Ron’s Organic Markets has limited access to borrowed funds and must choose among several independent projects with returns greater than their cost of capital. All the projects under consideration have the same required investment of $ 2 million and Ron’s has $10 million available for capital investments this year. Which of the following selection criteria is least likely to produce the optimal five projects for investment Choose the five projects with:()
A. the greatest total NPV.
B. the largest sum of profitability indexes.
C. the highest IRRs.
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An analyst meets with a new client. During the meeting, the analyst sees that the new client’s portfolio is heavily invested in one over-the-counter stock. The analyst has been following the stock and thinks it will perform well in the long run. The analyst arranges through a brokerage firm to simultaneously sell a large number of shares of the stock via a series of cross trades from the new client’s portfolio to various existing clients. He arranges the trades to be executed at a price that approximates the current market price. This action is:()
A. not in violation of the Standards.
B. a violation of Standard Ⅲ (A), Loyalty, Prudence, and Care.
C. a violation of Standard Ⅲ (B), Fair Dealing.
Consider a floating rate issue that has a coupon rate that is reset on January 1 of each year. The coupon rate is defined as one-year London Inter-bank Offered Rate (LIBOR) + 125 basis points and the coupons are paid semi-annually. If the one-year LIBOR is 6.5 percent on January 1, which of the following is the semi-annual coupon payment received by the holder of the issue in that year()
A. 3.250%.
B. 6.500%.
C. 3.875%.
Assuming the federal government maintains a balanced budget, the most likely effects of a tax increase on government expenditures and real GDP are: Government Expenditures Real GDP()
A. Increase Decrease
B. Increase Increase
C. Decrease Increase
Assume the tax rate is constant, based on the following information, calculate the balance of the deferred tax account at the end of the second year The company acquired the asset for $ 8000. The asset will generate $ 5000 a year. The company’s tax rate is 40%. For tax purposes, the asset can be straight-line depreciated over 4 years. For financial accounting purposes, the asset is depreciated straight-line over 5 years.()
A. $ 0.
B. $ 240.
C. $ 480.