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1) One reason for international investment is to reduce: A. price-earnings (P/E) ratios. B. portfolio risk. C. beta risk. D. advantages in a foreign country.2) The interplay between interest rate differentials and exchange rates such that both adjust until the foreign exchange market and the money market reach equilibrium is called the: A. balance of payments quantum theory. B. purchasing power parity theory. C. arbitrage markets theory. D. interest rate parity theory. 3) Your company is considering a project with the following cash flows: Initial outlay = $1748.80 Cash flows Years 16 = $500 Compute the IRR on the project. A. 18% B. 11% C. 24% D. 9%4) The marginal cost of preferred stock is equal to: A. the preferred stock dividend divided by the net market price. B. (1 tax rate) times the preferred stock dividend divided by net price. C. the preferred stock dividend divided by its par value. D. the preferred stock dividend divided by market price

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