Corporate Finance Study Set 12

Business

Quiz 4 :

Financial Markets and Net Present Value: First Principles of Finance

Quiz 4 :

Financial Markets and Net Present Value: First Principles of Finance

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Which of the following is not true?
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B

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An investment should be made in period 0 if:
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C

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You have an investment opportunity available to you that requires $400,000. You have no funds available but you will have income of $120,000 this year. The investment will have a net payoff $33,000 at the end of the year. If the market rate is 7.5% will you make the investment?
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B

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Financial markets develop to accommodate _________ between individuals.
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A financial instrument, by its possession, that entitles the holder to receive the payments are called:
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The first or basic principle of finance dictates that an individual will invest in a project if:
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The ray that connects the maximum one can consume in Year 0 with the maximum one can consume in Year 1 represents:
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The present value of future cash flows minus initial cost is called:
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The following statement, that the value of an investment to an individual is not dependent on consumption preferences, is called the:
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According to the net present value rule, an investment should be made if:
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You have an investment opportunity available to you that requires $400,000. You have no funds available but you will have income of $120,000 this year. The investment will have a payoff $433,000 at the end of the year. If the market rate is 8.25% what is the net present value?
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One of the functions of financial intermediaries is to make sure the market clears. This means:
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If the amount of money to be lent is exactly equal to the amount desired to be borrowed then the market is cleared at:
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The consumption opportunity set moves further out when an investment is available because:
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Which of the following statements is true?
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The separation theorem says that:
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A lender with no investment opportunities has equal income in period 0 and in period 1. Which of the following correctly describes the consequence of an increase in the interest rate?
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An individual with no investment opportunities has income of $15,000 in period 0 and income of $10,000 in period 1. If the interest rate is 7%, which of the following points is on the individual's consumption possibility line?
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Components of a loan which is fully paid back are:
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Which of the following conditions do not characterize perfect capital markets?
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