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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
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
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
financial
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 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?
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
sta
maximizing the stock
maximizing earnings per share. Which of the following is
design c
hire the CEO This is the
set of laws, policies, incentives, and monitors designed to handle the
issues arising from the separation of ownership and control.
corporate g defined benefit plan
agency theory Which of the following
Most sole
S
An

advantage of sole proprietorships is that the owner has complete
S
corporation An angel investor differs from a venture capitalist
size of investment.
Which statement is incorrect regarding hybrid organizations?
They offer s They offer
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 stakeholders include all of the following EXCEPT
auditors. From the perspective of ownership risk, the best form
sole
S corporation.
Which of the following is NOT considered a hybrid organization?
all of these choices are correct. limited
limited liability partnership Which of these is the system of
incentives and monitors that tries to overcome the agency problem?
checks and Balances
board of Directors When
determining a form of business organization, all of the following are
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
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- - market
value Which of the following measures the number of days accounts
receivable are held before the firm collects cash from the sale?
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
fixed-charge coverage
basic earni ROA
Which ratio measures the operating return on the firm’s assets
operating
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-charge
2.33 times Which of these ratios measure the
extent to which the firm uses debt (or financial leverage) versus
debt management

equity ratios A
strong liquidity position means that Mu the firm is
able to meet its short- the firm pays out a large
the firm uses
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- internal-
cross- 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
4.91 times Incorrect Which of the following
measures the number of dollars of sales produced per dollar of fixed
fixed asset turnover ratio The term “capital structure” refers
the amount of current versus fixed assets on
the amount of long-term debt versus equity on
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 did the firm’s inventory stay
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
29.2
days, 0.0345 times 29.2 days, 12.5 times,

12.5 days, 29.2
times, respectively Which ratio measures how many days inventory
total asset
inventory intensity ratio Which ratio measures the number of
dollars of operating earnings available to meet each dollar of
times
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, respectively
LotsofDebt: 10 percent, 1.11 times, 0.1111 times, respectively;
and LotsofEquity: 90 percent, 10 times, 9 times, respect
LotsofDebt: 10 percent, 10 times, 9 times, respectively; and
LotsofEquity: 90 percent, 1.11 times, 0.1111 times, respectively A
firm has an ACP of 38 days and its annual sales are $5.3 million.
$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 $192.70, $410.00,
$410.00, $192.70,
$2.1809, $1.025, respectively An investor wanting
large returns will be interested in companies that have Multiple
high cur
high ROAs. Which of the following measures
the operating return on the firm’s assets, irrespective of financial
basic
profit margin For
publicly traded firms, which of these ratios measure what investors
think of the company’s future performance and risk? Multiple
market value
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 different accounting
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 type of benchmarks? Multiple
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 Java’s total assets?
$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 sustainable growth
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 might happen after your due date.
Learn: McGraw-Hill Connect® Access Maximizing
owners’ equity value means carefully considering all of the following
how best to return the profits from
which projects to invest
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
retained earnings As individual legal
entities, corporations assume liability for their own debts, so the
only limited liability.

For corporations, maximizing the value of owner’s equity can also
be stated as Multiple Choi
maximizing retained
maximizing net income. Which of the following is
not an impact of the slowdown occurring in China’s economy?
lower demand
real estate
money going out of
Manhattan, New York What is the debt ratio for a firm with an
66.25
71.43 percent Which of the following
refer to ratios that measure the relationship between a firm’s liquid
internal- cross-
section For publicly traded firms, which of these ratios measure
what investors think of the company’s future performance and risk?
price
market value ratios Which of the following is the
maximum growth rate that can be achieved by financing asset
internal growth
retained earnings growth rate To interpret financial
ratios, managers, analysts, and investors use which of the following
time- cross-
industry analysis
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FIN 370 Week 1 Practice: Finance and Financial Statement Analysis
Quiz

