Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED, Exams of Nursing

Download Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED and more Exams Nursing in PDF only on Docsity! Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Sophia Principles of Finance Milestone 3 1 Which of the following is true of portfolio diversification? A diversified portfolio containing positively correlated investments has a higher variance than a portfolio containing a single asset type. A diversified portfolio containing negatively correlated investments has a lower variance than a portfolio containing a single asset type. A diversified portfolio containing positively correlated investments has a lower variance than a portfolio containing a single asset type. A diversified portfolio containing negatively correlated investments has a higher variance than a portfolio containing a single asset type. CONCEPT Portfolio Considerations 2 A security that falls below the security market line has . Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ a high expected return and a high price Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ 9,450 CONCEPT Thinking About Operating Leverage 4 The risk that your investment will lose value because your return is dependant on the stability of a secondary investment is known as . prepayment risk model risk liquidity risk asset-backed risk CONCEPT Risk 5 Which of the following portfolios theoretically diversifies away the most risk? Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ One whose investments have a large covariance Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ One whose investments are highly correlated One whose investments have zero correlation One whose investments have a negative covariance CONCEPT Implications Across Portfolios 6 What is the effect on the stock price of a company that announces it earned higher-than- expected quarterly profits? The stock price will likely go up because it's a clear indication that the financial health of the company is strong. The stock price will likely go up because the announcement suggests that the company is undervalued. The effect depends on what generated the profits and how analysts forecast this information. Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Change in sales = 7% Change in earnings = 10% 1.43 0.7 Cannot calculate without net income data Cannot calculate without EBIT data CONCEPT Thinking About Financial Leverage 9 Select the true statement about the bankruptcy process. A Chapter 7 bankruptcy allows a company to restructure its debt. A bankruptcy reorganization plan is voted on by a company's shareholders. Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Corporations file bankruptcy petitions with the states. Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ A company receives a stay from any collections activity after filing a bankruptcy petition. CONCEPT Understanding the Bankruptcy Process 10 The discounted cash flow approach is useful for . determining the value of future profits (or losses) in today’s terms determining the value of a company’s publicly traded equity graphing an asset's position on the security market line evaluating whether an asset is over-valued, under-valued or correctly priced CONCEPT Approaches to Calculating the Cost of Capital 11 Using the following variables, calculate an organization's cost of preferred stock. Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ 25.00% Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ 19.83% 13.33% CONCEPT Understanding Returns 13 Company A Company B Market Value of Equity $400,000 $600,000 Market Value of Debt $100,000 $800,000 Cost of Equity 9% 9% Cost of Debt 3% 4% Tax Rate 35% 35% Based solely on their current weighted average cost of capital, which company should pursue an investment opportunity with an expected return of 6.5%? Neither Company A nor Company B Only Company B Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Both Company A and Company B Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ equity increases volatility debt interest payments are tax-deductible the company will be less leveraged 16 As a securities dealer, Patrick is able to easily know and compare the prices of stocks, which are now consolidated in a national market system. Which federal regulation established this process? Sarbanes-Oxley Act of 2002 Securities Exchange Act of 1934 Securities Act Amendments of 1975 Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Securities Act of 1933 Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ Principle of Finance Milestone 3 latest update 2021/2022 Sophia Course,100% correct.GRADED A+ CONCEPT Market Regulation 17 What is the amount of money foregone by investing in one asset compared to another known as? The weighted average cost of capital The opportunity cost of capital The required rate of return on capital The overall cost of capital CONCEPT The Basics of the Cost of Capital 18 A social media start-up wants to raise funds to support growth by offering shares to a select group of investors. What type of market transaction should they pursue?