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The higher the interest rates, the _____________________ the future value of an investment.
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The higher the interest rates, the _____________________ the future value of an investment.
higher
The higher the interest rates, the ________________ the present value of an investment's future cash flows.
lower
The cash flows for an annuity must all be
equal, and they must occur at regular intervals, such as once a year or once a month.
Assume that you have analyzed the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following possible changes in the scenario would lower the calculated value of the investment?
The discount rate increases.
Time lines can be constructed where some of the payments
constitute an annuity but others are unequal and thus are not part of the annuity.
Which of the following bank accounts has the lowest effective annual return?
-An account that pays 8% nominal interest with monthly compounding
-An account that pays 7% nominal interest with monthly compounding
-An account that pays 7% nominal interest with daily (365-day) compounding
-An account that pays 8% nominal interest with annual compounding
B
An example of agency cost is:
a manager expensing a lavish dinner on the company expense report.
The capital budgeting decision process addresses
which productive assets a firm should purchase
During rising prices, a company using the LIFO method assumes that the sale is from the newest, highest-cost inventory.
False
True
True
Generally accepted accounting principles determine are rules that mandate (mandatory) how a company can issue stocks to raise money.
t
f
false
A trademark is an example of:
an intangible asset
Which of the following is a stakeholder?
IRS, LENDER, EMPLOYEE
If you just purchased a share of IBM through a New York Stock Exchange-based transaction, you participated in:
a secondary market transaction
Treasury stock
-It is a firm's own shares repurchased in the market by the firm.
-It can be reissued under stock option and other employee benefit plan
-It increases the net worth of the company.
NOT TRUE=lowers the value of the company.
What is on the income statement?
Extraordinary Items
Depreciation expense
Amortization expense
NOT: GOODWILL
The ease with which a security can be sold and converted into cash is called:
marketability
When prices are falling, valuing inventory using the LIFO method rather than FIFO gives:
both inventory and net income a higher value.
On June 23, 2008, Mikhal Cosmetics sold $250,000 worth of its products to Rynex Corporation, with the payment to be made in 90 days on September 20. The goods were shipped to Rynex on July 2. The firm's accountants should recognize the sale on
June 23, 2008
Which of the following statements is true of zero coupon bonds?
-Zero coupon bonds have no coupon payments over its life and only offer a single payment at maturity.
-The most frequent and regular issuer of zero coupon securities is the U.S. Treasury Department.
-Zero coupon bonds sell well below their face value (at a deep discount) because they offer no coupons.
-All of the above
all of the above
If Bank A pays interest on a monthly basis and Bank B pays the same interest on a quarterly basis, then investing $1,000 in Bank B will lead to a higher future value than investing the same amount in Bank A.
t
f
false
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