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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
financial institutions
Financial managers double-check the accountant’s statements.
Both
accountants and financial managers use total quality management
Financial managers are focused on
This is a general term for securities
like stocks, bonds, and other assets that represent ownership in a
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 to as
restricted
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
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
market
investments
What is the difference in perspective between finance and
accounting
risk This subarea of finance is important for adapting to the
international finance For corporations, maximizing the value
maximizing earnings per share.
Which of the following is NOT a function of the board of directors?
design compensation
hire
the CEO This is the set of laws, policies, incentives, and monitors
designed to handle the issues arising from the separation of
corporate
agency theory Which of the following statements is incorrect?
Most sole proprietors raise money by
S corporations are considered a hybrid
An advantage of sole proprietorships is that the
Partnerships have unlimited
liability. Agency problems exist in which forms of business

partner sole proprietorship
An angel investor differs
type of investment.
size of investment. Which statement is incorrect regarding
They offer single taxation.
They offer the same
All of these choices are
correct. From a taxation perspective, the form of business
organization with the highest business level taxes is the Multiple
sole proprietorship.
partnership. Corporate stakeholders include all of the
suppliers.
auditors. From the perspective of
ownership risk, the best form of business organization is the
S corporation. Which of the following is NOT
considered a hybrid org all of
S
limited liability
partnership Which of these is the system of incentives and monitors
that tries to overcome the agency probl
Security
board of Directors When determining a
form of business organization, all of the following are considered
the physical location of the business.
the
owners’ risks. All of the following are an example of a fiduciary
a financial advisor advises
a bank

a CEO manages the firm. Restricted
a special type of stock that can be
converted into corporate bonds after a specific amount of time has
a special type of stock that is not transferable from the
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
internal-
cross- market value Which of the following
measures the number of days accounts receivable are held before
the firm collects cash from the sale? Mult accounts
accounts
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? Multiple
fixed-
ROA Which ratio measures the
operating return on the firm’s assets irrespective of financial
basic
earni 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-charge coverage ratio? Multiple
Choice 2.33 times
Which of these ratios measure the extent to which the firm uses debt
(or financial leverage) versus equity to finance its assets? Multiple
liquidity r equity ratios A strong liquidity position
the firm is able to meet its short-

the firm pays out a large portion of its net
the firm uses little debt in its
capital s 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-
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
7.25 times
4.91 times Incorrect Which of the following measures the
number of dollars of sales produced per dollar of fixed assets?
fixed
fixed asset
turnover ratio The term “capital structure” refers to Multiple
the amount of current versus fixed assets on the balance
the amount of long-term debt versus equity on the
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 did the firm’s inventory stay
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’ 29.2
29.2 days, 12.5 times,
12.5 days, 29.2
times, respectively Which ratio measures how many days inventory

is held before the total asset
inventory intensity ratio Which ratio measures the number of
dollars of operating earnings available to meet each dollar of
interest obligations times
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
LotsofDebt: 90 percent, 10 times, 9 times, respectively;
and LotsofEquity: 10 percent, 1.11 times, 0.1111 times, respectively
LotsofDebt: 10 percent, 10 times, 9 times, respectively; and
LotsofEquity: 90 percent, 1.11 times, 0.1111 times, respectively A
firm has an ACP of 38 days and its annual sales are $5.3 million.
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,
respectiv $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
$192.70, $410.00,
$410.00, $192.70,
$2.1809, $1.025, respectively An investor wanting
large returns will be interested in companies that have Multiple
high ROAs. Which of the following measures
the operating return on the firm’s assets, irrespective of financial
leverage and taxes? Mul basic
profit margin For
publicly traded firms, which of these ratios measure what investors
think of the company’s future performance and risk? Multiple
market value
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 different accounting
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 type of benchmarks? Multiple
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 Java’s total assets? Multiple
$12m. Last year
Rain Repel Corporation had an ROE of 10 percent and a dividend
payout ratio of 80 percent. What is the sustainable growth rate?

