Question

I. True or False (10 points, 1 point each) No. 12 13456 78910 Answer 1. When the market interest rate exceeds the coupon rate, bonds sell for less than face value to provide enough compensation to investors. 2. LVMH's Issuance of a 7-year bond in 2005, raising 600 million euros is a financing decision. 3. A project's payback period is the length of time necessary to generate an NPV of zero. 4. A financial intermediary invests in financial assets rather than real assets 5. Book values are "forward-looking" measures of value. 6. The separation of ownership and management is one distinctive feature of both corporations and sole proprietors. 7. Return on assets and return on equity are both profitability ratios. 8. As the opportunity cost of capital decreases, the net present value of a project also decreases. 9. Apple Computer is well known for its product innovations. Access to financing was vital to Apple's growth and profitability 10. The expected return on an investment includes compensation for both the time value of money and the risks assumed.

Answer 1

Answer :

S. No	1	2	3	4	5	6	7	8	9	10
Answer	True	True	False	True	True	False	True	False	True	True

Explanation

1.bonds sold less than face value when interest rates exceeds coupon rate. - it's true

2.Issuance of 7 year bond for gathering 600 euros is the financing decision - it's true

3.priject payback period is the length of the project not necessary to generate NOV zero - so false

6. Separation of ownershipand management is the one of the distinctive feature of the corporations not for the sole proprietors - so, false

7. Return on assets and return on equity both are prifitability ratios - so true

8. As the opportunity cost of capital decreases Net present value increases - so false