Please explainwhy the answer is correct.

1.Which of the following statement is most correct?

Preferred dividends paid are tax deductible.

Interest expense is not tax deductible.

Common dividends paid are not tax deductible.

None of the statements above is correct.

Correct Answers: Common dividends paid are not tax deductible.

2.When evaluating two independent investments, the NPV approach is a reliable capital budgeting technique without any potential problems.

True

False

Correct Answer: True

3.Which of the following statements about portfolio is true?

The expected return of a portfolio is the weighted average of the expected returns of all individual stocks in the portfolio.

Portfolio is the weighted average of the standard deviations of all individual stocks in the portfolio.

Portfolio beta is the weighted average of the beta values of all individual stocks in the portfolio.

Both A and C are correct.

Correct Answer: Portfolio beta is the weighted average of the beta values of all individual stocks in the portfolio.

4.For a non-constant dividend growth stock, the capital gain yield of the stock is not equal to the dividend growth rate g during the super-normal growth period.

True

False

Correct Answer: False