2.04 percent 44.44 percent 1.11
percent
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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 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. MC Qu. 1-14 Which of the
following managers would… Which of the following managers
would NOT use finance human resource
these choices are . MC Qu. 1-11 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
market instruments investments financial markets asset classes
MC Qu. 1-63 An angel investor differs from a… An angel investor
differs from a venture capitalist because of the Multiple Choice size
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
a financial advisor advises
the shareholder
elects a boar a bank employee manages deposits. MC
Qu. 3-85 Which ratio assesses how efficiently a… Which ratio
assesses how efficiently a firm uses its fixed assets? Multiple Choice
fixed asset turnover
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? Multiple Choice
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 firm owes?
Multiple Ch fixed- cash coverage
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 ratio,
quick
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?
price
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
sustainable
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
retained earnings growth rate MC
Qu. 3-23 To interpret financial ratios, managers, analysts,… To
interpret financial ratios, managers, analysts, and investors use
time
cross- time-industry
competitive analysis MC Qu. 3-42 Last year Poncho Villa
Corporation had… Last year Poncho Villa Corporation had an
ROA of 16 percent and a dividend payout ratio of 25 percent. What
33.33
percent 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
your instructor. Don’t worry, this might happen after your due date.
With regard to money deposited in a bank, future values are

larger than
smaller than present values. Time value of money concepts can
CFOs and CEOs to make business
All of these choices are co investors calculating a
return on an investment. Which of the following statements is
$100 to be received in the future is
worth more than that today since it could be invested and earn
$100 to be received in the future is worth less than that
Discounting is
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
$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 Cho
$98.36 Which of the following statements is incorrect with
Cash flows we receive are
A helpful
tool for organizing our analysis Interest rates
Cash flows we pay out are
called outflows and designated with a negative number. What is the
future value of $700 deposited for one year earning 4 percent
interest rate annually? Mul $28
$700 Approximately what interest rate is needed to double an
100
17 percent What is the present value of a
$750 payment made in three years when the discount rate is 5

$646.96 How are present values affected by changes in interest
One would need to know the future value
The higher the interest rate,
The lower the interest
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
0.11
9 years Approximately what rate is
15.8 percent
The process of figuring out how much an amount that you expect to
compounding.
Approximately what interest rate is needed to double an investment
9 percent You double your money in five years.
The reason your return is not 20 percent per year is because:
it does not
it does not reflect the effect of
it does not reflect the effect of compounding.
Determine the interest rate earned on a $1,500 deposit when $1,680
12.00 pe 1.12
0.89 percent When calculating the
number of years needed to grow an investment to a specific amount
the lower the interest rate, the
the
interest rate has nothing to do with the length of the time period
the higher the interest rate, the
the Rule

of 72 is the only way to calculate the time period needed to achieve
the growth. Level sets of frequent, consistent cash flows are called
loans.
When saving for future expenditures, we can add the ________ of
contributions over time to see what the total will be worth at some
time value to money In order to discount
the appropriate tax rate.
the appropriate discount rate.
What is the future value of a $500 annuity payment over eight years
$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
forever? Mul
$1,000.00 Your credit rating and current economic conditions
whether you get simple or
how long discounting wil 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?
If the 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
$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

$24,997.51
$25,000.00 Compounding
monthly versus annually causes the interest rate to be effectively
is affected only
is independent of the monthly compounding. Loan
both the
the interest
paid
the principal balance paid per period only. The simple form of
an annualized interest rate is called the annual percentage rate
less
accurate measure of the interest rate paid for monthly
concept that is only used because the law
more accurate
measure that only applies to mortgages.
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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 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
$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
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
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 present value of an
what is the present value of the same annuity due? 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
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
$245.00 $235.85 $265.00 What is the present value of a $750
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
$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
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
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
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
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 present value of an
what is the present value of the same annuity due? 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
Multiple Choice $1,938.96 $440.80 $1,197.81 $204.17 If the future
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

