Finance chapter 10 Questions and
Answers
Valuation of financial assets requires knowledge of - answerAppropriate discount rate
and future cash flow
The market allocates capital two companies based on - answerAll of the above
If a company stock price goes up and nothing else changes the required rate of return
should - answerGo down
In a general sense the value of any asset is the - answerPresent value of the cash flows
received from the asset
Which of the following financial assets is likely to have the highest required rate of
return based on risk - answerCommon stock
Which of the following is not one of the components that makes up the required rate of
return on a bond - answerMaturity payment
Which is a characteristic of the cost of preferred stock - answerPreferred stock is valued
as a perpetuity
The value of a common stock is based on its - answerPast performance
The common stock which pays a constant dividend could be valued as if it were -
answerpreferred stock
Preferred stock has all but which of the following characteristics - answerThe same
binding contractual obligation as debt
If the inflation premium for a bonnet goes up the price of the bond - answerGoes down
Answers
Valuation of financial assets requires knowledge of - answerAppropriate discount rate
and future cash flow
The market allocates capital two companies based on - answerAll of the above
If a company stock price goes up and nothing else changes the required rate of return
should - answerGo down
In a general sense the value of any asset is the - answerPresent value of the cash flows
received from the asset
Which of the following financial assets is likely to have the highest required rate of
return based on risk - answerCommon stock
Which of the following is not one of the components that makes up the required rate of
return on a bond - answerMaturity payment
Which is a characteristic of the cost of preferred stock - answerPreferred stock is valued
as a perpetuity
The value of a common stock is based on its - answerPast performance
The common stock which pays a constant dividend could be valued as if it were -
answerpreferred stock
Preferred stock has all but which of the following characteristics - answerThe same
binding contractual obligation as debt
If the inflation premium for a bonnet goes up the price of the bond - answerGoes down
