Which of the following risk types can be diversified away by adding stocks to a portfolio?

		Inflation risk
		Unique risk
		Interest rate risk
		Market risk

What are free cash flows (FCF) for a firm with ... EBITDA = 6,000, EBIT = 5,000, Net Income = 4,000, Taxes = 300, Depreciation = 1,000, this year's current assets = 4,000, this year's current liabilities = 1,000, last year's current assets = 5,000, last year's current liabilities = 2,000, and Dividends = 300, and Capital expenditures = 1,000.

Answer

		4,400
		4,700
		5,700
		none of the above

An investor buys a stock for $80, and one year later receives a $5 dividend and sells the stock for $79. What was the investor's return?

Answer

		2%
		4%
		5%
		8%

What is the WACC for a firm with 20% debt, 50% equity and 30% preferred equity? Assume its cost of debt is 11%, cost of equity is 20% and its cost of preferred equity is 15%. The tax rate is 35%.

Answer

		12.6%
		14.0%
		14.9%
		15.9%

Which of the following changes in working capital will result in an increase in cash flows?

Answer

		Increase in accounts payable
		Increase in inventories
		Increase in accounts receivable
		Decrease in other current liabilities

How much would you need to save every year starting next year for you to have $10,000,000 in your retirement account in 20 years. Assume all interest is reinvested and the rate on the account is 12%.

Answer

		$135,665
		$138,074
		$138,787
		$145,109

What is the present value of a 5 period annuity of $3,000 if the interest rate is 12% and the first payment is in one period?

Answer

		9,112
		10,814
		12,112
		13,200

What is worth more, $100 in one year or $121 in three years if interst rates are 15%?

Answer

		$100 in one year
		$121 in three years
		They are equal
		None of the above

A stock is expected to have a dividend of $10 in one year and $11 in two years and then grow its dividend at a constant 10%/year forever. If the discount rate is 12%, what should be the current stock price?

		250
		450
		500
		None of the above

When a sole proprietorship fails, the maximum that can be lost by the proprietor is:

		the amount of her invested money.
		the amount of the profit on the investment.
		the amount necessary to pay her debts.
		the amount of the proprietor's personal wealth.

Beta measures a stock's sensitivity to unique risk.

True False

The discount rate that makes the npv = 0:

		internal rate of return.
		yield to maturity.
		current yield.
		coupon rate.

What is the periodic rate for a 12% APR assuming quarterly compounding?

		1%
		2%
		3%
		4%

Which of the following cash flows should be included when calculating a proposed project's future cash flows?

		project expenses already paid for
		financing costs
		sunk costs
		taxes

Question 38

If you own a share of stock in Apple and decide to sell it through your broker, the share will be sold on a primary market.

True False