 percent per year, what will an
average house cost in “5” years? Multiple Choice $507,500.00
$405,745.93 $405,168.75 $402,500.00 A deposit of $500 earns 5
percent the first year, 6 percent the second year, and 7 percent the
third year. What would be the third year future value? Multiple
Choice $615.62 $595.46 $671.02 $634.91 If an average home in your
town currently costs $300,000, and house prices are expected to grow
at an average rate of 5 percent per year, what will an average house
cost in 10 years? Multiple Choice $483,153.01 $507,593.74
$488,688.39 $450,000.00 We call the process of earning interest on
both the original deposit and on the earlier interest payments Multiple
Choice multiplying. discounting. compounding. computing. How
much would be in your savings account in 7 years after depositing
$100 today if the bank pays 5 percent interest per year? Multiple

Choice $140.71 $814.20 $735.00 $135.00 What is the future value of
$2,500 deposited for one year earning a 14 percent interest rate
annually? Multiple Choice $2,550 $3,150 $2,950 $2,850 What is the
future value of $600 deposited for four years earning an 11 percent
interest rate annually? Multiple Choice $803.61 $910.84 $792.90
$899.23 What is the present value of a $250 payment in one year
when the discount rate is 6 percent? Multiple Choice $250.00 $245.00
$235.85 $265.00 What is the present value of a $750 payment made
in three years when the discount rate is 5 percent? Multiple Choice
$868.22 $647.88 $712.50 $646.96 Approximately how many years
does it take to double a $600 investment when interest rates are 6
percent per year? Multiple Choice 12 years 8 years 0.08 year 8.33
years Approximately what rate is needed to double an investment
over five years? Multiple Choice 8 percent 14.4 percent 15.8 percent
12.2 percent Which of the following statements is correct? Multiple
Choice Discounting is finding the future value of an original
investment. $100 to be received in the future is worth more than that
today since it could be invested and earn interest. The Rule of 72
calculates the compounded return on investments. $100 to be received
in the future is worth less than that today since it could be invested
and earn interest. Approximately what interest rate is needed to
double an investment over four years? Multiple Choice 4 percent 100
percent 25 percent 18 percent What is the present value of a $600
payment in one year when the discount rate is 8 percent? Multiple
Choice $555.56 $575.09 $525.87 $498.61 A dollar paid (or received)
in the future is Multiple Choice not comparable to a dollar paid (or
received) today. worth as much as a dollar paid (or received) today.
worth more than a dollar paid (or received) today. not worth as much
as a dollar paid (or received) today. What is the present value of a
$500 payment in one year when the discount rate is 5 percent?
Multiple Choice $475.00 $476.19 $525.00 Approximately what
interest rate is needed to double an investment over eight years?
Multiple Choice 8 percent 100 percent 9 percent 12 percent What is

the present value of a $200 payment made in three years when the
discount rate is 8 percent? Multiple Choice $158.77 $515.42 $251.94
$150.00 When calculating the number of years needed to grow an
investment to a specific amount of money Multiple Choice the
interest rate has nothing to do with the length of the time period
needed to achieve the growth. the higher the interest rate, the shorter
the time period needed to achieve the growth. the lower the interest
rate, the shorter the time period needed to achieve the growth. the
Rule of 72 is the only way to calculate the time period needed to
achieve the growth.Determine the interest rate earned on a $1,500
deposit when $1,680 is paid back in one year. Multiple Choice 89.00
percent 12.00 percent 0.89 percent 1.12 percent Determine the interest
rate earned on a $200 deposit when $208 is paid back in one year.
Multiple Choice 2 percent 4 percent 104 percent 8 percent Determine
the interest rate earned on a $500 deposit when $650 is paid back in
one year. Multiple Choice 0.77 percent 30.0 percent 77.0 percent 1.30
percent Which of the following will increase the future value of an
annuity? Multiple Choice The number of periods increases. The
amount of the annuity increases. The interest rate increases. All of
these choices are correct. Level sets of frequent, consistent cash flows
are called Multiple Choice loans. budgets. bills. annuities. The length
of time of the annuity is very important in accumulating wealth within
an annuity. What other factor also has this effect? Multiple Choice the
future value interest rate for compounding the time line the present
value When moving from the left to the right of a time line, we are
using Multiple Choice compound interest to calculate future values.
discounted cash flows to calculate present values. simple interest to
calculate future values. only payments to calculate future values. In
order to discount multiple cash flows to the present, one would use
Multiple Choice the appropriate simple rate. the appropriate discount
rate. the appropriate compound rate. the appropriate tax rate. What is
the future value of a $500 annuity payment over eight years if interest
rates are 14 percent? Multiple Choice $6,750.14 $6,241.09 $6,809.72

$6,616.38 What is the future value of an $800 annuity payment over
$7,002.99 $18,620.78 $12,720.00 When saving for future
expenditures, we can add the ________ of contributions over time to
see what the total will be worth at some point in time. Multiple
Choice future value present value payment time value to money If the
future value of an ordinary, 7-year annuity is $10,000 and interest
rates are 4 percent, what is the future value of the same annuity due?
Multiple Choice $9,615.38 $10,700.00 $10,000.00 $10,400.00 If the
Multiple Choice $943.40 $1,040.00 $1,000.00 $1,060.00 Your credit
rating and current economic conditions will determine Multiple
Choice whether you get simple or compound interest. the interest rate
that a lender will offer. how long discounting will affect you. how
long compounding will affect you. What is the present value of a
$300 annuity payment over 5 years if interest rates are 8 percent?
Multiple Choice $1,938.96 $440.80 $1,197.81 $204.17 If the future
value of an ordinary, 11-year annuity is $5,575 and interest rates are
5.5 percent, what is the future value of the same annuity due?
Multiple Choice $5,769.06 $5,881.63 $5,619.52 $5,947.88 What is
the present value of a $1,100 payment made every year forever when
interest rates are 4.5 percent? Multiple Choice $11,100 $21,089.37
$22,963.14 $24,444.44 What is the present value of a $600 annuity
payment over 4 years if interest rates are 6 percent? Multiple Choice
$757.49 $3,145.28 $475.26 $2,079.06 What is the present value,
when interest rates are 10 percent, of a $75 payment made every year
forever? Multiple Choice $750.00 $1,000.00 $6.75 $675.00 If the
future value of an ordinary, 4-year annuity is $1,000 and interest rates
are 6 percent, what is the future value of the same annuity due?
Multiple Choice $943.40 $1,060.00 $1,040.00 $1,000.00 A loan is
offered with monthly payments and a 14.5 percent APR. What is the
loan’s effective annual rate (EAR)? Multiple Choice 15.50 percent

