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FINC 600 Midterm Quiz

FINC 600 Midterm Quiz

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Author: Dannie Young
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Question 1 of 25
4.0/ 4.0 Points
 The concept of compound interest is most appropriately described as:
 A.Interest earned on an investment 
   B.The total amount of interest earned over the life of an investment 
  C.Interest earned on interest 
 
Question 2 of 25
4.0/ 4.0 Points
 
Which of the following investment rules does not use the time value of the money concept?
   A.Net present value 
   B.Internal rate of return 
 C.The payback period 
   D.All of the above use the time value concept 
 
Question 3 of 25
4.0/ 4.0 Points
 
The unique risk is also called the:
   A.Unsystematic risk 
   B.Diversifiable risk 
   C.Firm specific risk 
  D.All of the above 
 
Question 4 of 25
2.0/ 4.0 Points
 
What are some of the important points to remember while estimating the cash flows of a project?
 
The most important points are
 
1) They are estimates. So there can be deviations
 
2) Some huge loss may completely change the return from product.
 
3) Other risks like market risks, reinvestment risk etc. may affect the cash flow pattern
 
Question 5 of 25
4.0/ 4.0 Points
 
A bond with duration of 10 years has yield to maturity of 10%. This bond's volatility is:
 
  A.9.09% 
   B.6.8% 
   C.14.6% 
   D.6.0% 


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