1. What is the required return using the CAPM if the stock's beta is 1.2, and the individual, who expects the market to rise by 13.2%, can earn 6.4% invested in a risk-free Treasury bill?

A. 9.46%
B. 14.56%
C. 24.58%
D. 11.62%

2. What is the future value of an ordinary annuity if you deposit $1,500 per year for the next 5 years into an account that earns an interest rate of 5 percent annually?

A. $8,288
B. $1,914
C. $6,322
D. $7,500

3. Which of the following is calculated by subtracting the cost of goods sold and administrative expense from net sales?

A. Inventory cost
B. Operating income
C. Accounts receivable
D. Total liabilities

4. If the interest rate on an account is 8 percent annually, what is the present value of $40,000 to be received 5 years from today?

A. $6,188
B. $27,223
C. $10,018
D. $22,073

5. Which of the following is considered to be a current liability?

A. Raw materials
B. Work-in-process
C. Short-term money market instruments
D. Accounts payable

6. Accountants suggest that assets should be valued at

A. the lower of market or cost.
B. the higher of market or cost.
C. cost.
D. market.

7. The current ratio excludes

A. cash equivalents.
B. paid-in capital.
C. accrued interest.
D. inventory.

10. If an account currently has a value of $84,000 and earns an interest rate of 4 percent annually, for how many years can you withdraw $10,000 from the account?

A. 20
B. 12
C. 8
D. 10

11. Liabilities equal

A. assets minus equity.
B. equity.
C. assets.
D. equity minus assets.

12. Which of the following types of ratio is used to measure activity?

A. Liquidity ratio
B. Profitability ratio
C. Leverage ratio
D. Turnover ratio

13. If you deposit $700 in an account today, and the money grows to $1,800 in 14 years, what rate of annual interest have you earned?

A. 7 percent
B. 10 percent
C. 4 percent
D. 50 percent

14. Profitability ratios are used to measure

A. liquidity.
B. leverage.
C. performance.
D. turnover.

15. If you deposit $10,000 in an investment that yields 6 percent annually, how many years will it take for your investment to double in value?

A. 18 years
B. 20 years
C. 12 years
D. 15 years

16. To measure risk, the capital asset pricing model uses

A. the term during which the asset is held.
B. an asset's standard deviation.
C. beta.
D. the volatility of an asset's cash flows.

18. At an interest rate of 6.25% percent compounded annually, how many years will it take for an investment of $7,000 to grow to $10,000? (Round to the nearest year.)

A. 6 years
B. 8 years
C. 4 years
D. 10 years

$6,000 represents the PV of $10,000 invested at 20% for x number of years

19. Which of the following is calculated by adding total liabilities plus equity?

A. Inventory
B. Total assets
C. Hidden assets
D. Operating income

20. An investor my reduce risk by selecting

A. stocks traded on organized exchanges.
B. a cross-section of firms in the same industry.
C. high beta stocks.
D. stocks with poorly correlated returns.