q1 The periodic cash-flows from an investment in shares are called:

Select one:

a. Coupons

b. Interest

c. Capital gains

d. Dividends

q2 What will be the payback period on a project that has the following net cash-flows and where the overall required rate of return of the company is 6% p.a.:

T₀ -$500m

T₁ $150m

T₂ $250m

T₃ $50m

T₄ $150m

T₅ $300m

Select one:

a. 3 years and 4 months

b. 3 years and 6 months

c. 3 years and 9 months

d. 4 years

q3 Which of the following is not a stage in the capital budgeting process?

Select one:

a. Forecasting the cash-flows associated with the project

b. Application of an investment evaluation technique to the cash-flows of the project to determine acceptability

c. Choosing to accept or reject the project

d. Determining the mix of debt and equity to be used to finance the project

q4 In the dividend valuation model the value of a share is given by the present value of which cash flows?

Select one:

a. The last dividend and future dividends

b. The current dividend and future dividends

c. Future dividends

d. The most recent dividend and future dividends

q5A downward sloping yield curve generally indicates:

Select one:

a. An expansion in economic activity in the future

b. A rise in interest rates in the future

c. Unemployment will fall in the future

d. A contraction in economic activity in the future