Current price of Stock

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Final Exam
1. The valuation of a financial asset is based on the concept of determining the present value.
T/F
True
2. The prices of financial assets are based on the expected value of future cash flows, ds rate and past dividends.
T/F
True
3. The market determined required rate of return is also called the discount rate.
T/F
True
4. In determining the cost of debt, yield and prices of outstanding bonds are used.
T/F
True
5. The cost of debt is equal to the current bond yield on bonds of similar risk class and adjusted for the corporate tax rate.
T/F
False
( One will take the YTM)
6. It is not unusual for corporate president, who deals with security analysts, to be as sensitive to after-tax income as to cash flow
T/F
False
7. Capital budgeting is primarily concerned with evaluating investment alternatives
T/F
True
8. We add depreciation to net income to arrive at a true earnings picture
T/F
False
( It is required to get the cash flows)
9. The Payback method is basic to ...