Question
1) An analyst determines that IBMs intrinsic value is $190. The market price of IBMs stock is $204.25. a. the stock is underpriced b. the
1) An analyst determines that IBMs intrinsic value is $190. The market price of IBMs stock is $204.25.
a. the stock is underpriced
b. the stock is efficiently priced
c. the stock is overpriced
d. the stock is in equilibrium
2)Ratios that attempt to measure a companys stock market performance are
a. asset management ratios
b. debt management ratios
c. liquidity ratios
d. market value ratios
3)A ten-year ordinary annuity has a present value of $4,225. Given an interest rate of 5%, what would be its present value as an annuity due?
a. $2,113
b. $4,024
c. $4,436
d. $4,563
4) When a company issues common stock to the public, the company usually uses what type of financial institution?
a. limited liability corporation
b. investment bank
c. initial public offering
d. hedge fund
5) Which of the following statements is false?
a. The three elements of financial decision making are money, time, and risk.
b. Finance is the study of investing.
c. The goal of the firm is to maximize a companys profits.
d. An efficient market is a market in which securities market prices equal their intrinsic values
6)Which of the following has a higher present value (assuming a positive interest rate)?
a. an immediate payment of $10,000
b. a $10,000, ten year ordinary annuity
c. a payment of $10,000 in exactly ten years from now
d. a $10,000, ten year annuity due
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