1.\tQuestion :\tThe financial goal of a for-profit business is:\tStudent Answer:\tprofit maximization.\towner wealth maximization.\tcash flow maximization.\tutility maximization.\tInstructor Explanation:\tThe answer can be found in the introduction to Chapter 1.\tPoints Received:\t1 of 1 \tComments:\t2.\tQuestion :\tSuppose two investments produce the same expected cash flows.\u00a0 We would assign a higher value to the investment with:\tStudent Answer:\tlower risk.\thigher cash flow variability.\thigher risk.\tthe highest possible cash flows under ideal conditions.\tInstructor Explanation:\tThe answer can be found in Section 1.1: Valuation.\tPoints Received:\t1 of 1 \tComments:\t3.\tQuestion :\tOpportunity costs can vary over time and:\tStudent Answer:\tare almost always close to 10%.\trepresent the highest possible return you can earn on an investment.\tare always based on the interest rate offered on bank savings accounts.\tset a return that other investments must equal or exceed to be attractive.\tInstructor Explanation:\tThe answer can be found in Section 1.1: Valuation.\tPoints Received:\t1 of 1 \tComments:\t4.\tQuestion :\tTime is a factor when determining the value of a possible investment.\u00a0 As investors, all else being equal, we value investments:\tStudent Answer:\tmore the longer we have to wait for the payoff.\tless the longer we have to wait for the payoff.\twith predefined wait times for payoff.\tregardless of time because a dollar is always a dollar.\tInstructor Explanation:\tThe answer can be found in Section 1.1: Valuation.\tPoints Received:\t1 of 1 \tComments:\t5.\tQuestion :\tAn investment, such as a bond, will have a higher expected return (or yield) if it:\tStudent Answer:\thas a higher purchase price.\tholds a higher rating, such as AAA or AA.\tcarries greater risk.\thas been issued by a well-known company.\tInstructor Explanation:\tThe answer can be found in Section 1.1: Valuation.\tPoints Received:\t1 of 1 \tComments:\t6.\tQuestion :\tThe value of an asset is based on four characteristics”\ufffdcash flows, time, risk, and opportunity costs”\ufffdbut in many situations we can estimate an asset’s value by:\tStudent Answer:\tignoring risk, which simplifies the calculation.\tassigning our personal value to the asset.\tadding a risk premium to the current return on US government bonds.\tlooking at its market price.\tInstructor Explanation:\tThe answer can be found in Section 1.2: Markets.\tPoints Received:\t1 of 1 \tComments:\t7.\tQuestion :\tOver the past 50 years, stocks listed on the NYSE (New York Stock Exchange) have:\tStudent Answer:\treturned a very steady 12% per year.\tnever had a single year with a negative return.\tnever been overpriced or underpriced.\thad annual returns ranging from negative 30% to over positive 30%.\tInstructor Explanation:\tThe answer can be found in Section 1.2: Markets.\tPoints Received:\t1 of 1 \tComments:\t8.\tQuestion :\tThe accounting method you use in your checkbook is best described as:\tStudent Answer:\tcash accounting.\taccrual accounting.\tdeficit reduction.\tbalance sheet accounting.\tInstructor Explanation:\tThe answer can be found in Section 2.1: A Review of Accounting.\tPoints Received:\t1 of 1 \tComments:\t9.\tQuestion :\tOn the typical balance sheet, the right-hand side shows:\tStudent Answer:\tthe book value of plant, property, and equipment.\tthe market value of liabilities.\tthe accounting value of liabilities and equity.\tthe market value of common stock\tInstructor Explanation:\tThe answer can be found in Section 2.2: A Review of Financial Statements.\tPoints Received:\t1 of 1 \tComments:\t10.\tQuestion :\tTo arrive at a more accurate estimate of cash flow we would add depreciation expense to net income. The next step would be to:\tStudent Answer:\treduce our estimate by the increases in liabilities.\treduce our estimate by the decreases in assets\tincrease our estimate by the increases in liabilities.\tdo nothing more because we have an accurate estimate.\tInstructor Explanation:\tThe answer can be found in Section 2.4: Translating Accounting Profits Into Cash Flows.\tPoints Received:<\/p>\n","protected":false},"excerpt":{"rendered":"
1. Question : The financial goal of a for-profit business is: Student Answer: profit maximization. owner wealth maximization. cash flow maximization. utility maximization. Instructor Explanation: The answer can be found in the introduction to Chapter 1. Points Received: 1 of 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-204823","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/204823","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=204823"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/204823\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=204823"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=204823"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=204823"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}