Question 5 (1 point)

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Which of the following is a weakness of the NPV method of capital budgeting?

Question 5 options:

	It ignores depreciation.
	It ignores the time value of money.
	It does not provide the investor with the actual return on the project.
	All of the above

Question 6 (1 point)

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Brokers are share market participants who:

Question 6 options:

	have access to the ASX
	facilitate trading for investors only
	may not trade on their own account
	do not match any of the above description

Question 7 (1 point)

The participants in the Australian Equities Market are:

Question 7 options:

	Brokers
	Institutional Investors
	Individual Investors
	All of the above

Question 8 (1 point)

An operating lease is:

Question 8 options:

	non-cancellable
	has a definite duration
	is more expensive in general
	none of the above

Question 9 (1 point)

Laffitoff Ltd issues bonus shares to its existing share holders at no cost to the investors. This is an example of:

Question 9 options:

	a dividend decision
	a financing decision
	an investment decision
	indecision

The cost of debt is estimated by:

Question 10 options:

	implying the rate that makes the price of debt equal to the value of its cash flows.
	assuming a risk premium which is added to the risk free rate.
	dividing net interest by total debt.
	none of the above

Question 11 (1 point)

Which of these answers describes the cost of debt?

Question 11 options:

	One of the components of the firms cost of capital
	The required rate to induce investors to hold the firms debt
	The discount rate that equates the series of cash inflows (interest and principal) with the current bond price
	All of the above

Question 12 (1 point)

Rushdare Ltd pays $4 million to repurchase 2% of the shares held by its existing shareholders. This is an example of:

Question 12 options:

	an investment decision
	a dividend decision
	a financing decision
	none of the above

Question 13 (1 point)

QuickThink Ltd announces a share purchase plan to its existing shareholders. This is a classic example of:

Question 13 options:

	an investment decision
	a financing decision
	a dividend decision
	indecision

Question 14 (1 point)

What is the effective rate of an investment that pays 10% per annum?

Question 14 options:

	10.68%
	10.55%
	10.00%
	None of the above

Question 15 (1 point)

Which of the following is the best definition of a sunk cost?

Question 15 options:

	Expenditure incurred that is vital to an ongoing project.
	Expenditure incurred in the process of researching a project before a decision is made.
	Expenditure incurred by a mining company.
	None of the above

Question 16 (1 point)

The advantage of an Accumulation Index is:

Question 16 options:

	it includes only dividend income accumulated during the year
	it gives a better measure of shareholder wealth
	it gives a better indication of the lag in shareholder wealth
	all of the above

Question 17 (1 point)

If a Bond is bought by an investor at a yield of 6.50% and sold on the same day at a yield of 5.50% the investor will:

Question 17 options:

	make a loss
	make a profit
	break even
	be unable to determine the outcome

Question 18 (1 point)

What is the total value of all shares on issue in the marketplace for a firm referred to as?

Question 18 options:

	Owners Equity
	Net Assets
	Market Capitalisation
	Rate of Return

Question 19 (1 point)

The investment decision relates to the manner in which:

Question 19 options:

	Funds raised in money markets are employed in productive activities
	Funds raised in bond markets are employed in productive activities
	Funds raised in capital markets are employed in productive activities
	None of the above are applicable

Question 20 (1 point)

A financial asset is:

Question 20 options:

	A claim to a series of all cash flows
	A claim to a series of future cash flows
	A claim to a series of past cash flows
	All of the above

Question 21 (1 point)

Dividend Reinvestment Plans give shareholders the option of:

Question 21 options:

	having dividends replaced by new shares
	increasing their risk for an even greater return
	purchasing new shares at a nominal transaction cost
	none of the above

Question 22 (1 point)

Using the NPV decision rule, a project will not be accepted if the outcome is that:

Question 22 options:

	The NPV is equal to zero
	The NPV is greater than zero
	The NPV is greater than or equal to zero
	None of the above

Question 23 (1 point)

Placements are issue of new shares to:

Question 23 options:

	Institutional Investors
	Fund Managers
	Superannuation Funds
	All of the above

Question 24 (1 point)

Which of the following is a Real Asset?

Question 24 options:

	Debt
	Equity
	Debt and Equity
	None of the above

Question 25 (1 point)

Hybrid capital is typically:

Question 25 options:

	a low cost funding alternative
	subordinated to equity
	dilutes ownership of a company
	none of the above

Question 26 (1 point)

A global minimum variance portfolio is the portfolio with:

Question 26 options:

	the lowest level of risk
	the lowest level of return
	the lowest level of risk and return
	none of the above

Question 27 (1 point)

What are the three main decisions corporate managers must make to realise the corporate objective?

Question 27 options:

	Wealth decision, financing decision, and dividend decision
	The size of their bonuses
	Investment decision, wealth decision, and dividend decision
	None of the above

Question 28 (1 point)

The capital market is a place where:

Question 28 options:

	individuals exchange future consumption for current consumption
	individuals exchange current consumption for future consumption
	individuals exchange past consumption for future consumption
	individuals exchange future consumption for past consumption

Question 29 (1 point)

Beta is a measure of:

Question 29 options:

	symmetrical risk
	systematic risk
	non-systematic risk
	none of the above

Question 30 (1 point)

The beta value of company ZAB Ltd's share is 1.05. This means that the share price is:

Question 30 options:

	more volatile than the market
	less volatile than the market
	as volatile as the market
	not impacted by the market