Corporate Finance Study Set 12

Which of the following is not true?

An investment should be made in period 0 if:

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?

Financial markets develop to accommodate _________ between individuals.

A financial instrument, by its possession, that entitles the holder to receive the payments are called:

The first or basic principle of finance dictates that an individual will invest in a project if:

The ray that connects the maximum one can consume in Year 0 with the maximum one can consume in Year 1 represents:

The present value of future cash flows minus initial cost is called:

The following statement, that the value of an investment to an individual is not dependent on consumption preferences, is called the:

According to the net present value rule, an investment should be made if:

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?

One of the functions of financial intermediaries is to make sure the market clears. This means:

If the amount of money to be lent is exactly equal to the amount desired to be borrowed then the market is cleared at:

The consumption opportunity set moves further out when an investment is available because:

Which of the following statements is true?

The separation theorem says that:

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?

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?

Components of a loan which is fully paid back are:

Which of the following conditions do not characterize perfect capital markets?