PARTI (10 marks) QUESTION 2: Multiple Choices 1. The higher the rate used in determining the future value of a Sl annuity. A. the smaller the future value at the end of the period. B. the greater the future value at the end of a period. C. the greater the present value at the beginning of a period. D. none of these the interest has no effect on the future value of an annuity. 2. New common stock is more expensive than the cost of retained earnings A to compensate for risk. B to compensate for more dividends. C. to compensate for expansionary problems. D. to cover distribution costs 3. Retained earnings has a cost associated with it because A new funds must be raised. B. There is an opportunity cost associated with stockholder funds. C. flotation costs increase the cost of funding D. None of the above 4. Benefits of social responsibility often include A. Better reputation B. Higher short-term earnings C. Lower expenses D. Two of the above 5. As the time period until receipt increases, the present value of an amount at a fixed interest rate A. decreases. B. remains the same. Cincreases. D. Not enough information to tell 6. Capital markets do not include which of the following securities? A. Common stock B. Commercial paper C. Government bonds D. Preferred stock 7. In determining the future value of a single amount, one measures A. the future value of periodic payments at a given interest rate. B. the present value of an amount discounted at a given interest rate. C. the future value of an amount allowed to grow at a given interest rate. D. the present value of periodic payments at a given interest rate. Divia