Question 51

Compounding is the process of finding the present value of some future amount.

Select one:

True

False

Question 52

A growth stock is a stock that results in a high return with relatively low levels of risk.

Select one:

True

False

Question 53

The pure play approach:

Select one:

a. Cannot be used if the firm has preferred stock outstanding.

b. Should be used only if a firm has more than three divisions.

c. Can be used to find the cost of capital for a division.

d. Is most useful when each division makes a multitude of different products.

e. Is easier to implement than the subjective approach.

Question 54

Your firm seeks to obtain a short-term loan from a local bank. The banker quotes you a rate of 6%. This is a nominal rate.

Select one:

True

False

Question 55

A project which has a discounted payback period longer than its life also has a positive NPV.

Select one:

True

False