Questions from Financial Markets


Q: 1. When determining the cost of a loan, the business

1. When determining the cost of a loan, the business owner should consider the effects of which of the following? a. Discounting the loan b. Compensating balance requirements c. Fees d. All of the...

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Q: 1. Capital budgeting is the process of doing which of the

1. Capital budgeting is the process of doing which of the following? a. Allocating capital among bonds and stocks. b. Making certain adequate capital is available to pay bills when they come due. c. B...

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Q: 1. Which of the following types of cash flow, according

1. Which of the following types of cash flow, according to surveys, are the least likely to be audited? a. Initial investment b. Operating cash flow c. Financing costs d. Salvage value 2. Purposely o...

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Q: 1. Risk-adjusted discount rates should be used to evaluate

1. Risk-adjusted discount rates should be used to evaluate capital budgeting projects for which of the following reasons? a. The risk/expected return tradeoff in finance b. Otherwise low-risk, low-ret...

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Q: 1. The expense of developing initial outlay or cost estimates for

1. The expense of developing initial outlay or cost estimates for a project should be considered which of the following? a. A sunk cost b. Part of the total initial outlay expenses c. An depreciable e...

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Q: 1. True or False? Net working capital changes will affect

1. True or False? Net working capital changes will affect a project’s operating cash flow estimates. a. True because the project may affect levels of inventory or accounts receivable. b. True because...

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Q: 1. The stages of the capital budgeting process do not include

1. The stages of the capital budgeting process do not include which one of the following? a. Design b. Identification c. Development d. Follow-up 2. In which stage of the capital budgeting process a...

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Q: 1. How is NPV computed? a. Present value

1. How is NPV computed? a. Present value of future cash flows minus cost b. Sum of cash inflow minus cost c. Future value of cash inflows minus future value of cost d. Present value of profits from th...

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Q: 1. The relationship between the cost of capital and net present

1. The relationship between the cost of capital and net present value can be described by which of the following? a. Upward sloping b. Rises, then falls c. Called the NPV profile d. Shows that NPV is...

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Q: 1. How is MIRR computed? a. By finding

1. How is MIRR computed? a. By finding the discount rate that equates the present value of the cash outflows with the terminal value of the cash inflows of a capital budgeting project b. By finding th...

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