15.63 percent 15.13 percent 14.97 percent When you get your credit
card bill, if you make a payment larger than the minimum payment
Multiple Choice you will not affect the payoff time. you are wasting
your current consumption and making TVM not work for you. you
will increase the payoff time. you will reduce the payoff time. The
simple form of an annualized interest rate is called the annual
percentage rate (APR). The effective annual rate (EAR) is a Multiple
Choice less accurate measure of the interest rate paid for monthly
compounding. measure that only applies to mortgages. more accurate
measure of the interest rate paid for monthly compounding. concept
that is only used because the law requires it, and is of no use to a
borrower. Compounding monthly versus annually causes the interest
rate to be effectively higher, and thus the future value Multiple
Choice grows. is independent of the monthly compounding.
decreases. is affected only if the calculation involves an annuity due.
A loan is offered with monthly payments and a 10 percent APR. What
is the loan’s effective annual rate (EAR)? Multiple Choice 12.67
percent 10.00 percent 11.20 percent 10.47 percent
==============================================
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MC Qu. 4-16 What is the future value of… What is the future value
of $1,000 deposited for one year earning 5 percent interest rate
annually? Multiple Choice $1,005 $1,000 $2,050 $1,050 MC Qu. 4-5
We call the process of earning… We call the process of earning
interest on both the original deposit and on the earlier interest
payments Multiple Choice discounting. computing. multiplying.
compounding. MC Qu. 4-71 A deposit of $500 earns 5… A deposit of
$500 earns 5 percent the first year, 6 percent the second year, and 7
percent the third year. What would be the third year future value?
Multiple Choice $595.46 $634.91 $671.02 $615.62 MC Qu. 4-9 With
regard to money deposited in… With regard to money deposited in a
bank, future values are Multiple Choice smaller than present values.
are completely independent of present values. equal to present values.
larger than present values. MC Qu. 4-17 What is the future value of…
What is the future value of $2,000 deposited for one year earning 6
percent interest rate annually? Multiple Choice $4,120 $2.000 $120
$2,120 MC Qu. 4-10 A dollar paid (or received) in… A dollar paid
(or received) in the future is Multiple Choice not comparable to a
dollar paid (or received) today. worth as much as a dollar paid (or
received) today. worth more than a dollar paid (or received) today. not
worth as much as a dollar paid (or received) today. MC Qu. 4-29
Approximately how many years does it… Approximately how many
years does it take to double a $300 investment when interest rates are
8 percent per year? Multiple Choice 9 years 11 years 4.17 years 0.11
years MC Qu. 4-7 The interest rate, i, which we… The interest rate, i,
which we use to calculate present value, is often referred to as the
Multiple Choice compound rate. dividend. multiplier. discount rate.
MC Qu. 4-73 What is the present value of… What is the present value
of a $600 payment in one year when the discount rate is 8 percent?
Multiple Choice $525.87 $575.09 $555.56 $498.61 MC Qu. 4-78
Approximately what rate is needed to… Approximately what rate is
needed to double an investment over five years? Multiple Choice 12.2

percent 8 percent 15.8 percent 14.4 percent MC Qu. 4-79 Determine
the interest rate earned on… Determine the interest rate earned on an
$800 deposit when $808 is paid back in one year. Multiple Choice
100 percent 15 percent 10 percent 1 percent MC Qu. 4-109 You
double your money in 5… You double your money in five years. The
reason your return is not 20 percent per year is because: Multiple
Choice it is probably a “fad” investment. it does not reflect the effect
of the Rule of 72. it does not reflect the effect of compounding. it
does not reflect the effect of discounting. MC Qu. 5-146 Which of the
following will increase… Which of the following will increase the
future value of an annuity? Multiple Choice The number of periods
increases. The amount of the annuity increases. The interest rate
increases. All of these choices are . MC Qu. 5-22 What is the future
value of… What is the future value of a $1,000 annuity payment over
$9,214.20 $4,320.00 $3,312.10 MC Qu. 5-74 If the present value of
an… If the present value of an ordinary, 8-year annuity is $12,500
and interest rates are 9.1 percent, what is the present value of the same
annuity due? Multiple Choice $14,114.80 $14,211.90 $13,941.90
$13,637.50 MC Qu. 5-147 Which of the following will increase…
Which of the following will increase the present value of an annuity?
Multiple Choice The effective rate is calculated over fewer years. The
amortization schedule decreases. The interest rate decreases. The
number of periods decreases. MC Qu. 5-30 If the future value of an…
If the future value of an ordinary, 7-year annuity is $10,000 and
interest rates are 4 percent, what is the future value of the same
annuity due? Multiple Choice $10,700.00 $10,000.00 $10,400.00
$9,615.38 MC Qu. 5-31 If the future value of an… If the future value
of an ordinary, 4-year annuity is $1,000 and interest rates are 6
percent, what is the future value of the same annuity due? Multiple
Choice $943.40 $1,000.00 $1,040.00 $1,060.00 MC Qu. 5-33 A loan
is offered with monthly… A loan is offered with monthly payments
and a 6.5 percent APR. What is the loan’s effective annual rate

(EAR)? Multiple Choice 5.69 percent 12.63 percent 7.28 percent
6.697 percent MC Qu. 5-15 People refinance their home… People
refinance their home mortgages Multiple Choice when rates fall and
rise. whenever they need to, independent of rates. when rates fall.
when rates rise.
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FIN 370 Week 3 Apply: Bond Valuation and Stock Valuation
Homework
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FIN 370 Week 3 Apply: Bond Valuation and Stock Valuation
Homework Review the Week 3 “Practice: Bond Valuation and Stock
Valuation Quiz” in Connect®. Complete the Week 3 “Apply: Bond
Valuation and Stock Valuation Homework” in Connect®. Note: You
have only one attempt available to complete assignments. Grades
must be transferred manually to eCampus by your instructor. Don’t
worry, this might happen after your due date. Determine the interest
payment for the following three bonds: 4 percent coupon corporate
bond (paid semi-annually), 4.75 percent coupon Treasury note, and a
corporate zero coupon bond maturing in 15 years. (Assume a $1,000
$20.00, $23.75, $150, respectively
$40.00, $47.50, $0,
$20.00, $23.75, $0, respectively Determine the
interest payment for the following three bonds: 5.5 percent coupon
corporate bond (paid semi-annually), 6.45 percent coupon Treasury
note, and a corporate zero coupon bond maturing in 10 years.
$27.50, $32.25,
$5.50,

