Question
A construction company is preparing a capital budget and considering four long-term investments . The profitability index of each project is as follows Project A:
A construction company is preparing a capital budget and considering four long-term investments
. The profitability index of each project is as follows
Project A: 0.34
Project B: 1.12
Project C: 1.26
Project D: 0.93
In theory, which two projects should the company pursue?
a) Projects B and C
b) Projects B and D
c) Projects A and D
d) Projects A and C
Which of the following is true of venture capital?
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a) Venture capital is comparable to a bank loan, which must be repaid over time.
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b) Venture capitalists reserve the right to sell their portion of company shares before an IPO.
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c) average, venture capital investors seek a return on their investment in about five years.
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d) One way venture capitalists evaluate potential investments is by analyzing a company's share price.
Place the following steps for developing a credit policy in the correct order of process:
- A: The company hopes that few customers will miss payments, so it decides to take no action to collect bad debts.
- B: The company decides that payments must be made within 45 days.
- C: The company decides that it's willing to lose sales in exchange for less bad debt risk.
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a) C, A, B
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b) B, A, C
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c) B, C, A
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d) C, B, A
Which of the following describes the securities underwriting process?
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a) An investment bank helps to connect a private company with sources of capital.
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b) An investment bank determines if a company can afford to go public.
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c) An investment bank responsible for market liquidity quotes a bid price and an ask price for a security.
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d) A company sells its securities to an investment bank, who then sells the securities to market participants.
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