Question1: A firm is conducting an analysis of trends over time and discovers that its inventory turnover has declined. This may be due to:
[A] an increase in inventory purchases.
[B] a decrease in inventory purchases.
[C] an increase in sales.
[D] an increase in cost of goods sold.
Question2: Common stockholders are most concerned with:
[A] The size of the firm's beginning earnings per share
[B] The risk of the investment
[C] The spread between the return generated on new investments and the investor's required rate of return
[D] The percentage of profits retained
Question3: The average cost associated with each additional dollar of financing for investment projects is:
[A] Risk-free rate
[B] Beta
[C] The incremental return
[D] The marginal cost of capital
Question4: If current market interest rates rise, what will happen to the value of outstanding bonds?
[A] It will remain unchanged
[B] It will rise
[C] It will fall
[D] There is no connection between current market interest rates and the value of outstanding bonds
Question5: Investment risk is:
[A] The probability of achieving a return less than expected.
[B] The probability of achieving a standard deviation less than expected.
[C] The probability of achieving a return greater than expected.
[D] The probability of achieving a beta coefficient less than expected.