1. As market interest rates (and investors\' required rates of return) change ov
ID: 2684988 • Letter: 1
Question
1. As market interest rates (and investors' required rates of return) change over time, the ____ of outstanding bonds will also change. A. price. B. par value. C. coupon rate. D. maturity. 2. An example of a flotation cost is A. a fee paid to investment bankers to issue a new security. B. shipping costs for a new machine. C. installation costs for a new machine. D. training costs to operate a new machine. 3. According to financial theory, the value of a common stock today is based on A. its past performance. B. the firmExplanation / Answer
As market interest rates (and investors' required rates of return) change over time, the ____ of outstanding bonds will also change.
A. price.
B. par value
. C. coupon rate.
D. maturity
. 2. An example of a flotation cost is
A. a fee paid to investment bankers to issue a new security.
B. shipping costs for a new machine.
C. installation costs for a new machine.
D. training costs to operate a new machine.
3. According to financial theory, the value of a common stock today is based on
A. its past performance.
B. the firm’s bond yield.
C. the amount of hype it generates in the marketplace.
D. the present value of its future cash flows.
4. Which of the capital budgeting methods is considered to be the most technically correct method to compare the costs and benefits of a project?
A. payback.
B. net present value.
C. internal rate of return.
D. yield to maturity.
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