Q.1 Say whether these sentences are TURE (T) or FALSE (F): 10 marks ( 1. Shareholder wealth maximization would imply maximizing the price of common stock. (2. A ratio by itself may have no meaning unless compared with any other ratio. () 3. In compound interest calculation, interest is earned on principal and interest earned over time. ( ) 4. Returns from investing in a savings account in a bank are riskier than returns on common stock. ( 5. A bond issued by an American corporation in Qatar in USD is an example of Eurobonds. ( ) 6. Preferred stock is referred to as a hybrid security because it has characteristics of common stocks and bonds 07. Sources of capital include: Debt, Preferred stock, Retained earnings and Common Stock 08. Preferred stock is less risky than common stock, but more risky than debt. 09. Financial ratios are useful for evaluating financial performance and make projections and comparison. O) 10. Theoretically, accounting information is the best data to guide financial decision-making. ( ) 11. A financial manager must evaluate each investment project taking into consideration taxes and cost of capital o 12. Convertible bonds decrease in value whenever the price of the company's stock increases 13. A rational investor will always prefer an investment with a lower standard deviation of returns. ( ) 14. Historically in USA, investments with the highest returns have the lowest standard deviation ( 15. The expected yield on junk bonds is lower than the yield on double A rated-bonds 0 16. A company's cost of capital is the same as the opportunity cost of capital. 17. At an annual interest rate of 9o, an initial sum of money will double approximately every 80 vears. 18. Variation in the rate of return of an investment is a measure of the riskiness of that investment ( ) 19. Two approaches that allow for the retirement of preferred stock are call provisions and sinking fund prov1510ns () 20. Tim has $100 in a bank account paying 2o interest per year. At the end of 5 years. Tim's bank account balance will be $110 if interest is not compounded, but will be more than $110 if interest is compounded