Service

Chat Now

There are 24 T/F and Multiple Choice Questions of Corporate Finance. Which could not find

There are 24 T/F and Multiple Choice Questions of Corporate Finance. Which could not find

There are 24 T/F and Multiple Choice Questions of Corporate Finance.
Which could not find online, so I need professional to finish them
Such as:
1. Sensitivity and scenario analysis aid the capital budgeting decision process by changing the underlying assumptions on which the decision is based.
2. In the accounting break-even the EAC is used to allocate the initial investment at its opportunity cost over the life of the project.
Read the questions (TF and Multiple Choice Questions.docx) first, before you bid.
Make sure you have confidence to do it well.
After I submit the answers, I will get the grade;
if the grade is lower than 70%, I will ask for refund.

Question 1
Sensitivity and scenario analysis aid the capital budgeting decision process by changing the underlying assumptions on which the decision is based.
True
False


1 points  
Question 2
In the accounting break-even the EAC is used to allocate the initial investment at its opportunity cost over the life of the project.
True
False


1 points  
Question 3
The slope of the capital market line is the equilibrium price of risk in terms of expected return, (E(RM) - RF) / σM .
True
False


1 points  
Question 4
The two-fund separation in the CAPM equilibrium means that every investor holds a combination of the well-diversified market portfolio and the risk-free asset.
True
False


1 points  
Question 5
The SML is a graphical presentation of the relationship between a security's expected return and its beta.
True
False


1 points  
Question 6
If other things remain the same, the higher the standard deviation, the lower the beta of a security.
True
False


1 points  
Question 7
The beta of a security is estimated as the slope of the regression equation, where the dependent variable (vertical axis) is the (excess) return on the security and the independent variable (horizontal axis) is the (excess) return on the market portfolio.
True
False


1 points  
Question 8
If a security is above the SML, a mean-variance investor would sell the security because it is overvalued.
True
False


1 points  
Question 9
The cost of debt of a firm is equal to one plus the marginal corporate tax rate (1 + TC) multiplied by the yield to maturity of its outstanding debt.
True
False


1 points  
Question 10
The adjusted beta is always lower than the unadjusted beta.
True
False


1 points  
Question 11
One method of estimating the growth rate of a company is to use the retention growth model, where the growth rate (=g) is estimated as the ROE multiplied by the plowback ratio.
True
False


1 points  
Question 12
The financial leverage is the extent to which fixed-income securities are used in a firm's capital structure.
True
False


1 points  
Question 13
As the debt ratio of a firm increases, its equity beta increases because of the added financial risk.
True
False


1 points  
Question 14
MM's proposition I under no taxes implies that the cost of equity of a firm remains the same as the firm uses more debt because of the no-tax assumption.
True
False


1 points  
Question 15
MM's proposition I under no taxes implies that an issue of debt increases both the expected earnings per share (EPS) and the risk of the EPS. As a result, the stock price remains the same.
True
False


1 points  
Question 16
_____ evaluates the NPV of a project with respect to changes in one variable while holding others constant.
 
        Sensitivity analysis      
        Scenario analysis      
        Simulation      
        Mean Variance model      

             
1 points  
Question 17
The present value (PV) break-even point is better than the accounting break-even point because
 
        PV break-even point is the same as the sensitivity analysis.      
        PV break-even point covers the economic opportunity costs of the investment.      
        PV break-even point covers the fixed costs of production, which the accounting break-point does not.      
        PV break-even point covers the variable costs of production, which the accounting break-even point does not.

     
1 points  
Question 18
An investor who wishes to form a portfolio that lies to the right of the optimal risky portfolio on the Capital Market Line has to
 
        lend some of her money at the risk-free rate and invest the rest in the optimal risky portfolio.      
        borrow some money at the risk-free rate and invest it in the optimal risky portfolio      
        invest only in the risky securities.      
        hold a portfolio which is not diversified.

     
1 points  
Question 19
If other things remain the same, diversification is more effective when
 
        securities returns are positively correlated.      
        securities returns are uncorrelated.      
        securities returns are negatively correlated.      
        securities returns are high.      

             
1 points  
Question 20
A measure of how much the returns of two risky assets move together is
 
        variance      
        standard deviation      
        covariance      
        semi-variance      

             
1 points  
Question 21
The optimal risky portfolio can be identified by finding ______ .
 
        the minimum variance point on the efficient frontier      
        the maximum return point on the efficient frontier      
        the tangency point of the capital market line and the efficient frontier      
        none of the above answers is correct.

     
1 points  
Question 22
Which one of the following is not a determinant of beta of the equity of a company?
 
        cyclicality of revenues      
        operating leverage      
        financial leverage      
        All of the above are determinants of beta.      

             
1 points  
Question 23
When the SML is written in the following form, the second tem (underlined) in the equation represents ______________:
RS,L = RF + βS,U (RM - RF) + βS,U (B/S) (RM - RF)
 
        total risk premium      
        business risk premium      
        financial risk premium      
        non-systematic risk premium      

             
1 points  
Question 24
When we consider the corporate taxes, the value of a levered firm can be shown as the next equation: VL = VU + tc B.
The last tem (=tc B) in the equation above represents _______.
 
        present value of taxes      
        present value of tax shields      
        present value of financial risk premium      
        present value of bankruptcy costs 

Abhinav 29-Nov-2019

Answer (UnSolved)

question Get solution