$55.00, $64.50, $0, respectively Consider
the following three bond quotes; a Treasury note quoted at 102.30,
and a corporate bond quoted at 99.45, and a municipal bond quoted at
102.45. If the Treasury and corporate bonds have a par value of
$1,000 and the municipal bond has a par value of $5,000, what is the
$1,002.30, $1,000, $1,000,
$1,000, $1,000, $5,000, respectively Which of these
statement The bond market is larger than
Bonds are more important capital sources than stocks for
Some bonds offer high potential for
rewards and, consequently, higher risk. Which of the following issues
U.S.
Treasury A 2.95 percent TIPS has an original reference CPI of 180.2.
If the current CPI is 205.1, what is the current interest payment and
par value of the TIPS? (Assume semi-annual interest payments and
$1,138.18, $29.50,
$1,000.00, $29.50,
respective $1,138.18, $16.79, respectively A 2.5 percent TIPS
has an original reference CPI of 170.4. If the current CPI is 205.7,
what is the current interest payment and par value of the TIPS?
(Assume semi-annual interest payments and $1,000 par value.)
Multip $1,000,
$1,000,
$15.09, respectively A 3.25 percent TIPS has an original reference
CPI of 194.1. If the current CPI is 210.3, what is the current interest
payment? (Assume semi-annual interest payments and a par value of
$16.25
A 3.75 percent TIPS has an original reference CPI of 183.9. If the
current CPI is 214.7, what is the current interest payment? (Assume

semi-annual interest payments and a par value of $1,000.) Multiple
$18.75 A 3.75 percent
TIPS has an original reference CPI of 175.8. If the current CPI is
207.7, what is the current interest payment and par value of the TIPS?
$1,181.46,
$1,181.46, $22.15, respectively Consider the following three
bond quotes; a Treasury note quoted at 87.25, and a corporate bond
quoted at 102.42, and a municipal bond quoted at 101.45. If the
Treasury and corporate bonds have a par value of $1,000 and the
municipal bond has a par value of $5,000, what is the price of these
$1,000, $1,000, $1,000,
$872.50,
$1,000, $1,000, respectively Which of the following is a true
statement? M If interest rates fall, all bonds will
If interest rates fall, corporate bonds will have
If interest rates fall, no bonds will enjoy rising
If interest rates fall, U.S. Treasury bonds will have
decreasing values. Which of the following bonds makes no interest
A bond
A bond
A bond
whose coupon rates are less than the market interest rates If Zeus
Energy bonds are upgraded from BBB- to BBB+, which of the
following statements is true? Multiple Choice Interest rates required
on new bond issue will increase. The current bond price will decrease.
The current bond price will increase and interest rates on new bonds
issue will decrease. The current bond price will decrease and interest
rates on new bonds issue will increase. Rank from lowest credit risk
to highest credit risk the following bonds, with the same time to
maturity, by their yield to maturity: Treasury bond with yield of 5.55

percent, IBM bond with yield of 7.95 percent, Trump Casino bond
with a yield of 9.15 percent and Banc Ono bond with a yield of 6.12
percent. Multiple C Treasury, Trump Casino, Banc Ono, IBM
Trump Casino,
Trump Casino, Banc Ono, IBM,
Treasury Which of the following is an electronic stock market without
a physical trading floor? Mul
New York Stock Exchange Individuals who use their own stock
inventory and capital to buy and sell the stocks they represent are
none o market
investors. Sally has researched GLE and wants to pay no
more than $50 for the stock. Currently, GLE is trading in the market
buy using a use the bid-ask
None of the options. Which of these
investors earn returns from receiving dividends and from stock price
Investment bankers GEN has 10 million shares
outstanding and a stock price of $89.25. What is GEN’s market
$892,500,000 As
residual claimants, which of these investors claim any cash flows to
the firm that remain after the firm pays all other claims? rev:
07_10_2017_QC_CS-
preferred
stockholders If on November 27, 2017, The Dow Jones Industrial
Average closed at 12,958.44, which was up 215.04 that day. What
was the return (in percent) of the stock market that day? Multiple
−0.017 percent Dividend yield is defined as: Multiple Choice
the last dividend paid expressed as a percentage of the current stock
price. the last four quarters of dividend income expressed as a

percentage of the par value of the stock. the last four quarters of
dividend income expressed as a percentage of the current stock price.
the next dividend to be paid expressed as a percentage of the current
stock price. Why is the ask price higher than the bid price? Multiple
It
It represents the
gain all particip It represents the gain the stock
buy achieves. JUJU’s dividend next year is expected to be $1.50. It is
trading at $45 and is expected to grow at 9 percent per year. What is
9
p 6 percent; 1.5
1.5 percent; 6 percent If Target Corp. (TGT) recently
earned a profit of $6.07 earnings per share and has a P/E ratio of 16.5.
The dividend has been growing at a 10 percent rate over the past few
years. If this growth continues, what would be the stock price in five
years if the P/E ratio remained unchanged? What would the price be if
$261.30, $275.96 respectively
At your discount brokerage firm, it costs $7.95 per stock trade. How
much money do you receive after selling 250 shares of General
Electric (GE), which trades at $55.19
$14,037.95
You would like to buy shares of International Business Machines
(IBM). The current bid and ask quotes are $103.25 and $103.30,
respectively. You place a market buy-order for 200 shares that
executes at these quoted prices. How much money did it cost to buy
$20,660.00 None of the options JPM has earnings per share of
$1 $174.08 Ralph Lauren (RL)
has earnings per share of $3.85 and a P/E ratio of 17.37. What is the

