BUS 401 Week 2 Quiz

1
BUS 401 Week 2 Quiz Check this A tutorial
guideline at http//www.assignmentcloud.com/BUS-
401-NEW/BUS-401-Week-2-Quiz 1.) The longer we
have to wait for a future amount to be
received the lower its present value will
be.  the higher its present value will be.  Time
does not affect present value, so it doesnt
matter how long we have to wait.  Beyond 10 years
the value doesnt change anymore because 10 years
might as well be 20 years.    2.) Compounding
means that  dollar interest the first year is
multiplied by the number of years to get total
interest.   the same dollar amount of interest is
paid each period.   interest is paid on interest
earned in earlier periods.   the rate of interest
grows over time.     
2
3.) An ordinary annuity has its first payment
______, but an annuity due has its first payment
_________. at the beginning of the period at the
beginning of the period.  at the beginning of the
period at the end of the period.  at the end of
the period at the end of the period.  at the end
of the period at the beginning of the
period.    4.) The great majority of stock trades
occur  in the secondary markets.   in the
primary market.   as IPOs (initial public
offerings).   directly between the company and
investors.    5.) Shareholders gains come in the
form of only dividends.  only capital
gains.  dividends and capital gains.  interest
payments.    6.) Interest rates are given as
annual rates. If semiannual (twice a year)
compounding is being used, then you would make
the following adjustments  Double the rate and
double the number of years.   Double the rate and
halve the number of years.   Halve the rate and
halve the number of years.   Halve the rate and
double the number of years.   
3
7.) Which of the following is true of the
structure of a zero-coupon bond? an annuity of
interest payments and a single principal payment
at maturity no interim interest payments but a
variable payment at maturity, depending on
interest rates an annuity of payments comprised
of both interest and principal no interim
interest payments and a single payment at
maturity  8.) If we make the assumption that a
companys dividends grow at some constant rate,
then we can value the stock as  a growing
perpetuity.   a growing annuity.   a
perpetuity.   an annuity.  9.) Which of the
following is NOT true of preferred
stock?  Preferred stock generally pays a fixed
dividend.   Preferred stock is a
perpetuity.   Dividends on preferred stock are
tax deductible.   Preferred stock dividends have
a higher priority than common stock
dividends.    10.) Zeta Corporation just paid a
2.00 dividend. Analysts believe that Zeta
Corporations dividend will grow by 20 next
year, and then settle into a constant growth
regime at 5 per year into the future. If
investors assign a required rate of return of 12
to Zetas stock, what should the stock sell for
today?  30.00   32.14   34.29   36.00  For
more classes visit http//www.assignmentcloud.com