Common stock is more difficult to value than corporate bonds

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Reference no: EM132064310

1. Common stock is more difficult to value than corporate bonds because:

a. easy to observe the required rate of return

b. some firms do not pay a dividend

c. the expected future cash flows are known in advance

d. the life of the investment finite

2. Given the following two mutually exclusive project, calculate the equivalent annual annuity for Project B. Assume a required rate of return of 12%. (Round to 2 decimals) Year Project A Project B

0 -500 -600

1 320 300

2 320 300

3 320 300

4 300

3. Suppose you want to sell your MSFT shares, you will receive the ________ times the number of shares less transactions costs.

a. intrinsic price

b. ask price

c. last price

d. bid price

Reference no: EM132064310

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