$0.22
==============================================
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FIN 370 Week 3 Apply: Week 3 Exercise Determine the interest
payment for the following three bonds: 4 percent coupon corporate
bond (paid semi-annually), 4.75 percent coupon Treasury note, and a
corporate zero coupon bond maturing in 15 years. (Assume a $1,000
par value.) Multiple Choice $20.00, $23.75, $150, respectively $4.00,
$20.00,
$23.75, $0, respectively Determine the interest payment for the
following three bonds: 5.5 percent coupon corporate bond (paid semi-
annually), 6.45 percent coupon Treasury note, and a corporate zero
coupon bond maturing in 10 years. (Assume a $1,000 par value.)
$55.00,
$64.50, $0, respectively Consider the following three bond quotes; a
Treasury note quoted at 102.30, and a corporate bond quoted at 99.45,
and a municipal bond quoted at 102.45. If the Treasury and corporate
bonds have a par value of $1,000 and the municipal bond has a par
value of $5,000, what is the price of these three bonds in dollars?
$1,002.30,
$1,000, $1,000, $5,000, respectively
The bond
Bonds are always less

Bonds are more important capital sources than
Some bonds offer high
potential for rewards and, consequently, higher risk. Which of the
following issues Treasury Inflation Protected Securities (TIPS)?
Multiple Choice Corporations Municipalities Nonprofits U.S.
Treasury A 2.95 percent TIPS has an original reference CPI of 180.2.
If the current CPI is 205.1, what is the current interest payment and
par value of the TIPS? (Assume semi-annual interest payments and
$1,138.18, $29.50,
00, $29.50,
$1,138.18, $16.79, respectively A 2.5 percent TIPS
has an original reference CPI of 170.4. If the current CPI is 205.7,
what is the current interest payment and par value of the TIPS?
$1,000,
$1,000,
$15.09, respectively A 3.25 percent TIPS has an original reference
CPI of 194.1. If the current CPI is 210.3, what is the current interest
payment? (Assume semi-annual interest payments and a par value of
$16.25
A 3.75 percent TIPS has an original reference CPI of 183.9. If the
current CPI is 214.7, what is the current interest payment? (Assume
semi-annual interest payments and a par value of $1,000.) Multiple
$18.75 A 3.75 percent
TIPS has an original reference CPI of 175.8. If the current CPI is
207.7, what is the current interest payment and par value of the TIPS?
$1,181.46,
$22.15, respectively Consider the following three bond quotes; a

$1,000,
respectively Which of the following is a true statement? Multiple
If interest rates fall, corporate bonds will have decreasing
If interest rates fall, U.S. Treasury bonds will have decreasing
values. Which of the following bonds makes no interest payments?
A bond whose coupon
A bond whose coupon
rate is equal to the market i A bond whose coupon
rates are less than the market interest rates If Zeus Energy bonds are
upgraded from BBB- to BBB+, which of the following statements is
Interest rates required on new bond issue
T The
current bond price will increase and interest rates on new bonds issue
The current bond price will decrease and interest
rates on new bonds issue will increase. Rank from lowest credit risk
to highest credit risk the following bonds, with the same time to
maturity, by their yield to maturity: Treasury bond with yield of 5.55
percent, IBM bond with yield of 7.95 percent, Trump Casino bond
with a yield of 9.15 percent and Banc Ono bond with a yield of 6.12
Trump Casino,
Trump Casino, Banc Ono, IBM,
Treasury Which of the following is an electronic stock market without
a p
New York Stock Exchange Individuals who use their own stock
inventory and capital to buy and sell the stocks they represent are
called: Multiple market

investors. Sally has researched GLE and wants to pay no
more than $50 for the stock. Currently, GLE is trading in the market
l use the bid-ask
None of the options. Which of these
investors earn returns from receiving dividends and from stock price
Stockhold Investment bankers GEN has 10 million shares
outstanding and a stock price of $89.25. What is GEN’s market
$892,500,000 As
residual claimants, which of these investors claim any cash flows to
the firm that remain after the firm pays all other claims? rev:
07_10_2017_QC_CS-
preferred
stockholders If on November 27, 2017, The Dow Jones Industrial
Average closed at 12,958.44, which was up 215.04 that day. What
was the return (in percent) of the stock market that day? Multiple
the last dividend paid expressed as a percentage of the current
the last four quarters of dividend income expressed
the last four
quarters of dividend income expressed as a percentage of the current
stock pr the next dividend to be paid expressed as a
percentage of the current stock price. Why is the ask price higher than
It represents the gain a market
It represents the gain the stock seller achieves.
It
represents the gain the stock buy achieves. JUJU’s dividend next year
is expected to be $1.50. It is trading at $45 and is expected to grow at
9 percent per year. What is JUJU’s dividend yield and capital gain?
3.33 percent; 9

1.5 percent; 6 percent If Target
Corp. (TGT) recently earned a profit of $6.07 earnings per share and
has a P/E ratio of 16.5. The dividend has been growing at a 10 percent
rate over the past few years. If this growth continues, what would be
the stock price in five years if the P/E ratio remained unchanged?
What would the price be if the P/E ratio increased to 18 in five years?
$ $261.30,
$259.78, $283.39 respectively At your discount brokerage firm,
it costs $7.95 per stock trade. How much money do you receive after
selling 250 shares of General Electric (GE), which trades at $55.19?
$14,037.95 You would like to buy shares of International
Business Machines (IBM). The current bid and ask quotes are
$103.25 and $103.30, respectively. You place a market buy-order for
200 shares that executes at these quoted prices. How much money did
$20,660.00 None of the options JPM has
earnings per share of $3.75 and P/E of 47. What is the stock price?
$174.08
Ralph Lauren (RL) has earnings per share of $3.85 and a P/E ratio of
$0.22
==============================================
FIN 370 Week 3 Practice: Bond Valuation and Stock
Valuation Quiz
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FIN 370 Week 3 Practice: Bond Valuation and Stock Valuation Quiz
Complete the Week 3 “Practice: Bond Valuation and Stock Valuation
Quiz” in Connect®. Note: You have unlimited attempts available to
complete practice assignments. The highest scored attempt will be
recorded. These assignments have earlier due dates, so plan
accordingly. Grades must be transferred manually to eCampus by
Which of the following is a legal contract that outlines the precise
Prospectus Determine the interest payment for the following
three bonds: 5.5 percent coupon corporate bond (paid semi-annually),
6.45 percent coupon Treasury note, and a corporate zero coupon bond
maturing in 10 years. (Assume a $1,000 par value.) Multiple Choice
$55.00, $64.50, $0,
$27.50, $32.25,
$100, respectively Many bonds are not callable, but for those that are,
Called
Called any time after 10 years
Called any time after 2 years from the time an
Called any time after 10 years from the
time an investor buys the bond. A 3.75 percent TIPS has an original
reference CPI of 175.8. If the current CPI is 207.7, what is the current
interest payment and par value of the TIPS? (Assume semi-annual
$1,000, $37.50,
$1,000,
$18.75, respectively Which of the following determines the dollar
Original issue
discount A 3.75 percent TIPS has an original reference CPI of 183.9.
If the current CPI is 214.7, what is the current interest payment?
(Assume semi-annual interest payments and a par value of $1,000.)

