The dividend yield is defined as:

A$)$ the last annual dividend divided by the current market price per share.

B$)$ the last annual dividend divided by the current book value per share.

C$)$ next year's expected dividend divided by the current market price per share.

D$)$ next year's expected dividend divided by the current book value per share.

E$)$ next year's expected dividend divided by the par value per share.

Which one of the following types of securities has the lowest priority in a bankruptcy proceeding?

A$)$ Convertible bond

B$)$ Senior debt

C$)$ Common stock

D$)$ Preferred stock

E$)$ Straight bond

The payback period is the length of time it takes an investment to generate sufficient cash flows to enable the project to:

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FIN $215$ Final Take Home Exam

A$)$ produce a positive annual cash flow.

B$)$ produce a positive cash flow from assets.

C$)$ offset its fixed expenses.

D$)$ offset its total expenses.

E$)$ recoup its initial cost.

A cost that should be ignored when evaluating a project because that cost has already been incurred and cannot be recouped is referred to as a$($n$)$:

A$)$ fixed cost.

B$)$ forgotten cost.

C$)$ variable cost.

D$)$ opportunity cost.

E$)$ sunk cost.

On a particular risky investment, investors require an excess return of $7$ percent in addition to the risk$-$free rate of $4$ percent. What is this excess return called?

A$)$ Inflation premium

B$)$ Required return

C$)$ Real return

D$)$ Average return

E$)$ Risk premium