The phase of the economic cycle when levels of employment and production are low and economic growth is at a virtual standstill or even negative is called:

A. Growth

B. Expansion

C. Recession

D. Depression

A single, overall cost of capital is often used to evaluate projects because:

A. It avoids the problem of computing the required rate of return for each investment proposal

B. It is the only way to measure a firm's required return

C. It acknowledges that most new investment projects have about the same degree of risk

D. It acknowledges that most new investment projects offer about the same expected return

A statistical measure of the degree to which two variables (e.g., securities' returns) move together is:

A. Coefficient of variation

B. Variance

C. Co-variance

D. Certainty equivalent

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date is called:

A. face value

B. fair value

C. market value

D. transaction value

When Beta >1.0, it indicates that:

A. Security is more risky than the market

B. Security is less risky than the market

C. Security is as risky as the market

D. Security is not risky at all

Companies that have capital amount of more than $2 billion are known as:

A. Small cap companies

B. Mid cap companies

C. Growth companies

D. Large cap companies

Which of the following is NOT a source of Return on Equity (ROE)?

A. Return on assets

B. Leverage

C. Book value per share

D. Sales per total assets

The maximum percentage of the value of a property that the lender is willing to loan is called:

A. Loan to value ratio

B. Private mortgage

C. Price earnings ratio

D. Mortgage points

Palo Alto Industries has a debt-to-equity ratio of 1.6 compared with the industry average of 1.4. This means that the company:

A. Will not experience any difficulty with its creditors

B. Has less liquidity than other firms in the industry

C. Will be viewed as having high creditworthiness

D. Has greater than average financial risk when compared to other firms in its industry

Prescription drug coverage is:

A. A voluntary program

B. A state-run public assisted program

C. Needs co-payments and co-insurances

D. Both A and C are correct