Business Finance Chapters 10-21
7 Questions
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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
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