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Business Finance Chapters 10-21

7 Questions
Business Quizzes & Trivia
Questions and Answers
  • 1. 
    The valuation of a financial asset is based on the concept of determining the present value of future cash flows.
    • A. 

      True

    • B. 

      False

    • C. 

      N/A

  • 2. 
    The prices of financial assets are based on the expected value of future cash flows, discount rate, and past dividends.
    • A. 

      True

    • B. 

      False

    • C. 

      N/A

  • 3. 
    The market determined required rate of return is also called the discount rate.
    • A. 

      True

    • B. 

      False

    • C. 

      N/A

  • 4. 
    The discount rate depends on the market's perceived level of risk associated with an individual security.
    • A. 

      True

    • B. 

      False

    • C. 

      N/A

  • 5. 
    By using different discount rates, the market allocates capital to companies based on their risk, efficiency, and expected returns.
    • A. 

      True

    • B. 

      False

    • C. 

      N/A

  • 6. 
    In estimating the market value of a bond, the coupon rate should be used as the discount rate.
    • A. 

      True

    • B. 

      False

    • C. 

      N/A

  • 7. 
    Most bonds promise both a periodic return and a lump-sum payment.
    • A. 

      True

    • B. 

      False

    • C. 

      N/A