A) Which of the following is the overarching principle that a financial manager should follow when making decisions A) Decisions should generate the greatest benefits for the firm B) Decisions should provide benefit to the firm without incurring costs C) Decisions should be on behalf of the firm's owners that give the greatest benefit to those owners, the firm's employees and the firm's other stakeholders D) Decisions should increase the value of the firm to its investors B) What is a competitive market A) A market in which goods have a different ask price and bid price B) A market in which a good can be bought and sold at the same price C) A market in which a good is sold at a lower price than that for which it can be bought D) A market in which a good is bought for a lower price than that for which it can be sold C) As an oil refiner, you are able to produce $65 worth of unleaded gasoline from one barrel of Alaska North Slope (ANS) crude oil Because of its lower sulfur content, you can produce $62 worth of unleaded gasoline from one barrel of West Texas Intermediate (WTI) crude Another oil refiner is offering to trade you 11000 bbl of Alaska North Slope (ANS) crude oil for 10500 bbl of West Texas Intermediate (WTI) crude oil Assuming you currently have 10500 bbl of WTI crude, the added benefit (cost) to you if you take the trade is closest to Note Express your answers in strictly numerical terms For example, if the answer is $500, write enter 500 as an answer D) You own 800 shares of Newstar Financial stock, currently trading for 70 per share You are offered a deal where you can exchange these stocks for 700 shares of Amback Financial Group stock, currently trading at $90 per share What is the value of this trade, if you choose to make it Note Express your answers in strictly numerical terms For example, if the answer is $500, write enter 500 as an answer E) Which of the following best explains why you cannot use the price of rolled oats at a local supermarket as the competitive market value of rolled oats A) You can buy the oats at the price posted by the store, but the store will not buy oats from you for the same price B) The posted prices of oats can vary widely between grocery stores, even within the same local area C) Grocery stores mark up the prices of their oats up to make a profit D) Grocery stores typically sell oats in different packaging, which results in different prices within the same store F) If equivalent investment opportunities trade simultaneously in different competitive markets, then they must trade for the same price in both markets What do we call the above statement A)The Net Present Value rule B)The Law of One Price C)The Valuation Principle D)The Time Value of Money G) You are scheduled to receive $10,000 in one year What will be the effect of an increase in the interest rate on the present value of this cash flow A) It will cause the present value to fall B) It will cause the present value to rise C) It will have no effect on the present value D) The effect cannot be determined with the information provided H) If the interest rate is 15 , the 1 year discount factor is equal to Note Express your answers in strictly numerical terms For example, if the answer is 5 , enter 0 05 as an answer I) If the interest rate is 5 , the 10 year discount factor is equal to Note Express your answers in strictly numerical terms For example, if the answer is 5 , enter 0 05 as an answer J) If the 1 year discount factor is 0 89, the interest rate must be equal to Note Express your answers in strictly numerical terms For example, if the answer is 5 , enter 0 05 as an answer K) If the 5 year discount factor is 0 86, the interest rate must be equal to Note Express your answers in strictly numerical terms For example, if the answer is 5 , enter 0 05 as an answer L) What is the present value (PV) of $100000 received 7 years from now, assuming the interest rate is 9 per year Note Express your answers in strictly numerical terms For example, if the answer is $500, write enter 500 as an answer

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 18, 2024

A) Which of the following is the overarching principle that a financial manager should follow when making decisions? A) Decisions should generate the greatest benefits

A) Which of the following is the overarching principle that a financial manager should follow when making decisions?

		A) Decisions should generate the greatest benefits for the firm.
		B) Decisions should provide benefit to the firm without incurring costs.
		C) "Decisions should be on behalf of the firm's owners that give the greatest benefit to those owners, the firm's employees and the firm's other stakeholders. "
		D) Decisions should increase the value of the firm to its investors.

B) What is a competitive market?

		A) A market in which goods have a different ask price and bid price.
		B) A market in which a good can be bought and sold at the same price.
		C) A market in which a good is sold at a lower price than that for which it can be bought.
		D) A market in which a good is bought for a lower price than that for which it can be sold.

C) As an oil refiner, you are able to produce $65 worth of unleaded gasoline from one barrel of Alaska North Slope (ANS) crude oil. Because of its lower sulfur content, you can produce $62 worth of unleaded gasoline from one barrel of West Texas Intermediate (WTI) crude. Another oil refiner is offering to trade you 11000 bbl of Alaska North Slope (ANS) crude oil for 10500 bbl of West Texas Intermediate (WTI) crude oil. Assuming you currently have 10500 bbl of WTI crude, the added benefit (cost) to you if you take the trade is closest to ________.Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."

D) You own 800 shares of Newstar Financial stock, currently trading for 70 per share. You are offered a deal where you can exchange these stocks for 700 shares of Amback Financial Group stock, currently trading at $90 per share. What is the value of this trade, if you choose to make it?Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."

E) Which of the following best explains why you cannot use the price of rolled oats at a local supermarket as the competitive market value of rolled oats?

		A) "You can buy the oats at the price posted by the store, but the store will not buy oats from you for the same price. "
		B) "The posted prices of oats can vary widely between grocery stores, even within the same local area. "
		C) Grocery stores mark up the prices of their oats up to make a profit.
		D) "Grocery stores typically sell oats in different packaging, which results in different prices within the same store."

F) If equivalent investment opportunities trade simultaneously in different competitive markets, then they must trade for the same price in both markets. What do we call the above statement?

A)The Net Present Value rule.

B)The Law of One Price.

C)The Valuation Principle.

D)The Time Value of Money.

G) "You are scheduled to receive $10,000 in one year. What will be the effect of an increase in the interest rate on the present value of this cash flow?"

		A) It will cause the present value to fall.
		B) It will cause the present value to rise.
		C) It will have no effect on the present value.
		D) The effect cannot be determined with the information provided.

H) "If the interest rate is 15%, the 1-year discount factor is equal to ________.Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer."

I) "If the interest rate is 5%, the 10-year discount factor is equal to ________.Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer."

J) "If the 1-year discount factor is 0.89, the interest rate must be equal to ________.Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer."

K) "If the 5-year discount factor is 0.86, the interest rate must be equal to ________.Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer."

L) "What is the present value (PV) of $100000 received 7 years from now, assuming the interest rate is 9% per year?Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."