If a project's expected rate of return exceeds its opportunity cost of capital, one would expect: a. the profitability index to be negative. b. the opportunity cost of capital to be too low. c. the project to have a positive NPV. d. the NPV to be zero.

During a recovery phase (recovery from recession), Federal Reserve bank lowers the interest rate. How does this fact affect the price of a firms stock? a. Price goes up b. Price goes down c. Price remains unchanged d. Not enough information to conclude

Stock A has a P/E ratio of $5 while stock B has a P/E ratio of $8. If everything else is the same, which stock should you buy? a. Stock A b. Stock B c. Both are equally profitable investment d. Not enough information to conclude