$21.89 Regarding a
bond’s characteristics, which of the following is the principal loan
amount that Par or
face value Call premium Time to maturity value Maturity date Which
of the following was the catalyst for the recent financial crisis?
Multiple Choice Widespread layoffs due to illegal alien hiring.
Corruption in the investment banking industry. All of the options
were catalysts. Defaults on subprime mortgages. Which of the
following is NOT a factor that determines the coupon rate of a
company’s bonds? Multiple Choice The level of interest rates in the
overall economy at the time. The term of the loan. All of the options
are factors that determine the coupon rate of a company’s bonds. The
amount of uncertainty about whether the company will be able to
make all the payments. Consider the following three bond quotes; a
Multiple Choice $1,002.30, $1,000, $1,000, respectively $1,002.30,
$994.50, $5,012.25 respectively $1,000, $1,000, $5,000, respectively
$1,023.00, $994.50, $5,122.50, respectively Bond prices are quoted in
terms of which of the following? Multiple Choice Original issue
discount Coupon rate in dollars Percent of par value Market rate in
dollars Which of the following is a debt security whose payments
originate from other loans, such as credit card debt, auto loans, and
home equity loans? Multiple Choice Asset-backed securities Junk
Debentures To compensate the
bondholders for getting the bond called, the issuer pays which of the
Call
Call Coupon rate A 2.5 percent TIPS has
an original reference CPI of 170.4. If the current CPI is 205.7, what is
the current interest payment and par value of the TIPS? (Assume
semi-annual interest payments and $1,000 par value.) Multiple Choice

$1,0
$1,207.16, $15.09,
respectively Determine the interest payment for the following three
bonds: 2.5 percent coupon corporate bond (paid semi-annually), 3.15
percent coupon Treasury note, and a corporate zero coupon bond
maturing in 10 years. (Assume a $1,000 par value.) Multiple Choice
$25.00, $31.50, $0,
$12.50, $15.75, $0,
respectively A 2.95 percent TIPS has an original reference CPI of
180.2. If the current CPI is 205.1, what is the current interest payment
and par value of the TIPS? (Assume semi-annual interest payments
$878.60, $16.79,
respec $1,000.00,
$1,138.18, $29.50, respectively
Determine the interest payment for the following three bonds: 4
percent coupon corporate bond (paid semi-annually), 4.75 percent
coupon Treasury note, and a corporate zero coupon bond maturing in
$40.00, $47.50, $0,
respectively Which of the following are main issuers of bonds?
All of
Corporate bonds A 4.5 percent corporate coupon
bond is callable in five years for a call premium of one year of coupon
payments. Assuming a par value of $1,000, what is the price paid to
$1,000 Calculate the price of a
zero coupon bond that matures in 20 years if the market interest rate is
8.5 percent. (Assume annual compounding and a par value of $1,000.)
$90.29
Which of the following terms is a comparison of market yields on
securities, assuming all characteristics except maturity are the same?
Term

Credit quality risk
Which of the following is used to compute bond cash interest
None of the options. What is the taxable
equivalent yield on a municipal bond with a yield to maturity of 4.5
percent for an investor in the 39 percent marginal tax bracket?
11.54 percent
1.76 percent Which of the following bonds carry significant risk that
the issuer will not make current or future payments? Multiple Choice
Interest rate risk
from BBB- to BBB+, which of the following statements is true?
The current bond price will decrease and interest rates on new
The current bond price will increase and
interest rate Interest rates
required on new bond issue will increase. Sally has researched GLE
and wants to pay no more than $50 for the stock. Currently, GLE is
trading in the market for $54. Sally would be best served to: Multiple
use the bid- None of the
options. As residual claimants, which of these investors claim any
cash flows to the firm that remain after the firm pays all other claims?
rev: 07_10_2017_QC_CS- bondholders
preferred
stockholders GEN has 10 million shares outstanding and a stock price
$892,500,000
$89,250,000,000 The NASDAQ Composite includes: Multiple
30 of the largest (market capitalization) and most active
500 firms that are the largest
500 firms that are the largest
as ranked by Fortune Magazine. all of the stocks listed on the

NASDAQ Stock Exchange. Trading at physical exchanges like the
New York Stock Exchange and the American Stock Exchange takes
at market mark at brokers’ trading
at dealers’ computers. All of
Dow Jones Industrial Average.
Mercantile 1000. If on
November 26, 2017, The Dow Jones Industrial Average closed at
12,743.40, which was down 237.44 that day. What was the return (in
+1.83
+0.02 percent If on
November 27, 2017, The Dow Jones Industrial Average closed at
12,958.44, which was up 215.04 that day. What was the return (in
+0.017
−0.017 percent Which of
these investors earn returns from receiving dividends and from stock
Individuals who use their
own stock inventory and capital to buy and sell the stocks they
none of the options. Which of the
following is an electronic stock market without a physical trading
American
S New York Stock
Exchange JUJU’s dividend next year is expected to be $1.50. It is
trading at $45 and is expected to grow at 9 percent per year. What is
9
percent 3.33 percent;
6 percent; 1.5 percent If Target Corp. (TGT) recently
earned a profit of $6.07 earnings per share and has a P/E ratio of 16.5.
The dividend has been growing at a 10 percent rate over the past few
years. If this growth continues, what would be the stock price in five
years if the P/E ratio remained unchanged? What would the price be if

