QUESTION 24

1. What is the present value of $2,000 received in 14 years if you can earn a 6% rate of return on your investments?

   		$4521.81
   		$42,030.13
   		$18,589.97
   		$884.60

QUESTION 25

1. What is the present value of $4,000 received at the end of each year for five years if you can earn an 9% rate of return on your investments?

   		$6,154.50
   		$23,938.84
   		$15,558.61
   		$2,599.73

QUESTION 26

1. Systematic/external risks

   		are forces that affect all investment categories.
   		can be eliminated by investing in a variety of economic sectors.
   		are unique to certain types of investment.
   		result from random firm-specific events.

QUESTION 27

1. Two assets have a coefficient of correlation of -.4.

   		Combining these assets will have no effect on risk.
   		Combining these assets will reduce risk.
   		Combining these assets may either raise or lower risk.
   		Combining these assets will increase risk.

QUESTION 28

1. Rob owns 300 shares of Blackwood common stock valued at $9 a share. Blackwood has declared a 3-for-1 stock split effective tomorrow. After the split, Rob will own

   		100 shares valued at about $27 a share.
   		900 shares valued at about $3 a share.
   		900 shares valued at about $27 a share.
   		100 shares valued at about $3 a share.

QUESTION 29

1. When a corporation declares a stock split, it usually does so because

   		the firm's retained earnings are excessive.
   		it wants to make its stock more affordable to average investors.
   		investors sometimes require nontaxable returns.
   		there are too many shares of stock outstanding.