Exam 14: Capital and Financial Markets

The table below describes an amusement park's revenues from different numbers of batting cages.If the price of constructing a new batting cage is $6,000,how many cages should the park construct?

A new business computer will generate net income of $1,000 this year,$800 next year,$400 the year after that,and nothing thereafter.Assume that each year's income is received at the end of the year.What is the maximum amount a firm would be willing to pay for the computer?

You have a bond that you can redeem for $10,000 one year from now.The interest rate is 10 percent (0.10)per year.How much is the bond worth today?

Any long-lasting tool that people use to produce goods and services is called

You have two bonds,both with a face value of $7,000.One of them matures one year from today,while the other matures one year after that.If the interest rate is 8 percent (0.08)per year,what is the difference in value between the two bonds?

When the market estimate of a company's riskiness increases the market adjusts by

Other things equal,a person with a cosmetician's certificate from a vocational school will earn $4,000 more per year than a person without one,starting the year the certificate is received.But after 6 years,the difference in income will disappear because styles have changed.If the interest rate is 5 percent (0.05)per year,what is the present value of having just received a certificate? (Assume that each year's income is received at the end of the year. )

You have a bond that you can redeem for $10,000 one year from now.The interest rate is 3 percent (0.03)per year.How much is the bond worth today?

The efficient markets theory of stock prices,implies that

The key difference between a share of stock and a bond is that

Which of the following is a primary function served by financial markets?

When the market estimate of a company's riskiness decreases the market adjusts by

You are thinking of purchasing a 5-year bond,with a face value of $8,000,on the secondary bond market.The bond was issued three years ago,so it will mature two years from today.If the interest rate is 10 percent (0.10)per year,what is the value of the bond?

The demand curve for shares of a stock is typically