Bondholders and stockholders
A) never in agreement.
B) are always in agreement.
C) can disagree at times.
D) never really interact.
QUESTION 2Stockholders manage risk by
A) electing the board of directors.
B) appointing day-to-day managers.
C) diversifying their portfolios.
D) having lots of bonds in their portfolios.
QUESTION 3The corporate form of business allows a more efficient way to manage risk relative to
A) proprietorships.
B) partnerships.
C) other non-corporate forms of business.
D) all of these choices.
QUESTION 4NPV calculation need to include
A) only sunk costs of a project.
B) only variable costs of a project.
C) all costs related to a project.
D) a risk-free rate as the discount rate.
QUESTION 5If the discount rate increases
A) NPV does not change.
B) NPV rises.
C) NPV falls.
D) investment also increases.
QUESTION 6You should invest if a new project if
A) the NPV is equal to 1.
B) the NPV is positive.
C) the NPV is equal to the discount rate.
D) none of these choices.
QUESTION 7A risk-free rate can be measured by
A) the rate of inflation.
B) the rate on corporate bonds.
C) the Federal Reserve's discount rate.
D) a rate of a Treasury security.
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