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ID: 2698182 • Letter: #
Question
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1. The point in time when ownership of a
compensation-related option or share of stock passes to the manager
refers to....... A. The agency date, B. The compensation
payment date, C. granting, D. Vesting?
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2. When prices are falling, valuing inventory using the
LIFO method rather than FIFO gives...A. inventory a higher
value but lowers net income., B. inventory a lower value and also
lowers net income., C. both inventory and net income a higher
value., D. inventory a lower value and net income a higher
value.?
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3. Cash flows from financing activities include all but
one of the following: A. not affect the present
value of the future cash flow. B. increase the present value of any
future cash flow. C. decrease the present value of any future cash
flow. D. None of the above?
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4. Which one of the following statements is NOT true?
A. The realized yield is the return earned on a bond given the cash flows actually received by the investor.
B. The realized yield is equal to the yield to maturity even if the bond is sold prior to maturity.
C. It is the interest rate at which the present value of the actual cash flows generated by the investment equals the bond’s price at the time of sale of the bond.
D. All of the above
5. Bond price: Your friend recommends that you invest in a three-year bond issued by Trimer, Inc., that will pay annual coupons of 10 percent. Similar investments today will yield 6 percent. How much should you pay for the bond? (Round to the nearest dollar.)
A. $1,024 B. $979 C. $886 D. $1, 107
Explanation / Answer
1. The point in time when ownership of a
compensation-related option or share of stock passes to the manager refers to.......
D. Vesting?
2. When prices are falling, valuing inventory using the
LIFO method rather than FIFO gives...
C. both inventory and net income a highervalue.,
3. Cash flows from financing activities include all but
one of the following:
D. None of the above?
4. Which one of the following statements is NOT true?
B. The realized yield is equal to the yield to maturity even if the bond is sold prior to maturity.
5. Bond price: Your friend recommends that you invest in a three-year bond issued by Trimer, Inc., that will pay annual coupons of 10 percent. Similar investments today will yield 6 percent. How much should you pay for the bond? (Round to the nearest dollar.)
D. $1, 107
nper =3, Coupon=10%, Rate=6%, Let Face value FV =$1000
So PMT = 10%*1000 = 100
So Current price = PV(Rate,nper,pmt,fv)
= PV(6%,3,-100,1000) = $1107
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