FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- If markets are in equilibrium, which of the following conditions will exist? a. Each stock's expected return should equal its required return as seen by the marginal investor. b. All stocks should have the same expected return as seen by the marginal investor. c. The expected and required returns on stocks and bonds should be equal. d. All stocks should have the same realized return during the coming year. e. Each stock's expected return should equal its realized return as seen by the marginal investor.arrow_forwardTreasury stock should be reported Group of answer choices in the Investments and Funds section of the balance sheet. as a deduction from total stockholders’ equity on the balance sheet. as a current asset only if it will be sold within the next year or the operating cycle, whichever is longer. as a current asset only if it will be sold within the next year or the operating cycle, whichever is shorter.arrow_forwardMarket risks are: B. Interest rate risk, foreign exchange risk, portfolio concentration, commodity price risk D. Equity price risk, interest rate risk, foreign exchange risk, commodity price risk C. Foreign exchange risk, commodity price risk, issue risk, credit risk A. Equity price risk, transaction risk, foreign exchange risk, commodity price riskarrow_forward
- When using discounted dividend method to estimate stock price, which of the following should be used as the discount rate? - required return of debt - risk free rate - required return of the equity - WACC - Bank deposit ratearrow_forwardExplain the difference between expected rate of return, required rate of return, and historical rate of return when applied to common stock.arrow_forwardU.S. Treasury Security ABCDE Time to maturity 1 year 10 years 6 months 20 years 5 years Yield 15.4% 13.9% 15.7% 13.4% 14.1%arrow_forward
- Find the annualized holding rate of return and the average rate of return for a stock that returned -30% in year 1 and +30% in year 2. Annualized holding rate of return = -7.00% A. -9.00% B. -15.00% C. 0.00%arrow_forwardAn increase in which factors increases the interest rate sensitivity (duration) of a bond? Check all that apply: Time to maturity Coupon rate Par value Bond ratingarrow_forwardThe money market is the short-term market for stocks and bonds. Select one: True OR Falsearrow_forward
- Which of the following is TRUE? a. A bull market is where stocks, on average, are expected to go up in the near future. b. A bull market is the primary market where IPO's are introduced. c. A bull market is a situation where the price of stock in that market has been rising over a fairly long period of time d. A bull market is a market where there are more buyers than sellers, there have been more purchases of stock than sales of stock and a lot of stock is traded every day.arrow_forwardDiscuss the relative volatility of short- and long-term interest rates.arrow_forwardWhat happens to Bond prices, quantities, and interest rates if (Make sure to include the supply and demand graph for bonds for each question : a) Decrease in wealth b) Increase in risk c) Decrease in liquidityarrow_forward
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