Question 17 Lois is purchasing an annuity that will pay $ 5,000 annually for 20 years, with the first annuity payment made on the date of purchase. What is the value of the annuity on the purchase date given a discount rate of 7 percent? A. $ 56,191.91 B. $ 52,970.07 C. 54,282.98 D. $ 66,916.21 E. 56,677.98
Question 18 The cash flow resulting from a firm’ s ongoing, normal business activities is referred to as the: A. Net capital spending. B. Cash flow to investors. C. Additions to net working capital. D. Operating cash flow. E. Cash flow to retained earnings.
Question 19 The market price of a bond increases when the: A. Par value decreases. B. Coupon rate decreases. C. Discount rate decreases. D. Face value decreases. E. Coupon is paid annually rather than semiannually
Question 20 The excess return you earn by moving from a relatively riskfree investment to a risky investment is called: A. Arithmetic average return. B. Geometric average return. C. Time premium. D. Risk premium. E. Inflation premium.
Question 21 A firn has a total debt ratio of. 47. This means the firn has 47 cents in debt for every: A. $ 1 in fixed assets. B. $ 53 in total equity. C. $ 1 in total equity. D. $ 1 in current assets. E. $ 53 in total assets.