1) A project with an IRR that is less than the opportunity cost of capital should be:
A.accepted for all project types
B.accepted for all lending projects
C.accepted for all borrowing projects
D.rejected for all projects
2) What is the present value of the following set of cash flows at an interest rate of 7%:
$1,000 today, $2,000 at end of year 1, $4,000 at end of year 3, and $6,000 at end of year
5?
A.$9,731
B.$10,412
C.$10,524
D.$11,524
3) In the case of a professional corporation, ________ has/have limited liability.
A.only the professionals
B.only the business
C.both the professionals and the business
D.neither the professionals nor the business
4) Break-even revenues on an accounting basis typically indicate a:
A.negative NPV for the firm
B.positive NPV for the firm
C.high degree of operating leverage
D.downturn in the business cycle
5) The track record for proxy fights suggests they are:
A.usually successful in forcing out management
B.successful only when accompanied by a tender offer
C.rarely effective in taking over management
D.the first step in a hostile takeover
6) The major difference between options on real assets and options on financial assets is
that options on:
A.financial assets are costly
B.financial assets have a higher probability of positive payoff
C.real assets are implicit, rather than explicit
D.real assets are not influenced by price volatility