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Everyday Science Questions & Answers Section 46

Ques No.1: What will be value of $100 after two years, if the interest rate during this period is 5%?

Ans: $110.25

Ques No.2: Investors require higher return on

Ans: Levered equality

Ques No.3: In a well-functioning capital market if the firm pays no taxes then what is better about borrowing?

Ans: No difference who (firm or shareholders) borrows

Ques No.4: Corporations can return cash to their shareholders by

Ans: Paying cash dividends and Stock Repurchase

Ques No.5: The money a investor receive for taking on a risk is called

Ans: Risk Premium

Ques No.6: An asset that pays a fixed amount of cash each year for a specified number of years is called

Ans: Annuity

Ques No.7: Net Present Value is calculated as

Ans: PV of Cash Inflow - PV of cash outflow

Ques No.8: An investment should be accepted if its NPV is

Ans: Positive

Ques No.9: The ratio between the amount of profit and investment is called the

Ans: Rate of return

Ques No.10: An investment should be accepted if

Ans: Rate of Return > Opportunity Cost

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