Question Details

What is the opportunity cost of Project A 



1.	What is the opportunity cost of Project A if it is expected to yield 10%, while the yields from other projects range from 6.5% to 11.5% with the mean 9% and 5% standard deviation?
a.	10%
b.	6.5%
c.	11.5%
d.	9%
e.	9.3%
	
2.	You recently sold 200 shares of Disney stock, and the transfer was made through a broker.  This is an example of:
a.	A money market transaction.
b.	A primary market transaction.
c.	A secondary market transaction.
d.	A futures market transaction.
e.	An over-the-counter market transaction.
	
3.	Which of the following statements is CORRECT?
a.	Hedge funds are legal in Europe and Asia, but they are not permitted to operate in the United States.
b.	Hedge funds are legal in the United States, but they are not permitted to operate in Europe or Asia.
c.	Hedge funds have more in common with investment banks than with any other type of financial institution.
d.	Hedge funds have more in common with commercial banks than with any other type of financial institution.
e.	Hedge funds are not as highly regulated as most other types of financial institutions.  The justification for this light regulation is that only "sophisticated" investors (i.e., those with high net worths and high incomes) are permitted to invest in these funds, and such investors supposedly can do any necessary "due diligence" on their own rather than have it done by the SEC or some other regulator.
4.	Which of the following statements is CORRECT?
a.	While the distinctions are becoming blurred, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise capital from other parties.
b.	The NYSE operates as an auction market, whereas Nasdaq is an example of a dealer market.
c.	Money market mutual funds usually invest their money in a well-diversified portfolio of liquid common stocks.
d.	Money markets are markets for long-term debt and common stocks.
e.	A liquid security is a security whose value is derived from the price of some other "underlying" asset.
5.	Dell has an inventory period of 1 month, and an account receivable period of 0 (zero) months. It also has a payable period of 6 months. What are the cash conversion cycle period and the interest expense for Dell if they have annual net total (credit) sales volume of $10 billion? The market interest rate is 6.0%.
a.     -5.0, $-250 m    
b.      6.0, $300m    
c.      1.0, $100m    
d.      3.0, $150m    
e.      0.0, $100m




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