Question 21

A firm has a tax rate of 35%, an unlevered rate of return of 14%, total debt of $1,000, and an EBIT of $370.00. What is the unlevered value of the firm?

Select one:

a. $1,718

b. $1,532

c. $1,346

d. $393

e. $27

Question 22

Your portfolio consists of two stocks. You have $2500 in stock A and $7500 in stock B. The returns for stock A have a standard deviation of 20% and the returns for stock B have a standard deviation of 10%. The correlation coefficient between A and B is 0.4. What is your portfolio standard deviation?

Select one:

a. 6.8%

b. 8.2%

c. 10.5%

d. 9.8%

e. 10.2%

Question 23

Bond ratings issued by DBRS specifically account for interest rate risk.

Select one:

True

False

Question 24

An income stock typically generates high capital gains

Select one:

True

False

Question 25

A new project will cause accounts payable to increase by $70,000, accounts receivable to increase by $80,000 and inventory to decrease by $10,000. Which one of the following statements is true?

Select one:

a. The project will decrease the amount of cash provided to customers.

b. Net working capital will decrease.

c. The change in inventory is a use of cash.

d. The project will not affect net working capital.

e. The change in accounts payable is a use of cash.