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NEW QUESTION: 1
Buying a security with the intent of selling it prior to its maturity date to increase the return is an example of:
A. an interest rate future.
B. matching investment strategy.
C. a diversification program.
D. active investment strategy.
Answer: D
NEW QUESTION: 2
A firm follows the simple growth model and can invest $1000 every year into new projects which have a rate of return of 17%. Each project generates a constant stream of earnings year after year. The firm's stock has a required rate of return of 13%. If the firm is founded today, the firm value equals ________.
A. $3,165
B. $1,895
C. $2,440
D. $2,675
Answer: D
Explanation:
Explanation/Reference:
Explanation:
You should be careful in solving such a problem.
Suppose the firm invests $1,000 today in a project. This first project generates a constant stream of perpetuity with an annual payment of $1,000 * 0.17 = $170. The present value of this stream is 170/0.13
$1,307.6. The NPV of the project is then $1,307.6 - $1,000 = $307.6. Since the firm does this every year, it has a perpetuity of $307.6 (the NPVs of projects 2 and on, at the time the projects are started).The present value of these NPVs is $307.6/0.13 = $2,367. Thus, the total value of the firm is $2,367 + $307.6 (first project) = $2,675.
NEW QUESTION: 3
CREATE PROCEDURE param_test (
IN P_in INT,
OUT P_out INT,
INPUT P_inout INT)
BEGIN
SELECT P_in, P_out, P_ inout;
SET P_in, P_inout
END
A. Option D
B. Option B
C. Option C
D. Option A
Answer: C
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