A call can never be worth more than nor worth less than Question 17: (1 Point) The exercise price; the stock price. The stock price; the exercise price. Its issue value; the exercise price. The stock price; zero Zero; the stock price Which one of the following statements is correct? Question 18: (1 Point) The future value of a sum increases as the period of time increases, all else constant. The future value of $100 invested at 4% simple interest increases at a constant rate as the period of time increases. There is an inverse relationship between the future value of a lump sum investment and the length of the investment period. The future value of $100 invested at 4%, compounded annually, decreases over time in a logarithmic manner. Because time is the exponent in the present value formula, the length of an investment period has minimal effect on the present value of the investment. Question 19: Which of the following statements about bonds is correct? (1 Point) Any regular coupon bond of any maturity will sell for its face value if the coupon rate is greater than the market rate of interest All else equal, the market value of a corporate bond is always inversely related to its coupon rate. The yield to maturity will be greater than the coupon rate when a bond is selling at a discount. The repayment of the bond principle is tax-deductible. All of the above statements are correct. Question 20: Ben and Jerry are each investing $100,000 today in a savings account. Ben will earn 6% interest compounded annually. Jerry will earn 6% simple interest. After fifteen years Ben will have more than Jerry. (1 Point) $49,656 $100,714 $136,636 $149,656 None of the above is correct. Question 14: (1 Point) Which of the following statements is true? I. The interest rate charged per period multiplied by the number of periods per year is called the effective annual rate. II. You have just won a lottery prize. You can choose to receive a lump sum payment of $750,000 today or an annual payment of $50,000 at the end of each of the next 20 years. The interest rate that makes you indifferent between the two is 2.91%, and at higher rates you should take the lump sum. ill. You hold a winning ticket from your provincial lottery. It entitles the bearer to receive payments of $50,000 at the end of each of the next 20 years. Given what you know about the time value of money, you should be able to sell this ticket for less than $1 million in the open market. I only. Il only III only. I and Ill only. O II and III only. Question 15: Which one of the following statements concerning net working capital is correct? (1 Point) Net working capital includes accounts from the statement of comprehensive income. Net working capital includes cash, accounts receivables, inventory, and accounts payable. Net working capital is negative when current assets exceed current liabilities. The change in net working capital is equal to the beginning net working capital minus the ending net working capital. Net fixed assets is a part of net working capital. Question 16: (1 Point) Tom's Coffee has a price earnings ratio of 17. First Mug has a price-earnings ratio of 14. You know with certainty that Tom's Coffee stock: Earns a greater profit per share than does one share of First Mug stock. Represents a larger percentage of firm ownership than does one share of First Mug. Sells at a lower price per share than one share of First Mug. Has a higher market price per dollar of earnings than one share of First Mug. Has a higher price than one share of stock in First Mug. A call can never be worth more than nor worth less than Question 17: (1 Point) The exercise price; the stock price. The stock price; the exercise price. Its issue value; the exercise price. The stock price; zero Zero; the stock price Which one of the following statements is correct? Question 18: (1 Point) The future value of a sum increases as the period of time increases, all else constant. The future value of $100 invested at 4% simple interest increases at a constant rate as the period of time increases. There is an inverse relationship between the future value of a lump sum investment and the length of the investment period. The future value of $100 invested at 4%, compounded annually, decreases over time in a logarithmic manner. Because time is the exponent in the present value formula, the length of an investment period has minimal effect on the present value of the investment. Question 19: Which of the following statements about bonds is correct? (1 Point) Any regular coupon bond of any maturity will sell for its face value if the coupon rate is greater than the market rate of interest All else equal, the market value of a corporate bond is always inversely related to its coupon rate. The yield to maturity will be greater than the coupon rate when a bond is selling at a discount. The repayment of the bond principle is tax-deductible. All of the above statements are correct. Question 20: Ben and Jerry are each investing $100,000 today in a savings account. Ben will earn 6% interest compounded annually. Jerry will earn 6% simple interest. After fifteen years Ben will have more than Jerry. (1 Point) $49,656 $100,714 $136,636 $149,656 None of the above is correct. Question 14: (1 Point) Which of the following statements is true? I. The interest rate charged per period multiplied by the number of periods per year is called the effective annual rate. II. You have just won a lottery prize. You can choose to receive a lump sum payment of $750,000 today or an annual payment of $50,000 at the end of each of the next 20 years. The interest rate that makes you indifferent between the two is 2.91%, and at higher rates you should take the lump sum. ill. You hold a winning ticket from your provincial lottery. It entitles the bearer to receive payments of $50,000 at the end of each of the next 20 years. Given what you know about the time value of money, you should be able to sell this ticket for less than $1 million in the open market. I only. Il only III only. I and Ill only. O II and III only. Question 15: Which one of the following statements concerning net working capital is correct? (1 Point) Net working capital includes accounts from the statement of comprehensive income. Net working capital includes cash, accounts receivables, inventory, and accounts payable. Net working capital is negative when current assets exceed current liabilities. The change in net working capital is equal to the beginning net working capital minus the ending net working capital. Net fixed assets is a part of net working capital. Question 16: (1 Point) Tom's Coffee has a price earnings ratio of 17. First Mug has a price-earnings ratio of 14. You know with certainty that Tom's Coffee stock: Earns a greater profit per share than does one share of First Mug stock. Represents a larger percentage of firm ownership than does one share of First Mug. Sells at a lower price per share than one share of First Mug. Has a higher market price per dollar of earnings than one share of First Mug. Has a higher price than one share of stock in First Mug