Question1: The future value of an annuity is:
[A] less than each annuity payment
[B] equal to each annuity payment
[C] more than each annuity payment
[D] none of the above
Question2: The basic "rent" that you are charged when you borrow money is called:
[A] inflation premium
[B] risk premium
[C] real rate of return
[D] none of the above
Question3: A high price earnings ratio usually indicates that a firm is a:
[A] value stock
[B] growth stock
[C] convertible security
[D] constant security
Question4: Which of the following capital budgeting methods states the return of a project as a percentage?
[A] payback period
[B] net present value
[C] internal rate of return
[D] none of the above
Question5: According to the reinvestment rate assumption, which method of capital budgeting assumes cash flows are reinvested at the project's rate of return?
[A] internal rate of return
[B] none of the above
[C] payback period
[D] net present value