Financial Management

111. The value today of an amount to be received at some point in the future is known as:

1. present value-annuity
2. future value-annuity
3. present value-single amount
4. future value-single amount

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112. A series of payments required to accumulate a given amount is known as:

1. future value-annuity
2. present value-annuity
3. annuity equalling a future amount
4. annuity equalling a present amount

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113. Financial risk relates to:

1. the ability of the firm to pay dividends
2. the ability of the firm to access capital markets for additional funds
3. the ability of the firm to meet debt obligations as they come due
4. the firm's financial risk premium

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114. The beta coefficient measures:

1. the return relative to the risk-free rate
2. the return relative to the market return
3. the historical volatility relative to the market's volatility
4. the required return on a financial asset

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115. All of the following are steps in the decision-making process of a good capital budgeting process except:

1. obtaining the necessary financing
2. collection of data
3. evaluation and decision making
4. re-evaluation and adjustment

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116. Under the net present value method:

1. the interest rate is determined that equates inflows and outflows
2. the time value of money is not taken into account
3. inflows are discounted back to determine if they exceed outflows
4. the basic discount rate is the internal rate of return

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117. Risk in capital budgeting may be defined as:

1. the chance the firm won't be able to meet its debt obligations
2. the possibility of the firm losing its competitive position
3. the variability of possible outcomes from a given investment
4. the possibility that the firm can't obtain funds needed to finance the desired asset

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118. All methods used in evaluating risk in capital budgeting have one thing in common:

1. they use the coefficient of variation to determine the discount rate
2. risk classes are used to determine discount rates
3. they use computer-based statistical analysis
4. they recognize the differences in risk levels and adjust for them

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119. In recent years Government of Canada funding requirements have:

1. increased and become more short term
2. increased and become more long term
3. decreased and become more short term
4. decreased and become more long term

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120. Nonresident holdings of Canadian securities are most significant in the:

1. bond market
2. money market
3. stock market
4. mortgage market

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