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Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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1. What is the fundamental goal of a firm? Profit maximization Maximizing shareholder wealth O Maximizing management wealth Corporate social responsibility 2. Which of the following are acceptable criteria for determining the weights in the weighted average cost of capital? Market value of the capital structure and historical costs of financing O Market value of the capital structure and the target mix of debt and equity Using the after-tax cost of debt and the market value of the capital structure Using the book value of the capital structure and the prior level of debt and equity 3. When a company increases its degree of financial leverage, the equity beta of the company falls the systematic risk of the company falls the unsystematic risk of the company falls the standard deviation of returns on the equity of the company rises 4. What is the current price of a share of stock when the last dividend was $3.00, the growth rate is 6 percent, and the investor's required rate of return is 12 percent? $25.00 $26.50 $50.00 $53.00
Transcribed Image Text:1. What is the fundamental goal of a firm? Profit maximization Maximizing shareholder wealth O Maximizing management wealth Corporate social responsibility 2. Which of the following are acceptable criteria for determining the weights in the weighted average cost of capital? Market value of the capital structure and historical costs of financing O Market value of the capital structure and the target mix of debt and equity Using the after-tax cost of debt and the market value of the capital structure Using the book value of the capital structure and the prior level of debt and equity 3. When a company increases its degree of financial leverage, the equity beta of the company falls the systematic risk of the company falls the unsystematic risk of the company falls the standard deviation of returns on the equity of the company rises 4. What is the current price of a share of stock when the last dividend was $3.00, the growth rate is 6 percent, and the investor's required rate of return is 12 percent? $25.00 $26.50 $50.00 $53.00
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