1 of 50
Term
T/F: In Modigliani and Miller's proposition with taxes, the optimal
capital structure is to use as much leverage as possible
Give this one a try later!
FALSE/ only reject all projects if the
FALSE/ UNDERVALUED
total NPV is negative
FALSE TRUE
Don't know?
2 of 50
Term
,T/F: The higher the correlation between stock "i" returns and the
returns on the market portfolio, the greater the relevant risk for stock
"i"
Give this one a try later!
False/ x axis is beta and the slope is
FALSE/ UNDERVALUED
the required return
TRUE FALSE
Don't know?
3 of 50
Term
T/F: with our security market line graph, we would expect stock
prices to increase if the Federal Reserve Bank reduced the risk free
rate
Give this one a try later!
FALSE FALSE/ UNDERVALUED
You assume the future selling price TRUE
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4 of 50
,Term
T/F: The greater a firm's percentage of fixed costs, the greater the
firm's degree of operating leverage
Give this one a try later!
False TRUE
False/ x axis is beta and the slope is
FALSE/ UNDERVALUED
the required return
Don't know?
5 of 50
Term
T/F: Monte Carlo simulation can give you a usable result with one
trial
Give this one a try later!
FALSE/ only reject all projects if the
FALSE/ UNDERVALUED
total NPV is negative
TRUE FALSE
, Don't know?
6 of 50
Term
T/F: The market portfolio risk premium is constant for all stocks
Give this one a try later!
FALSE/ it assumes that cash flows
are reinvested at the IRR % and
TRUE
DOES NOT take into account cost
of capital
False/ x axis is beta and the slope is
FALSE
the required return
Don't know?
7 of 50
Term
T/F: The greater the correlation between a stock's returns and
returns on the market portfolio, the greater the beta
Give this one a try later!
FALSE/ it assumes that cash flows
are reinvested at the IRR % and
Term
T/F: In Modigliani and Miller's proposition with taxes, the optimal
capital structure is to use as much leverage as possible
Give this one a try later!
FALSE/ only reject all projects if the
FALSE/ UNDERVALUED
total NPV is negative
FALSE TRUE
Don't know?
2 of 50
Term
,T/F: The higher the correlation between stock "i" returns and the
returns on the market portfolio, the greater the relevant risk for stock
"i"
Give this one a try later!
False/ x axis is beta and the slope is
FALSE/ UNDERVALUED
the required return
TRUE FALSE
Don't know?
3 of 50
Term
T/F: with our security market line graph, we would expect stock
prices to increase if the Federal Reserve Bank reduced the risk free
rate
Give this one a try later!
FALSE FALSE/ UNDERVALUED
You assume the future selling price TRUE
Don't know?
4 of 50
,Term
T/F: The greater a firm's percentage of fixed costs, the greater the
firm's degree of operating leverage
Give this one a try later!
False TRUE
False/ x axis is beta and the slope is
FALSE/ UNDERVALUED
the required return
Don't know?
5 of 50
Term
T/F: Monte Carlo simulation can give you a usable result with one
trial
Give this one a try later!
FALSE/ only reject all projects if the
FALSE/ UNDERVALUED
total NPV is negative
TRUE FALSE
, Don't know?
6 of 50
Term
T/F: The market portfolio risk premium is constant for all stocks
Give this one a try later!
FALSE/ it assumes that cash flows
are reinvested at the IRR % and
TRUE
DOES NOT take into account cost
of capital
False/ x axis is beta and the slope is
FALSE
the required return
Don't know?
7 of 50
Term
T/F: The greater the correlation between a stock's returns and
returns on the market portfolio, the greater the beta
Give this one a try later!
FALSE/ it assumes that cash flows
are reinvested at the IRR % and
