1. Which of the following statements is CORRECT?a. The preferred stock of a given firm is generally less risky to investors than the same firm's common stock.
2. If in the opinion of a given investor a stock's expected return exceeds its required return, this suggests that the investor thinksc. the stock is experiencing supernormal growth.
3. Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds?a. Market interest rates decline sharply.
4. Suppose rRF = 4%, rM = 9%, and rA = 16%.Calculate Stock A's beta. Round your answer to two decimal places. 2.4If Stock A's beta were 1.4, then what would be A's new required rate of return? Round your answer to two decimal places.11%5. Nick's Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $3 at the end of each year. The preferred stock sells for $30 a share. What is the stock's required rate of return? Round the answer to two decimal places.10%6. Washington-Pacific invests $2 million to buy a tract of land and plant some young pine trees. The trees can be harvested in 12 years, at which time W-P plans to sell the forest at an expected price of $4 million. What is W-P's expected rate of return? Round your answer to two decimal places.8.33%7. Which of the following statements is CORRECT?b.If a bond's yield to maturity exceeds its coupon rate, the bond's price must be less than its maturity value. 8. Kendall Corners Inc. recently reported net income of $2.4 million and depreciation of $336,000. What was its net cash flow? Assume it had no amortization expense.$2736000 or 2.736 million 9. You plan to invest some money in a bank account. Which of the following banks provides you with the highest effective rate of interest?. e.Bank 5; 6.0% with daily (365-day) compounding. 10. Which of the following items is NOT included in current assets?c.Bonds. 11.A 10-year bond with a 9% annual coupon has a yield to maturity of 8%. Which of the following statements is CORRECT?a.If the yield to maturity remains constant, the bond's price one year from now will be higher than its current price. . 12. Thress Industries just paid a dividend of $1.00 a share (i.e., D0 = 1.00). The dividend is expected to grow 4% a year for the next 3 years and then at 11% a year thereafter. What is the expected dividend per share for each of the next 5 years? Round your answers to the nearest cent.D1 = 1.04$ D2 = 1.08$ D3 =1.13$ D4 =1.25$ D5 = 1.39$ 13. Which of the following statements is CORRECT?e. As they are generally defined, money market transactions involve debt security with maturity if <1yr