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 .