Which one of the following is a risk that applies to most securities?

unsystematic.

asset-specific.

diversifiable.

systematic.

According to behaviorists, noise traders affect prices in financial markets by:

decreasing the risk for rational investors who might otherwise trade against them.

trading on beliefs not fully justified by fundamental news.

seeking to exploit small pricing irregularities when a stock is undervalued or overvalued,

creating riskless arbitrage Opportunities for more informed traders.

In markets characterized by _________asset prices reflect all information, public and private

behavioral finance.

strong-form efficiency.

semi-strong-form efficiency

weak-form efficiency

If financial markets are semi-strong-form efficient, asset prices will incorporate_______ however, if
financial markets are strong-form efficient, asset prices will reflect___________

all information about price trends Of repeating patterns On record, all relevant current and predictable
information

all information relevant to the level of asset prices. all information regarding both the level and flow of
asset prices

all pertinent historical and current information: all informal. from public sources.

all information available from public sources, all historical, current and predictable future Information
from public and private sources
The ______ tells to the composition of the optimal portfolio from a theoretical standpoint

The Capital Asset Pricing Model

market portfolio.

efficient frontier.

single-factor model.

What is the net present value of a project with the following cash flows if the required rate of return
is 12 percent?

1,208.19

1,574.41

812.12

729.09

You are investing $200 today in a savings account at your local bank. Which one of the following terms
refers to the value of this investment five years from now?

present value.

future value.

invested principal.

discounted value.

The length of time a firm must wait to recoup, in present value terms, the money It has In invested In
a project is referred to as the:

payback period.

discounted payback period

Internal return period.

net present value period.

Using M&M propositions with corporate taxes and the following information, what is the value of the
levered firm? EBIT = $80,000; corporate Taxes = 40%; the firm borrows $400,000 at a rate of 9%

$705,000.

$520,000.

$955,555.

$993,333

What Is the future value of $7,189 invested for 23 years at 9.25 percent compounded annually?

$27,890.87.

$22,489.60.

$54,999.88.

$51,009.13.

A firm with greater operating leverage

Will have greater sales than otherwise identical firms.

Shows a higher percentage change in earnings for a given percentage change in sales.

Shows a lower percentage change in earnings for a given percentage change in sales.

Tends to make greater use of variable costs in its cost structure.

A project has a net present value of zero. Which one of the following best describes this project?

The project has no cash flows.

The project requires no initial cash investment

The summation of all of the project's cash flows is zero.

The project cash inflows equal its cash outflows in current dollar terms.
Which one of the following terms is defined as the mixture of a firm's debt and equity financing?

capital budgeting.

cash management.

working capital management

capital structure

Salem is calculating the present value of a bonus he will receive next year. The process he is using is
called:

accumulating.

growth analysis.

compounding.

discounting.
4.1 years