17)

Ford Motor Company had realized returns of

15%,

30%,

15%,

and

30%

over four quarters. What is the quarterly standard deviation of returns for Ford?

A.

24.65%

B.

30.12%

C.

27.39%

D.

32.86%

18)

Which of the following is NOT a limitation of the payback rule?

A.

It is difficult to calculate.

B.

It does not consider cash flows occurring after the payback period.

C.

Lacks a decision criterion that is economically based.

D.

It does not consider the time value of money.

19)

Credenza Industries is expected to pay a dividend of

$1.75

at the end of the coming year. It is expected to sell for

$62

at the end of the year. If its equity cost of capital is

10%,

what is the expected capital gain from the sale of this stock at the end of the coming year?

A.

$57.95

B.

$56.36

C.

$4.05

D. $5.64

20)

A stationery company plans to launch a new type of indelible ink pen. Advertising for the new product will be heavy and will cost the company

$9

million, although the company expects general revenues of $280 million next year from sources other than sales of the new pen. If the company has a corporate tax-rate of

40%

on its pretax income, what effect will the advertising for the new pen have on its taxes?

A.Increase taxes by

$3.60

million

B.Increase taxes by

$9

million

C.

It will have no effect on taxes.

D.Reduce taxes by

$3.60

million