1 multiple choice and 5 true false

18. Miko says, "If I loan my friend $20, I won't be able to spend that $20 on myself." Miko is describing the a. nominal rate of interest. b. real rate of interest. c. inflationary rate. d. default risk premium. e expected rate of inflation, 5. When a company calculates the net present value of a project using the rate of return of alternative investments, the final result is a measure of economic profit. Ans 6. Opportunity cost refers to the rate of return that could be earned by investing in an alternative project. Ans: 7. Typically, most of a firm's assets are financed with debt. Ans: 8. The capital gain on a share of common stock is the current market price minus the par value. Ans: 9. When an investment bank underwrites a stock issue, they will have two sources of income: the markup on the sale and their professional fees. Ans: 10. Over time, companies tend to pay about the same amount of dividends regardless of performance, unless there is catastrophic performance. Ans