10.47 percent
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Learn:
McGraw-Hill Connect® Access 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…

choices are . MC Qu. 5-22 What is the future value of… What is the
future value of a $1,000 annuity payment over 4 years if the interest
rates are 8 percent? Multiple Choice $4,506.11 $9,214.20 $4,320.00
$3,312.10 MC Qu. 5-74 If the present value of an… If the present
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
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.
$20.00, $23.75,
$40.00, $47.50,
$0, resp $20.00, $23.75, $0, respectively Determine the
interest payment for the following three bonds: 5.5 percent coupon
(Ass $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

price of these three bonds in dollars? Multiple Choic $1,002.30,
$1,000,
$1,000, $5,000, respectively Which of these statements is false?
The bond market is larger than the stock
Bonds are
more important capital sources than stocks for companies and
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
$1,138.18,
$1,000.00,
$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
$1,000, $7.1
$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 v
$16.25 A 3.75 percent TIPS has an
the current interest payment? (Assume semi-annual interest
payments and a par value of $1,

$18.75 A 3.75 percent TIPS has an
the current interest payment and par value of the TIPS? (Assume
semi-annual interest payments and $1,000 par value.) Multiple
$1,181.46, $37.50,
$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 three bonds in dollars?
$1,000, $1,000,
$1,000,
$872.50, $1,000, $1,000,
respectively Which of the following is a true statement? Multiple
If interest rates fall, all bonds will en
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
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
Treasury, Trump Casino,
Treasury,
Trump Casino,
Banc Ono, IBM, Treasury Which of the following is an electronic
American
New York Stock Exchange Individuals who use
their own stock inventory and capital to buy and sell the stocks they
none of
investors. 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:
buy using a market
use the bid- None of
the options. Which of these investors earn returns from receiving
Investment
bankers GEN has 10 million shares outstanding and a stock price of

$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-93259 Multiple Choice
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
−1.69 percent
−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?
It
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
6 percent 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
$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 it
$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? Multiple
$174.08 Ralph Lauren
(RL) has earnings per share of $3.85 and a P/E ratio of 17.37. What
$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
$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
$5.50, $6.45, $0
$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
$1,002.30, $994.50,
$1,023.00, $994.50, $5,122.50, respectively
$1,002.30, $1,000, $1,000, respectiv $1,000, $1,000,
$5,000, respectively Which of these statements is false? Multiple
Bonds are more
important capital sources than stocks for companies and
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
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
$8
$1,138.18, $16.79, respectively A 2.5 percent TIPS has an
the current interest payment and par value of the TIPS? (Assume
$1,000, $7.16, respectively
$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 $1,000.) Multiple
$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
$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? (Assume
$1,181.46, $37.50,
2.15,
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 three bonds in dollars?
$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, 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 payments?
A bond whose coupon
A bond whose
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
Interest rates required on
The current bond price will

The current bond price will increase and interest
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
Treasury, Banc Ono,
Trump Casino, IBM, Banc Ono, Treasury
Trump Casino, Banc Ono, IBM, Treasury Which of the
following is an electronic stock market without a physical trading
Nasdaq Stock
New York Stock
Exchange Individuals who use their own stock inventory and capital
to buy and sell the stocks they represent are called: Multiple Choice
investors. 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 serve
use the bid-ask
None of the options. Which of these
investors earn returns from receiving dividends and from stock
price appreciation? Multiple Choice
Investment bankers GEN has 10 million shares
outstanding and a stock price of $89.25. What is GEN’s market
$89,250,000,000
$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-93259 Multiple

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
−0.017 percent Dividend yield is defined
the last dividend paid expressed as a
the last four quarters of
dividend income expressed as a percentage of the par value of the
the last four quarters of dividend income expressed as a
the next dividend to be
paid expressed as a percentage of the current stock price. Why is the
It
It represents
It represents the gain all
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
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 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? Multiple
$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
$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 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 your instructor. Don’t worry, this might happen after
your due date. Which of the following is a legal contract that
outlines the precise terms between the issuer and the bondholder?

