Questions Chapter 13 (Real Estate Financing)

Which of the following investment strategies involves generating a higher expected rate of return through increasing risk? a. Leverage b. Value at risk            c. Diversifying d. Hedging risk

Which of the following decision criteria is the easiest to use and very popular among investors? O Payback period. O Internal rate of return. O Average accounting return. Net present value. O Discounted return on investment.

You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows. If the discount rate decreases the it would lower the calculated value of the investment.   Group of answer choices   True False

1. Define the components of holding period return. Can any of these components be negative? 2. How do you understand an investment risk and what statistic tools can be used to measure it?

Which one of the following could be considered as an advantage of using the payback method of investment appraisal? Select one: O A. Cash flows rising after the payback period is reached are ignored O B. It is easy to understand and simple to calculate O C. Does not take risk fully into account O D. Not related to wealth maximisation objective

What does Jensen's alpha measure? a. An investor's reward in proportion to their assumption of systematic risk b. The abnormal return of an asset, defined as the degree to which its actual return exceeds that predicted by the capital asset pricing model c. The degree to which diversifiable risk is eliminated d. How much reward an investor is getting for each unit of risk assumed

accounting answer need

Paragraph Styles Internal Rate of Return is used to estimate the profit of potential investments. However, this can be used in Firms to determine if an investment is worth pursuing or buying. How might the firm use IRR to make a decision about the possible investment? Internal Rate of Return is used to measure how the Firm will make profits or lose money in the project. Therefore, it makes it easier to determine the profitability and the higher the Internal Rate of Return the higher the profit comes into the company (business). Do NOT simply cut and paste information from the web - answer in your own words. QUESTION 5 The firm has contacted a bank to negotiate a loan to purchase the legal tech' software. A loan of £10,000 will be needed and the bank has offered three options, each to begin on 1st February 2023: (0) (ii) (III) £10,000 loan at 6% simple interest. The entire loan is to be repaid in one lump sum after five years, with interest paid at the end of each year of the loan.…

Explain the concept of risk - return trade-off in investing. How do investors balance risk and return. when making investment decisions?

The value of an investment can be defined in numerous ways. Which is FALSE?  a. It is the value determined by demand and supply.  b. It is an objective estimate wherein the risk preference of the investor is considered.  c. It is the present value of the cashflows on the investment  d. It is dependent on the perceptions of the investor.

1. How to compare different assets in investment selection process? 2. What are the quantitative characteristics of the assets and how to measure them? 3. How does one asset in the same portfolio influence the other one in the same portfolio? 4. And what could be the influence of this relationship to the investor’s portfolio? 5. What is relationship between the returns on an asset and returns in the whole market (market portfolio)?

Which approach to investment analysis is "best" in terms of accounting for both the timing and amount of revenue streams from a potential investment? A.  the payback period B.  the simple rate of return C.   the net present value D. the internal rate of return

When using the NPV method for a particular investsment decision, if the present value of all cash inflows is greater than the present value of all cash outflows, then ________. Group of answer choices A. the discount rate used was too high B. the investment provides an actual rate of return greater than the discount rate C. the investment provides an actual rate of return equal to the discount rate D. the discount rate is too low

Which of the following is an advantage of the average accounting return (AAR)? Multiple choice question. It is based on cash flows and market value. It accounts for the time value of money. Its input data are easily available. It uses an arbitrary benchmark cutoff rate.

The objective function of an investor in a CAPM world is to what (mathematically) [what are your trying to maximize]? What is the major assumption about the distribution of returns that we have to make to get to this objective function?

Q 2. Suppose an investment has conventional cash flows with positive NPV. How would it impact your decision based on capital budgeting techniques mentioned below? i. Profitability index (PI) ii. Internal Rate of Return (IRR) iii. Payback Period (PBP)

QUESTION 36 When evaluating an investment or project, Companies need to consider risk as a factor because: OA. A. All projects carry the same level of risk B. B. All projects do not carry the same level of risk C.C. Risk allows a company to measure the relative Net Present Value of an investment OD. D. Both B & C QUESTION 37 The Coefficient of Variation is the best measure of risk because: OA. A. It is a relative measure of risk, allowing companies to measure projects with different expected values. B. B. Is an absolute measure of risk O C.C. Is harder to calculate OD. D. Is never used QUESTION 38 Standard Deviation is an absolute measure of risk because A. It allows companies to measure projects with different expected values B. It measures risk in an absolute fashion, risk is measure based on the expected value. C.It can only be used to compare projects with the same expected value. D. Both B & C

Required account answer

An advantage of the internal rate of return method is that a.it considers the time value of money. b.it can rank proposals of equal lives. c.it considers the cash flows of the investment. d.All of these choices are correct.

Multiple Choice Questions 1. The following are the factors to be considered in Suitability, except A. Environment B. Capabilities C. Expectations D. Scenarios 2. The ____________ for a firm is the internal rate of return on existing investments, based on real cash flows. A. cash flow return on investment (CFROI) B. Economic Value Added (EVA) C. Total Shareholders Return D. Return on Investment 3. The elements that must be considered in using EVA are as follows, except ___________. A. Reasonableness of earnings B. Appropriate cost of Capital C. Volatility of the market D. None of the above