FIN 370 Final Uop Exam Assignment

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1. The Securities Investor Protection Corporation protects individuals from

· brokerage firm failures

· making poor investment decisions

· fraud by corporations

· other investors who fail to make delivery

2. You just purchased a parcel of land for $10,000. If you expect a 12% annual rate of return on your investment, how much will you sell the land for in 10 years?

· $38,720

· $39,720

· $31,060

· $25,000

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3. When calculating the weighted average cost of capital, which of the following has to be adjusted for taxes?

· Debt

· Preferred stock

· Retained earnings

· Common stock

4. Buying and selling in more than one market to make a riskless profit is called:

· profit maximization.

· globalization

· arbitrage.

· international trading.

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5. Which of the following is true about bonds?

· They have a fixed maturity, and they pay an amount equal to the maturity value times the coupon rate each year.

· At maturity of the bond, the investor receives the market price of the bond.

· They are obligations from the investor to the corporation.

· Their interest rate always varies with the Consumer Price Index

6. Compute the payback period for a project with the following cash flows, if the company's discount rate is 12%.

Initial outlay = $450

Cash flows: Year 1 = $325

Year 2 = $65

Year 3 = $100

· 3.17 years

· 2.6 years

· 2.88 years

· 3.43 years

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7. Which of the following best describes why cash flows are utilized rather than accounting profits when evaluating capital projects?

· Cash flows have a greater present value than accounting profits.

· Cash flows improve the tax position of a firm more than accounting profits.