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
$5.50, $6.45, $0,
$27.50, $32.25, $100, respectively Many bonds are
not callable, but for those that are, which of following is a common
Called any time after 2 years of
Called any time after 2 years from the time an investor buys
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-
$1,000, $37.50,
$1,000, $18.75,
respectively Which of the following determines the dollar amount of
Original issue discount A 3.75
CPI is 214.7, what is the current interest payment? (Assume semi-
annual interest payments and a par value of $1,000.) Multiple
$21.89 Regarding a bond’s
characteristics, which of the following is the principal loan amount
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 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? 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 bonds Cr
Debentures To compensate the bondholders for getting the
bond called, the issuer pays which of the following? Multiple Choice
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 $1,000, $15.09,
$1,207.16, $7.16, respectively $1,000, $7.16,

$1,207.16, $15.09, respectively Determine the
interest payment for the following three bonds: 2.5 percent coupon
(Assume a $1,000 par value.) Multiple Choice $12.50, $15.75, $100,
$2.50, $3.15, $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 and $1,000 par value.)
$1,138.18,
$1,000.00, $29.
$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 15 years. (Assume a $1,000
$4.00, $4.75, $0,
$40.00, $47.50, $0, respectively Which of the
following are main issuers of bonds? Multiple Choice U.S. Treasury
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 the bondholder if the issuer calls the
$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.) Multiple Cho
$90.29 Which of the
following terms is a comparison of market yields on securities,

assuming all characteristics except maturity are the same? Multiple
Term structure of interest
Credit quality risk Which of the
following is used to compute bond cash interest payments? Multiple
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
11.54 percent 1.76 percent Which of
the following bonds carry significant risk that the issuer will not
Credit
Liquidity rate risk bonds If Zeus Energy bonds are upgraded from
BBB- to BBB+, which of the following statements is true? Multiple
The current
bond price will decrease and interest rates on new bonds issue will
The current bond price will increase and interest
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
buy using a market o 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- bondhol
preferred
stockholders GEN has 10 million shares outstanding and a stock
price of $89.25. What is GEN’s market capitalization? Multiple

$89,250,000,000 The NASDAQ Composite includes: Multiple
30 of the largest (market capitalization) and most active
500 firms that are the largest in
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 brokers’
at dealers’ trading po at dealers’
computers. All of the following are stock market indices EXCEPT:
Dow Jones
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 percent) of the stock market that day?
+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 percent) of the stock
−1.69
−0.017 percent Which of these
investors earn returns from receiving dividends and from stock
Managers
Individuals who use
their own stock inventory and capital to buy and sell the stocks they
b
none of the options. Which of the
following is an electronic stock market without a physical trading
American
New York Stock

Exchange JUJU’s dividend next year is expected to be $1.50. It is
9
3.33 percent; 9
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?
$259.78,
$261.30,
$275.96 respectively If a preferred stock from Pfizer Inc. (PFE) pays
$3.00 in annual dividends, and the required return on the preferred
-service
brokerage firm, it costs $120 per stock trade. How much money do
you receive after selling 200 shares of Ralph Lauren (RL), which
$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 of General Electric (GE), which trades at $55.19?
$11,958.55
$14,037.95 JUJU’s dividend next year is expected to be $5.50. It is
12.22
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 buy these shares? Multiple Ch $19,241.00
$7.00 The size of the firm
measured as the current stock price multiplied by the number of
market makers.
constant growth model. Investors sell stock at the: Multiple
quoted
ask price. Stock valuation model dynamics make clear that lower
high 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 receive from
$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? Multiple Choice
$47.25 Ralph Lauren (RL) has
earnings per share of $3.85 and a P/E ratio of 17.37. What is the
$4.51
Many companies grow very fast at first, but slower future growth
blue chip companies.
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this might happen after 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
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
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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
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
−8 percent Which of these is a measure
summarizing the overall past performance of an investment?
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 percent and 15
Idol Staff, Rail Haul, Poker-R-
Rail Haul, Poker-R- Poker-R-Us, Idol Staff,
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
deviation of 30 percent. The average return and standard deviation
of WholeMart are 12 percent and 25 percent; and of Fruit Fly are

