Quizzes

Question 1

Mezzanine Debt

Answer 1

Frequently used for acquisitions and buyouts

Question 2

Venture Capital

Answer 2

Equity investing

Question 3

Private Equity

Answer 3

Combination of equity and debt investing, more strategic

Question 4

T/F - Compounding refers to the earning of interest on interest

Answer 4

True

Question 5

T/F - If a person buys a stock for $10 and sells it after 10 years for $20, the annual compound return is 10%

Answer 5

False

Question 6

The Future Value of a dollar
increases with lower interest rates
increases with higher interest rates
increases with longer periods of time
decreases with longer periods of time

Answer 6

increases with higher interest rates

increases with longer periods of time

Question 7

Discounting is…

Answer 7

The determination of future value and expressing the future in the present

Question 8

SAAS

Answer 8

Software as a service

Question 9

The time value of money suggests

Answer 9

individuals prefer a dollar in the present to a dollar in the future

Question 10

If interest rates rise

Answer 10

the present value of an annuity falls

Question 11

Which of the following is the largest if the interest rate is 12 percent annually?

1. $100 compounded for three years
2. $100 annuity compounded for three years
3. the present value of $100 received after three years

Answer 11

$100 annuity compounded for three years

Question 12

Which is smallest if the interest rate is 10%?

a. present value of $100 annuity for five years
b. future value of $100 annuity for five years
c. present value of $100 after five years d. $100 received right now

Answer 12

Present value of $100 after five years

Question 13

T/F - The present value of an annuity is worth more if interest rates are 5% instead of 10%.

Answer 13

True

Question 14

T/F - Realized returns frequently differ from expected returns.

Answer 14

True

Question 15

t/f - Unsystematic risk is the tendency for stock prices to move together.

Answer 15

False

Question 16

t/f - Systematic risk is reduced through portfolio diversification.

Answer 16

False

Question 17

t/f - The return on a portfolio considers both the individual asset’s return and its weight in the portfolio.

Answer 17

True

Question 18

t/f - Cross section analysis refers to comparing a firm to other firms in its industry.

Answer 18

True

Question 19

t/f - The more rapidly receivables turn over, the more funds the firm has tied up in accounts receivable.

Answer 19

False

Question 20

t/f - The return on equity represents what the firm is earning on stockholders’ investment in the firm.

Answer 20

True

Question 21

t/f - Leverage ratios indicate the extent to which the firm uses debt financing.

Answer 21

True

Question 22

t/f - The higher the ratio of debt to total assets, the smaller is the use of financial leverage.

Answer 22

False

Question 23

t/f - The use of financial leverage may permit the firm to increase the return on equity.

Answer 23

True

Question 24

Performance is measured by

Answer 24

Profitability Ratios

Question 25

Leverage ratios measure

Answer 25

extent to which the firm uses debt financing