Q1- Of the following terms, which is generally associated with both common stock and preferred stock? Multiple Choice Voting rights. Cumulative voting. Dividend yield. Arrearage. Proxy.

Q2- A key difference between stocks and bonds is that ___________________.

Multiple Choice

• Stocks, unlike bonds, give owners legal claims to payments.

• Stocks, unlike bonds, are major sources of funds.

• Stocks, unlike bonds, represent residual ownership.

• Bonds, unlike stocks, represent voting ownership.

• Bonds pay dividends.

• Q3- The crossover point on a graph helps to explain:

• Multiple Choice

• How the profitability index and the net present value are related.

• Why one project is always superior to another project.

• Next

• How decisions concerning mutually exclusive projects are derived.

• How the duration of a project affects the decision as to which project to accept.

• How the net present value and the initial cash outflow of a project are related.

• Q4-

  The principle that an investment should be rejected if the difference between the investment's cost and its market value is negative and accepted if the difference is positive is the:

  Multiple Choice

• Net present value rule.

• Discounted payback rule.

• Profitability index rule.

• Average accounting return rule.

• Internal rate of return rule.

• Q5-

  Assume you are tyring to determine whether to accept Project I or Project II and that these projects are mutually exclusive. In your analysis, you should calculate the crossover point by determining:

  Multiple Choice

• The internal rate of return for the differences in the cash flows of the two projects.

• The internal rate of return for the cash flows of each project.

• The net present value of each project using the internal rate of return as the discount rate.

• The discount rate that equates the discounted payback periods for each project.

• The discount rate that makes the net present value of each project equal to 1.