WholeMart, Fruit
WholeMart, Night Ryder, Fruit 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 22.67
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
$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 of the following statements is
The stock investment has a better
risk-return trade- The bond investment has a better risk-
return trade- Both investments have the same diversifiable
The two assets have the same coefficient of variation.
Which of these is the portion of total risk that is attributable to
Firm
Modern portfolio risk Which of
these is the term for portfolios with the highest return possible for
Efficient
Total portfolios Modern
portfolio theory is: Multiple Choice a concept and procedure for
a concept
and procedure for combining securities into a portfolio to maximize

a concept and procedure for combining securities
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? Multiple
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? Multiple
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
expected inflation premium? Multiple Choice Required
Risk- Risk
premium Which of the following is a model that includes an
equation that relates a stock’s required return to an appropriate
Efficient
markets 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
18.1 perc 24.3 percent Which of the following are the stocks of
small companies that are priced below $1 per share? Multiple
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
−69.07 percent
−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
14.14
4.14 percent Shares of
stock issued to employees that have limitations on when they can be
sold ar
privately held
information. Which of the following will directly impact the cost of
Profit margins
Which of these makes this a true statement? The WACC formula:
uses the after-tax costs of capital to compute
is not
focuses on operating costs only to keep them
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 their firm’s cash flows as:
a simple average of the capital components
they apply to
each asset as they are purchased with their respective forms of debt
or equity. a weighted average of the capital components costs
To

estimate the before-tax cost of debt, we use the coupon rate on the
To estimate the before-tax cost of debt, we
need to solve for the Yield to Call (YTC) on the firm’s existing debt.
To estimate the before-tax cost of debt, we need to solve for the
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
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-
10.32 percent; 7.02 percent
commissions to the
insignificant and can be
the difference between the bid-ask spread on
None of the options are correct.

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instructor. Don’t worry, this 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 willing to take. the
the one that offers the lowest
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,
8.45 percent Which of these is
the reward for taking systematic stock market risk? Multiple Choice
Market risk

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
This
This
This
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 growth rate, what is its expected return? Multiple Choice
3.00 p 3.48 percent
Which of the following will impact the cost of equity component in
The
risk-free rate The reason that we do not use an after-tax cost of
because most of the
because preferred dividends are paid out of before-
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
14.20 pe 18.50
15.50 percent Which of the following is a
principle of capital budgeting which states that the calculations of
cash flows should remain independent of financing? Multiple Choice
Separation pri Generally
WACC principle
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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
Night
WholeMart, Night Ryder,
Fruit Fly,
Night Ryder, WholeMart Which of these is the dollar return
Dollar return
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 Rx,
what was your p
1.67 percent Which of these
includes any capital gain (or loss) that occurred as well as any
income that you received from a specific investment? Multiple

Av
Market return Which of the following is defined as the
volatility of an investment, which includes firm specific risk as well
Market risk Which of
these is a measure summarizing the overall past performance of an
Average return
Market return Which of these statements
When people purchase a stock, they
When people purchase a stock, they do not know what their return
is going to be- Many people
purchase stocks as they find comfort in the certainty for this safe
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 TechNo, what was your percent return?
6.5
The larger the
standard deviation, the lower the total ri The larger the
The standard
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 your percent return?
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? Multiple Choice $2,960;
−$3,960; −15
−$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 percent return? Multiple
$4,110;
$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 deviation of 15
percent. The average return and standard deviation of Idol Staff are
15 percent and 25 percent; and of Poker-R-Us are 12 percent and 35
Idol Staff, Poker-R-
Poker-R-Us, Idol 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,
Both investments have the same diversifiable risk. The stock
investment has a better risk-return trade- 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
The two assets
Both investments have the
The stock investment has a better risk-

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