the P/E ratio increased to 18 in five years? Multiple Choice $161.30,
$259.78, $283.
If a preferred stock from Pfizer Inc. (PFE) pays $3.00 in annual
dividends, and the required return on the preferred stock is 7 percent,
what’s the value of the stock? Multiple
-service brokerage firm, it costs
$120 per stock trade. How much money do you receive after selling
200 shares of Ralph Lauren (RL), which trades at $85.13? Multiple
$
$16,546.00 At your discount brokerage firm, it costs $7.95 per
stock trade. How much money do you receive after selling 250 shares
$11,958.55 $14,037.95 JUJU’s
dividend next year is expected to be $5.50. It is trading at $45 and is
expected to grow at 4 percent per year. What is JUJU’s dividend yield
4 percent; 12.22 6
percent; 2.5 percent You would like to buy shares of International
Business Machines (IBM). The current bid and ask quotes are $96.17
and $96.24, respectively. You place a market buy-order for 100 shares
that executes at these quoted prices. How much money did it cost to
$7.00 The size of the firm measured as the
current stock price multiplied by the number of shares outstanding is
referred to as the firm’s: Multiple Choic market
constant growth model.
quoted ask price. Stock
valuation model dynamics make clear that lower discount rates lead
higher valuations. You would like to sell
400 shares of International Business Machines (IBM). The current bid

and ask quotes are $96.24 and $96.17, respectively. You place a limit
sell-order at $96.20. If the trade executes, how much money do you
$38,464.00 A preferred stock
from DLC pays $5.10 in annual dividends. If the required return on
the preferred stock is 12.1 percent, what is the value of the stock?
$47.25 Ralph
Lauren (RL) has earnings per share of $3.85 and a P/E ratio of 17.37.
$0.22
$4.51 Many companies grow very fast at first, but
slower future growth can be expected. Such companies are called:
variable
blue chip
companies.
==============================================
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your due date. MC Qu. 7-67 Which of the following is NOT… Which
of the following is NOT true about EE savings bonds? Multiple
Choice These are tax deferred investments. Interest payments are
received annually but are tax deductible. About one in six Americans

owns a savings bond. Paper bonds sell for one-half of their face value.
MC Qu. 7-4 Which of the following is a legal… Which of the
following is a legal contract that outlines the precise terms between
the issuer and the bondholder? Multiple Choice Prospectus
Enforcement codes Debenture Indenture MC Qu. 7-125 A 4.15
percent TIPS has an… A 4.15 percent TIPS has an original reference
CPI of 182.1. If the current CPI is 188.3, what is the par value of the
TIPS? Multiple Choice $1,000.00 $1,004.75 $967.07 $1,034.05 MC
Qu. 7-124 A 2.95 percent TIPS has an… A 2.95 percent TIPS has an
original reference CPI of 180.2. If the current CPI is 205.1, what is
the current interest payment and par value of the TIPS? (Assume
semi-annual interest payments and $1,000 par value.) Multiple Choice
$878.60, $16.79, respectively $1,000.00, $29.50, respectively
$1,138.18, $29.50, respectively $1,138.18, $16.79, respectively MC
Qu. 7-81 A 5.125 percent TIPS has an… A 5.125 percent TIPS has an
original reference CPI of 191.8. If the current CPI is 188.3, what is
the par value of the TIPS? Multiple Choice $992.75 $981.75
$1,018.60 $1,042.95 MC Qu. 7-38 Calculate the price of a zero…
Calculate the price of a zero coupon bond that matures in 10 years if
the market interest rate is 6 percent. (Assume semi-annual
compounding and $1,000 par value.) Multiple Choice $1,000.00
$553.68 $558.66 $940.00 MC Qu. 7-18 Which of the following terms
means… Which of the following terms means the chance that future
interest payments will have to be reinvested at a lower interest rate?
Multiple Choice Credit quality risk Interest rate risk Reinvestment
rate risk Liquidity rate risk MC Qu. 7-43 What’s the taxable
equivalent yield on a municipal… What’s the taxable equivalent yield
on a municipal bond with a yield to maturity of 3.9 percent for an
investor in the 35 percent marginal tax bracket? Multiple Choice
1.09% 6.00% 11.14% 3.90% MC Qu. 7-21 Which of the following is
an… Which of the following is an important advantage to the issuer
of a bond with a call provision? Multiple Choice They allow for
refinancing opportunities. They are able to avoid reinvestment rate

risk. They are able to avoid interest rate risk. They are able to reduce
their credit risk. Which of the following are backed only by the
reputation and financial stability of the corporation? Multiple Choice
Both debentures and unsecured bonds Debentures None of the options
Unsecured bonds Which of the following terms is the chance that the
bond issuer will not be able to make timely payments? Multiple
Choice Interest rate risk Liquidity of interest rate risk Term structure
of interest rates Credit quality risk As residual claimants, which of
these investors claim any cash flows to the firm that remain after the
firm pays all other claims? rev: 07_10_2017_QC_CS-93259 Multiple
Choice preferred stockholders creditors common stockholders
bondholders All of the following are stock market indices EXCEPT:
Multiple Choice Dow Jones Industrial Average. Standard & Poor’s
500 Index. Nasdaq Composite Index. Mercantile 1000. You would
like to sell 400 shares of International Business Machines (IBM). The
current bid and ask quotes are $96.24 and $96.17, respectively. You
place a limit sell-order at $96.20. If the trade executes, how much
money do you receive from the buyer? Multiple Choice $38,464.00
$38,496.00 $38,468.00 $38,480.00 Investors sell stock at the:
Multiple Choice dealer price. broker price. bid price. quoted ask price.
At your discount brokerage firm, it costs $9.95 per stock trade. How
much money do you need to buy 100 shares of Ralph Lauren (RL),
which trades at $85.13? Multiple Choice $8,503.05 $8,503.00
$9,508.00 $8,522.95 A preferred stock from DLC pays $5.10 in
annual dividends. If the required return on the preferred stock is 12.1
percent, what is the value of the stock? Multiple Choice $42.15
$47.25 $240.97 $6.31 At your discount brokerage firm, it costs
$10.50 per stock trade. How much money do you need to buy 100
shares of Apple (AAPL), which trades at $202.64? Multiple Choice
$21,314.00 $20,274.50 $20,253.50 In $20,264.00 JPM has earnings
per share of $3.75 and P/E of 47. What is the stock price? Multiple
Choice $185.95 $174.08 $112.98 $176.25 Pfizer, Inc. (PFE) has

