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Question 2  NPV, Annuity

Katya offers to pay you $10 at the end of every year for the next 5 years (t=1,2,3,4,5) if you pay her $50 now (t=0). You can borrow and lend from the bank at an interest rate of 10% pa, given as an effective annual rate.

Ignore credit risk.

Will you or Katya's deal?

Question 37  IRR

If a project's net present value (NPV) is zero, then its internal rate of return (IRR) will be:

Question 93  correlation, CAPM, systematic risk

A stock's correlation with the market portfolio increases while its total risk is unchanged. What will happen to the stock's expected return and systematic risk?

Question 334  option

Which option position has the possibility of unlimited potential losses?

Question 379  leverage, capital structure, payout policy

Companies must pay interest and principal payments to debt-holders. They're compulsory. But companies are not forced to pay dividends to share holders. or ?

Question 428  takeover

In a takeover deal where the offer is 100% scrip (shares), the merged firm's number of shares will be equal to the acquirer firm's original number of shares. or ?

Question 514  corporate financial decision theory, idiom

The expression 'cash is king' emphasizes the importance of having enough cash to pay your short term debts to avoid bankruptcy. Which business decision is this expression most closely related to?

Question 610  debt terminology

You deposit cash into your bank account. Does the deposit account represent a debt or to you?

Question 663  leverage, accounting ratio, no explanation

A firm has a debt-to-assets ratio of 20%. What is its debt-to-equity ratio?

Question 731  DDM, income and capital returns, no explanation

In the dividend discount model (DDM), share prices fall when dividends are paid. Let the high price before the fall be called the peak, and the low price after the fall be called the trough.


Which of the following statements about the DDM is NOT correct?

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