(16) To ensure that the financial statements sycnchronize, it is important that
ID: 2762000 • Letter: #
Question
(16) To ensure that the financial statements sycnchronize, it is important that the change in the cash balance on the balance sheet each year agrees with
A.
the cash collections from sales in the projected income statement.
B.
the cash provided by or used by operations on the projected statement of cash flows.
C.
the net change in cash on the projected statement of cash flows.
D.
the net change in working capital from period to period.
(17) The present value of a perpetuity is the promised constant cash payment divided by the interest rate (I).
True
False
(18) The APR (annual percentage rate) is defined as the simple interest charged per period multiplied by the number of periods per year.
True
False
(19) If you are building a portfolio, then you desire assets that do not have a correlation coefficient of one.
True
False
(20) Zero coupon bonds sell well above their par value because they offer no coupons.
True
False
(21) The variance is equal to the square root of the standard deviation.
True
False
(22) The real rate of interest varies with the business cycle, with the highest rates seen at the end of a period of business expansion and the lowest at the bottom of a recession.
True
False
(23) All other things being equal, a given change in the interest rates will have a greater impact on the price of a high-coupon bond than a lower-coupon bond with the same maturity.
True
False
(24) In the general dividend-valuation model, the price of a share of stock is the present value of all expected future dividends.
True
False
(25) Over sufficiently long periods, net income is always higher than free cash flows to common equity.
True
False
A.
the cash collections from sales in the projected income statement.
B.
the cash provided by or used by operations on the projected statement of cash flows.
C.
the net change in cash on the projected statement of cash flows.
D.
the net change in working capital from period to period.
Explanation / Answer
(16)
Therefore the correct answer is option c.
(17)
Therefore the correct answer is True.
(18)
Therefore the correct answer is True.
(19)
Therefore the correct answer is False.
(20)
Therefore the correct answer is False.
(21)
Therefore the correct answer is False.
(22)
Therefore the correct answer is True.
(23)
Therefore the correct answer is True.
(24)
Therefore the correct answer is False.
(25)
Therefore the correct answer is True.
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