1. The ________ is the compound annual rate of return that a firm will earn if it invests in the project and receives the given cash inflows.
A. internal rate of return
B. cost of capital
C. opportunity cost
D. riskminus?free rate
2. The purpose of the restrictive debt covenant that prohibits the sale of accounts receivable is to ________.
A. assure the lender that additional borrowing is constrained
B. limit the realization of current assets to cash
C. limit the amount of fixed?payment obligations
D. limit the payment of annual cash dividends
3. Which of the following is true of risk return trade off ?
A. Risk and return are inversely proportional to each other.
B. Risk can be measured on the basis of variability of return.
C. Riskier investments tend to have lower returns.
D. Tminus bills are more riskier than equity due to imbalances in government policies
4. The par value on a common stock is used as a basis for determining its fixed dividend.
True
False