Principle of Finance Milestone 3 Sophia Course Answered| Sophia Finance Milestone 3 (complete fall 2021/2022)

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You passed this Milestone 13 questions were answered correctly. 6 questions were answered incorrectly. 1 What is the amount of money foregone by investing in one asset compared to another known a... s?  The required rate of return on capital  The overall cost of capital  The opportunity cost of capital  The weighted average cost of capital CONCEPT The Basics of the Cost of Capital 2 A security that falls above the security market line has __________.  a high expected return and a low price  a high expected return and a high price  a low expected return and a low price  a low expected return and a high price CONCEPT Understanding the Security Market Line 3 Using the following variables, calculate an organization's cost of preferred stock.  Dpref: $4  Ppref: $30  g: 2%  This study source was downloaded by 100000831988016 from CourseHero.com on 04-04-2022 03:17:55 GMT -05:00 https://www.coursehero.com/file/68081199/Milestone-3docx/ 24%  15.33%  $12.66%  15% CONCEPT Valuing Different Costs 4 Which of the following is true of unsystematic risk?  The correlation among the returns of assets within a portfolio are irrelevant to this type of risk.  It can be diversified away by relying on the lack of a tight positive relationship among the returns of a set of individual assets.  Its presence commands a return in excess of the risk-free rate.  It is also known as non-diversifiable risk. CONCEPT Diversification 5 You own a small manufacturing business that produces widgets. You have spent $100,000 acquiring the fixed assets you need to produce widgets. Each widget costs you $4 to make and they sell for $22 each, so your variable cost is 18.2% of the overall revenue. At your current level of operating leverage, how many widgets must you sell to break even?  18,200  9,450  This study source was downloaded by 100000831988016 from CourseHero.com on 04-04-2022 03:17:55 GMT -05:00 https://www.coursehero.com/file/68081199/Milestone-3docx/ 4,546  5,556 CONCEPT Thinking About Operating Leverage 6 The risk that a bank will receive less interest from a lending product than it originally anticipated is known as __________.  operational risk  interest rate risk  market risk  prepayment risk CONCEPT Risk 7 Which of the following is a tenet of weak-form efficiency?  Markets, in general, are informationally inefficient, so investors can earn excess returns by studying patterns.  The market is impossible to predict because investors make decisions in a biased, emotionally-driven fashion.  Analyzing patterns in the past pricing of securities will not yield information that will enable investors to "beat" the market.  The prices of securities reflect all known present information, but do not account for past [Show More]

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