# BUS 401 Week 2 Quiz

**3**Times. Tutorial Rating:

## This Tutorial contains following Attachments:

- BUS 401 - Week 2 - Quiz.doc

**BUS 401 Week 2 Quiz**

**1.) The longer we have to wait for a future amount to be received**

**the lower its present value will be. **

**the higher its present value will be. **

**Time does not affect present value, so it doesn’t matter how long we have to wait. **

**Beyond 10 years the value doesn’t change anymore because 10 years might as well be 20 years. **

**2.) Compounding means that:**

** dollar interest the first year is multiplied by the number of years to get total interest. **

** the same dollar amount of interest is paid each period. **

** interest is paid on interest earned in earlier periods. **

** the rate of interest grows over time. **

**3.) An ordinary annuity has its first payment ______, but an annuity due has its first payment _________.**

**at the beginning of the period; at the beginning of the period. **

**at the beginning of the period; at the end of the period. **

**at the end of the period; at the end of the period. **

**at the end of the period; at the beginning of the period. **

**4.) The great majority of stock trades occur:**

** in the secondary markets. **

** in the primary market. **

** as IPOs (initial public offerings). **

** directly between the company and investors. **

**5.) Shareholders gains come in the form of:**

**only dividends. **

**only capital gains. **

**dividends and capital gains. **

**interest payments. **

**6.) Interest rates are given as annual rates. If semiannual (twice a year) compounding is being used, then you would make the following adjustments:**

** Double the rate and double the number of years. **

** Double the rate and halve the number of years. **

** Halve the rate and halve the number of years. **

** Halve the rate and double the number of years. **

**7.) Which of the following is true of the structure of a zero-coupon bond?**

**an annuity of interest payments and a single principal payment at maturity
no interim interest payments but a variable payment at maturity, depending on interest rates
an annuity of payments comprised of both interest and principal
no interim interest payments and a single payment at maturity **

**8.) If we make the assumption that a company’s dividends grow at some constant rate, then we can value the stock as:**

** a growing perpetuity. **

** a growing annuity. **

** a perpetuity. **

** an annuity. **

**9.) Which of the following is NOT true of preferred stock?**

** Preferred stock generally pays a fixed dividend. **

** Preferred stock is a perpetuity. **

** Dividends on preferred stock are tax deductible. **

** Preferred stock dividends have a higher priority than common stock dividends. **

**10.) Zeta Corporation just paid a $2.00 dividend. Analysts believe that Zeta Corporation’s dividend will grow by 20% next year, and then settle into a constant growth regime at 5% per year into the future. If investors assign a required rate of return of 12% to Zeta’s stock, what should the stock sell for today?**

** $30.00 **

** $32.14 **

** $34.29 **

** $36.00 **

## Write a review

**Your Name:**

**Your Review:**Note: HTML is not translated!

A B C D F

**Enter the code in the box below:**