If the expected annual return is 5.8%, how long will it take to double

2-Which of the following statements are most
correct?_____

A. Preferred
dividends paid are not tax deductible.
B. Interest
expense payments are not tax deductible.
C. Common
dividends paid are tax deductible.
D. None of the statements above is
correct.

4-If the expected annual return is 5.8%, how
long will it take to double our money? _______

A. 9.5 years
B. 10.8
years
C. 11.6
years
D. 12.3
years

5-Which of the following statements about
portfolio is true? ______

A. The expected return of a portfolio is
NOT the weighted average of the expected returns of all individual stocks in
the portfolio.
B. The
standard deviation of a portfolio is NOT the weighted average of the standard
deviations of all individual stocks in the portfolio.

C. Portfolio
beta is NOT the weighted average of the beta values of all individual stocks in
the portfolio.

8-Project selection ambiguity can arise if you
rely on the internal rate of return (IRR) instead of the net present value
(NPV) when

A. A
projects cash flows are normal.
B. There
are multiple IRRs.
C. Projects are mutually exclusive.
D. Both
B and C are correct

12- Any change in beta is likely to affect the
required rate of return on a stock, which implies that a change in beta will
likely have an impact on the stock’s price.______

False True

16- If an investor buys enough stocks, he or
she can, through diversification, eliminate all of the market risk inherent in
owning stocks, but as a general rule it will not be possible to eliminate all
company-specific risk. ______

A. True.

B. False

20-Which of the following statements about
sinking fund is true? ______

A. Sinking
funds are designed to protect bondholders, so it never hurts the bondholders in
any situations.

B. A
company would use sinking fund for open market purchase of bond if the interest
rate is greater than its coupon rate.
C. A company would prefer to use sinking
fund to call bond if bond sells at a discount.

26-Under what forms of Efficient Market
Hypothesis, investors can NOT profit via inside information? ______

A. Weak-form
Efficient Market Hypothesis
B. Semi-strong
form Efficient Market Hypothesis
C. Strong-form
Efficient Market Hypothesis
D. All of the above.

33-A store is offering a diamond ring for sale
for 36 months at $125 per month. The retail price of the ring is $3,900. What
is the interest rate on this offer?

A. 9.54%
B. 14.90%

C. 10.33%
D. 11.62%

34-You want to receive $5,000 per month in
retirement. If you can earn 0.5% per month and you expect to need the income
for 25 years, how much do you need to have in your account at retirement?

A. $776,034
B. $823,798
C. $986,453
D. $998,204

39- An investor is forming a portfolio by
investing $59,282 in stock A which has a beta of 1.50, and $39,156 in stock B
which has a beta of 1.50. The return on the market is equal to 8% and treasure
bonds have a yield of 3% (rRF). What¡¯s the portfolio beta? ______

A. 1.50
B. 3.00
C. 1.40

D. 1.80

46- A firm is considering a new inventory
system that will cost $120,000. The system is expected to generate positive
cash flows over the next four years in the amounts of $35,000 in year 1,
$55,000 in year 2, $65,000 in year 3, and $40,000 in year 4. The firm¡¯s
required rate of return is 9%. What is the internal rate of return (IRR) of
this project?

A. 14.03%
B. 17.56%
C. 19.26%
D. 21.78%

47- A firm is considering a new inventory system
that will cost $120,000. The system is expected to generate positive cash flows
over the next four years in the amounts of $35,000 in year 1, $55,000 in year
2, $65,000 in year 3, and $40,000 in year 4. The firm¡¯s required rate of
return is 9%. What is the profitability index (PI) of this project?

A. 0.87
B. 1.11

C. 1.31
D. 1.83.

48- A Corporation’s stock is selling for $40
in the market. The company’s beta is 0.8, the market risk premium (rM – rF) is
6%, and the risk-free rate is 9%. The most recent dividend paid is D0 = $2 and
dividends are expected to grow at a constant rate g. What’s the dividend growth
rate g for this stock? ______

A. 7.00%
B. 7.81%

C. 8.38%
D. 13.80%

49-Using the information from Question 48,
find the stock’s capital gain yield. ______

A. 6.00%

B. 6.19%
C. 7.81%
D. 8.38%

50- Using the information from Question 48 and
49, calculate the stock’s dividend yield. ______

A. 5.00%
B. 5.19%
C. 5.42%
D. 6.00%