Question :\tThe longer we have to wait for a future amount to be received:\tStudent Answer:\tthe lower its present value will be.\tthe higher its present value will be.\tTime does not affect present value, so it doesn’t matter how long we have to wait.\tBeyond 10 years the value doesn’t change anymore because 10 years might as well be 20 years.\tInstructor Explanation:\tThe answer can be found in Section 4.3: The Time Value of a Single Cash Flow.\tPoints Received:\t1 of 1 \tComments:\t2.\tQuestion :\tCompounding means that:\tStudent Answer:\tdollar interest the first year is multiplied by the number of years to get total interest.\tthe same dollar amount of interest is paid each period.\tinterest is paid on interest earned in earlier periods.\tthe rate of interest grows over time.\tInstructor Explanation:\tThe answer can be found in Section 4.2: Compound and Simple Interest.\tPoints Received:\t1 of 1 \tComments:\t3.\tQuestion :\tAn ordinary annuity has its first payment ______, but an annuity due has its first payment _________.\tStudent Answer:\tat the beginning of the period; at the beginning of the period.\tat the beginning of the period; at the end of the period.\tat the end of the period; at the end of the period.\tat the end of the period; at the beginning of the period.\tInstructor Explanation:\tThe answer can be found in Section 4.4: Valuing Multiple Cash Flows.\tPoints Received:\t1 of 1 \tComments:\t4.\tQuestion :\tThe great majority of stock trades occur:\tStudent Answer:\tin the secondary markets.\tin the primary market.\tas IPOs (initial public offerings).\tdirectly between the company and investors.\tInstructor Explanation:\tThe answer can be found in Section 5.1: Stocks.\tPoints Received:\t1 of 1 \tComments:\t5.\tQuestion :\tShareholders gains come in the form of:\tStudent Answer:\tonly dividends.\tonly capital gains.\tdividends and capital gains.\tinterest payments.\tInstructor Explanation:\tThe answer can be found in the introduction to Chapter 5.\tPoints Received:\t1 of 1 \tComments:\t6.\tQuestion :\tInterest rates are given as annual rates. If semiannual (twice a year) compounding is being used, then you would make the following adjustments:\tStudent Answer:\tDouble the rate and double the number of years.\tDouble the rate and halve the number of years.\tHalve the rate and halve the number of years.\tHalve the rate and double the number of years.\tInstructor Explanation:\tThe answer can be found in Section 4.3: The Time Value of a Single Cash Flow.\tPoints Received:\t1 of 1 \tComments:\t7.\tQuestion :\tWhich of the following is true of the structure of a zero-coupon bond?\tStudent Answer:\tan annuity of interest payments and a single principal payment at maturity\tno interim interest payments but a variable payment at maturity, depending on interest rates\tan annuity of payments comprised of both interest and principal\tno interim interest payments and a single payment at maturity\tInstructor Explanation:\tThe answer can be found in Section 5.2: Bonds.\tPoints Received:\t1 of 1 \tComments:\t8.\tQuestion :\tIf we make the assumption that a company’s dividends grow at some constant rate, then we can value the stock as:\tStudent Answer:\ta growing perpetuity.\ta growing annuity.\ta perpetuity.\tan annuity.\tInstructor Explanation:\tThe answer can be found in Section 5.1: Stocks.\tPoints Received:\t1 of 1 \tComments:\t9.\tQuestion :\tWhich of the following is NOT true of preferred stock?\tStudent Answer:\tPreferred stock generally pays a fixed dividend.\tPreferred stock is a perpetuity.\tDividends on preferred stock are tax deductible.\tPreferred stock dividends have a higher priority than common stock dividends.\tInstructor Explanation:\tThe answer can be found in Section 5.1: Stocks.\tPoints Received:\t1 of 1 \tComments:\t10.\tQuestion :\tZeta Corporation just paid a $2.00 dividend. Analysts believe that Zeta Corporation’s dividend will grow by 20% next year, and then settle into a constant growth regime at 5% per year into the future. If investors assign a required rate of return of 12% to Zeta’s stock, what should the stock sell for today?\tStudent Answer:\t$30.00\t$32.14\t$34.29\t$36.00\tInstructor Explanation:\tThe answer can be found in Section 5.1: Stocks.\tPoints Received:\t1 of 1<\/p>\n","protected":false},"excerpt":{"rendered":"
Question : The longer we have to wait for a future amount to be received: Student Answer: the lower its present value will be. the higher its present value will be. Time does not affect present value, so it doesn’t Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-204818","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/204818","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=204818"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/204818\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=204818"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=204818"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=204818"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}