earnings per share of $2.09 and a P/E ratio of 11.02. What is the stock
price? Multiple Choice $18.97 $5.27 $23.03 $0.19
==============================================
FIN 370 Week 4 Apply: Risk and the Cost of Capital
Homework
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FIN 370 Week 4 Apply: Risk and the Cost of Capital Homework
Review the Week 4 “Practice: Risk and the Cost of Capital Quiz” in
Connect®. Complete the Week 4 “Apply: Risk and the Cost of
Capital Homework” in Connect®. Note: You have only one attempt
available to complete assignments. Grades must be transferred
manually to eCampus by your instructor. Don’t worry, this might
happen after your due date. Rx Corp. stock was $60.00 per share at
the end of last year. Since then, it paid a $1.00 per share dividend last
year. The stock price is currently $62.50. If you owned 400 shares of
1.67 percent
5.60 percent TechNo stock
was $25 per share at the end of last year. Since then, it paid a $1.50
per share dividend last year. The stock price is currently $23. If you
owned 300 shares of TechNo, what was your percent return? Multiple
−8
percent Which of these is a measure summarizing the overall past
Percentage return Rank
the following three stocks by their level of total risk, highest to
lowest. Rail Haul has an average return of 8 percent and standard
deviation of 10 percent. The average return and standard deviation of

Idol Staff are 10 percent and 20 percent; and of Poker-R-Us are 6
Idol Staff, Rail Haul,
Poker-R- Rail Haul, Poker-R-Us, Idol Poker-R-Us,
Idol Staff, Poker-R-Us, Rail Haul Rank
the following three stocks by their total risk level, highest to lowest.
Night Ryder has an average return of 14 percent and standard
WholeMart are 12 percent and 25 percent; and of Fruit Fly are 25
WholeMart, Fruit Fly,
WholeMart,
Fruit Fly, Night Ryder, WholeMart
MedTech Corp. stock was $50.95 per share at the end of last year.
Since then, it paid a $0.45 per share dividend. The stock price is
currently $62.50. If you owned 500 shares of MedTech, what was
your percent return? Multiple Choic 23.55
7.20 percent FedEx Corp. stock ended the
previous year at $113.39 per share. It paid a $0.40 per share dividend
last year. It ended last year at $126.69. If you owned 300 shares of
FedEx, what was your dollar return and percent return? Multiple
$3,990; 11.73 percent A stock has
an expected return of 15 percent and a standard deviation of 20
percent. Long-term Treasury bonds have an expected return of 9
percent and a standard deviation of 11 percent. Given this data, which
The
stock investment has a better risk-return trade- The bond
investment has a better risk-return trade- Both investments
The two assets have the same
coefficient of variation. Which of these is the portion of total risk that
Modern
portfolio risk Which of these is the term for portfolios with the
Modern

Total
portfolios Modern portfolio theory is: Multiple Choice a concept and
procedure for combining securities into a portfolio to minimize risk.
a concept and procedure for combining securities into a
a concept and procedure for
combining securiti a
concept and procedure for combining securities into a portfolio to
maximize dollar return. If the risk-free rate is 8 percent and the
market risk premium is 2 percent, what is the required return for the
market? 2
10 percent Compute the expected return given these three
economic states, their likelihoods, and the potential returns: Economic
State Probability Return Fast Growth 0.40 25 % Slow Growth 0.55 12
% Recession 0.05 −50 %
14.1 percent
If the risk-free rate is 10 percent and the market risk premium is 4
percent, what is the required return for the market?
7 percent
Which of the following is typically considered the return on U.S.
government bonds and bills and equals the real interest plus the
Required retu
Risk- Risk premium
Which of the following is a model that includes an equation that
relates a stock’s required return to an appropriate risk premium?
Behavioral fin Beta The annual return on the S&P 500 Index
was 18.1 percent. The annual T-bill yield during the same period was
6.2 percent. What was the market risk premium during that year?
24.3 percent Which of the following are the stocks of small
Stock market bubble

Bargain stocks A company has a beta of 0.50. If the
market return is expected to be 12 percent and the risk-free rate is 5
8.5 percent If
the Japanese stock market bubble peaked at 37,500, and two and a
half years later it had fallen to 25,900, what was the percentage
−10.31 percent A company’s current
stock price is $84.50 and it is likely to pay a $3.50 dividend next year.
Since analysts estimate the company will have a 10 percent growth
14.14 percent
4.14 percent Shares of stock
issued to employees that have limitations on when they can be sold
are known as: Mult stock
privately held information.
Which of the following will directly impact the cost of equity?
Expected future Profit margins Which of these
uses the after-tax costs of capital to compute the firm’s weighted
focuses
on operating
uses the pre-tax costs of capital to compute the firm’s weighted
average cost of debt financing. When firms use multiple sources of
capital, they need to calculate the appropriate discount rate for valuing
a simple average of
a sum of the capital components
they apply to each asset as they are purchased with their
a weighted average of the
capital components costs Which of the following is a true statement?
To estimate the before-tax cost of debt, we use
To estimate the
before-tax cost of debt, we need to solve for the Yield to Call (YTC)

To estimate the before-tax cost of
debt, we need to solve for the Yield to Maturity (YTM) on the firm’s
To estimate the before-tax cost of debt, we use the
average rate on the firm’s existing debt. JackITs has 5 million shares
of common stock outstanding, 1 million shares of preferred stock
outstanding, and 20 thousand bonds. If the common shares are selling
for $28 per share, the preferred shares are selling for $13.50 per share,
and the bonds are selling for 98 percent of par, what would be the
weight used for equity in the computation of JackITs’ WACC?
91.19 percent
33.33 percent TellAll has 10 million shares of common stock
outstanding, 20 million shares of preferred stock outstanding, and 100
thousand bonds. If the common shares are selling for $32 per share,
the preferred shares are selling for $20 per share, and the bonds are
selling for 106 percent of par, what would be the weight used for
preferred stock in the computation of TellAll’s WACC? Multiple
33.33
percent ADK has 30,000 15-year 9 percent semi-annual coupon bonds
outstanding. If the bonds currently sell for 90 percent of par and the
firm pays an average tax rate of 32 percent, what will be the before-
tax and after- 11.19
10.12
10.32 percent; 7.02 percent Flotation
commissions to the underwriting
the difference between the bid-ask spread on the sale of the
None of the options are correct.
==============================================

