51) Investors mostly don’t prefer threat. Thus, a typical investor A) will certainly not be induced to take on any danger. B) will only take on the leastern risk possible. C) will only take on added danger if he expects to be compensated in the form of extra return. D) will only accept a zero return if the hazard is zero.
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52) In finance, we assume that investors are primarily A) neutral to hazard. B) averse to hazard. C) fond of risk. D) none of the above
53) Consider the after-tax cash flows for Project S and also Project L:
Project S Project L Year 1 $3000 0 Year 2 0 $3000 Project S Project L Year 1 $3000 0 Year 2 0 $3000
A rational perchild would favor ________. A) Project S bereason the money have the right to be reinvested sooner B) Project L bereason they have the right to stop taxes by receiving cash flows later C) indevelopment around profits rather of cash flows D) neither investment over the other
54) Assume that an investor is readily available an option of a risk-free government bond or a high-danger corpoprice stock. Further assume that the meant rerotate is the same for both. According to one of the axioms of finance, which investment would be chosen? A) the corpoprice stock B) the government bond C) neither, the investor would certainly be invarious D) none of the above
55) Assume that an investor is readily available a selection of a risk-cost-free federal government bond that is meant to rerevolve 3.5% or a high-threat corpoprice stock. According to among the values of finance, what would certainly induce the investor to purchase the corpoprice stock? A) a rerotate that is significantly reduced than 3.5% B) cash dividends C) a rerotate that is significantly better than 3.5% D) none of the above
56) Assume that you went to Las Vegas and also hit the jackpot for $5 million. More assume that you were available an option to obtain the $5 million now, or obtain it in two years. According to one of the values of finance, which would you take? A) the $5 million in 2 years because you would be afraid of spending it all best away B) the $5 million in 2 years bereason it would be worth more than if you would certainly get it this particular day C) You would be invarious as to as soon as you would certainly get the $5 million. D) the $5 million now because it would be worth more than if you would get it in 2 years
57) Assume that you won the Lotta Dough Lotto jackpot for $20 million. Additional assume that you were offered a choice to get the $20 million today, or get it in equal installments of $1 million per year for twenty years. According to one of the principles of finance, which would you take? A) the $20 million in equal installments of $1 million per year for 20 years bereason you would certainly be afrhelp of spfinishing it all ideal away B) the $20 million this day bereason it would certainly be worth more than if you would certainly get it in equal installments of $1 million per year for twenty years C) You would certainly be indifferent as to as soon as you would certainly obtain the $20 million considering that the complete variety of dollars received is the very same either way. D) the $20 million in equal installments of $1 million per year for 20 years bereason it would be worth more than if you would certainly get it today
58) Which of the following statements finest represents the “Agency Problem”? A) Managers could attempt to benefit themselves in regards to salary and perquisites at the expense of shareholders. B) The agency problem results from the separation of administration and also the ownership of the firm. C) The company problem may interfere through the implementation of maximizing shareholder wide range. D) every one of the above
59) As these days, the most significant economic crisis to plague the USA economic climate is thought about to be A) the Great Depression of the 1930s. B) the Great Recession of 2007 – 2009. C) the Reagan Tax Law Changes of 1985. D) the Savings and Loan Crisis of 1978 – 1982.
60) The “perfect storm” of components that contributed to the financial crisis of 2007 encompass A) increases in the minimum wage rate, unchecked illegal immigration, and also state government deficits. B) financial deregulation, unchecked commodity prices, floating currency exchange rates.
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C) poorly favored mortgage loans, falling housing prices, and also a contracting economic situation. D) agency costs, ineffective industries, and perfect capital industries.