1. The best method to use in deciding between mutually exclusive projects with equal useful life is ___________.

Select one:

a. the IRR

b. the Profitability Index

c. all of THESE

d. the NPV

2. If an investment pays an annual rate of 6% compounded monthly, then the quarterly interest rate is 1.5%.

Select one:

True

False

3. According to the CAPM, the expected return on a stock with a standard deviation of 40% and a beta of 0.9 will be higher than the expected return of an alternative stock with a standard deviation of 30% and a beta of 1.2.

Select one:

True

False

4.Which of the following statements is true?

Select one:

a. All of THESE

b. When a project has more than one sign change in the cash flows, the IRR rule may produce multiple IRRs.

c. The pay-back period can be used when companies want to recuperate as quickly as possible the initial cost of an investment.

d. An advantage of the average accounting return rule is that the accounting information is usually available.