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might happen after your due date. Which of the following is correct?
Multiple Choice All of the statements are correct. In some years,
long-term Treasury bonds performed better than stocks. Over a long
time frame, stocks have performed better than long-term Treasury
bonds. Average stock returns are not an indication of what an investor
may earn in any one year. The optimal portfolio for you will be:
Multiple Choice the one that reflects the amount of risk that you are
the one that
the one that offers the most
diversification. Year-to-date, Oracle had earned a 12.57 percent
return. During the same time period, Valero Energy earned −9.32
percent and McDonald’s earned 3.45 percent. If you have a portfolio
made up of 60 percent Oracle, 20 percent Valero Energy, and 20
percent McDonald’s, what is your portfolio return? Multiple Choice
6. 8.45 percent
Which of these is the reward for taking systematic stock market risk?
Market
Risk-free rate You have a portfolio consisting of 20
percent Boeing (beta = 1.3) and 40 percent Hewlett-Packard (beta =
1.6) and 40 percent McDonald’s stock (beta = 0.7). How much market
This portfolio has
This portfolio has
This portfolio has
This portfolio has

28 percent more risk than the general market. A company’s current
stock price is $22.00 and its most recent dividend was $0.75 per
share. Since analysts estimate the company will have a 12 percent
12.00
3.48 percent Which of
the following will impact the cost of equity component in the
The
risk-free rate The reason that we do not use an after-tax cost of
because most of the investors
preferred dividends are paid out of before- None of
because we can only estimate the
marginal tax rate of the preferred stockholders. Diddy Corp. stock has
a beta of 1.0, the current risk-free rate is 5 percent, and the expected
return on the market is 15.5 percent. What is Diddy’s cost of equity?
16.30 percent
15.50 percent Which of the following is a principle of capital
budgeting which states that the calculations of cash flows should
Financing
Generally accepted
WACC principle
==============================================
FIN 370 Week 4 Practice: Risk and the Cost of Capital Quiz
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FIN 370 Week 4 Practice: Risk and the Cost of Capital Quiz
Complete the Week 4 “Practice: Risk and the Cost of Capital Quiz” in

Connect®. Note: You have unlimited attempts available to complete
practice assignments. The highest scored attempt will be recorded.
These assignments have earlier due dates, so plan accordingly. Grades
must be transferred manually to eCampus by your instructor. Don’t
worry, this might happen after your due date. Rank the following
three stocks by their total risk level, highest to lowest. Night Ryder
has an average return of 14 percent and standard deviation of 30
percent. The average return and standard deviation of WholeMart are
12 percent and 25 percent; and of Fruit Fly are 25 percent and 40
WholeMart, Fruit Fly,
Fruit Fly, Night Ryder, WholeMart Which of these is
the dollar return characterized as a percentage of money invested?
Market
Average return Rx Corp. stock was $60.00 per share at the
end of last year. Since then, it paid a $1.00 per share dividend last
year. The stock price is currently $62.50. If you owned 400 shares of
4.17 percent
1.67 percent Which of these
includes any capital gain (or loss) that occurred as well as any income
that you received from a sp
Market
return Which of the following is defined as the volatility of an
investment, which includes firm specific risk as well as market risk?
Standard devia
Market risk Which of these is a measure
summarizing the overall past performance of an investment? Multiple
Percentage return
Market return Which of these statements is true? Multiple
When people purchase a stock, they know exactly what
purchase a stock, they do not know what their return is going to be-
Many people purchase stocks

When people purchase a stock, they know the short-term return,
but not the long-term return. TechNo stock was $25 per share at the
end of last year. Since then, it paid a $1.50 per share dividend last
year. The stock price is currently $23. If you owned 300 shares of
6.5 percent Which statement is
The larger the standard deviation, the
The larger the standard deviation, the more
The standard deviation is not an indication of total
The larger the standard deviation, the higher the total risk.
MedTech Corp. stock was $50.95 per share at the end of last year.
Since then, it paid a $0.45 per share dividend. The stock price is
currently $62.50. If you owned 500 shares of MedTech, what was
7.20
8.83 23.55 percent Sprint Nextel Corp. stock
ended the previous year at $25.00 per share. It paid a $2.57 per share
dividend last year. It ended last year at $18.89. If you owned 650
shares of Sprint, what was your dollar return and percent return?
M −$3,960; −15.13 percent
−$4,960; −16.13 percent FedEx
Corp. stock ended the previous year at $113.39 per share. It paid a
$0.40 per share dividend last year. It ended last year at $126.69. If
you owned 300 shares of FedEx, what was your dollar return and
$4,250; 12.29
$3,990; 11.73 percent Rank
the following three stocks by their risk-return relationship, best to
worst. Rail Haul has an average return of 10 percent and standard
Idol Staff are 15 percent and 25 percent; and of Poker-R-Us are 12
Idol Staff, Poker-R-Us,
Poker-R- Rail Haul,
Idol Staff, Poker-R-Us Idol Staff, Rail Haul, Poker-R-Us A stock has

an expected return of 15 percent and a standard deviation of 20
percent. Long-term Treasury bonds have an expected return of 9
percent and a standard deviation of 11 percent. Given this data, which
Both
investments have the same diversifiable risk. The stock investment
has a better risk-return trade-of The bond investment has a
better risk-return trade- The two assets have the same
coefficient of variation. A stock has an expected return of 12 percent
and a standard deviation of 20 percent. Long-term Treasury bonds
have an expected return of 9 percent and a standard deviation of 15
percent. Given this data, which of the following statements is correct?
The two assets have the same coefficient of
The stock investment has a better risk-return trade-off. The bond
investment has a better risk-return trade-off. Year to date, Company Y
had earned a 7 percent return. During the same time period, Company
R earned 9.25 percent and Company C earned −2.25 percent. If you
have a portfolio made up of 35 percent Y, 40 percent R, and 25
5.5875
12.6625
percent Which of these is the investor’s combination of securities that
achieves the highest expected return for a given risk level? Multiple
Optimal
Efficient portfolio If you invested $30,000 in Disney
and $10,000 in Oracle and the two companies returned 6 percent and
12 percent respectively, what was your portfolio’s return? Multiple
10.5
percent The annual return on the S&P 500 Index was 18.1 percent.
The annual T-bill yield during the same period was 6.2 percent. What
24.3 percent Which
The risk and
return that a firm experienced in the past is also the risk level for its

UOPFIN 370 NEW Become Exceptional--uopfin370.com

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