Instructions: This section contains Twenty $(20)$ multiple$-$choice questions each worth one

$(1)$ mark.

The real risk$-$free rate is $4\mathrm{.}1\%,$ and inflation is expected to be $7\%$ next year and $8\%$ for year $2.$

What is the yield for a $2-$year treasury security if the maturity risk premium is $0\%$ in year $1,$

$0\mathrm{.}6\%$ in year $2$ and increases by $0\mathrm{.}6\%$ per year thereafter?

a$.10\mathrm{.}5\%$

b$.12\mathrm{.}2\%$

c$.11\mathrm{.}7\%$

d$.13\mathrm{.}4\%$

Blisters Plc$.$ has a total debt to assets ratio of $70\%.$ Its total assets are $$800,000.$ If Blisters

has long term debt of $$360,000$ what is the current debt of the firm?

a$.$ $$230,000$

b$.$ $$190,000$

c$.$ $$200,000$

d$.$ $$220,000$

A disadvantage of the corporate form of organization is that corporations are generally more

regulated and more expensive to form than proprietorships and partnerships.

a$.$ True

b$.$ False

Rarrs Ltd$.$ operates with a receivables turnover ratio of $9.$ If its annual sales are

$$4,500,000,$ what is the accounts receivable balance?

a$.$ $$3,500,000$

b$.$ $$4,500,000$

c$.$ $$2,000,000$

d$.$ $$500,000$