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ABA CTFA Practice Test - Questions Answers, Page 33

List of questions

Question 321

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Two mutually exclusive investment proposals have 'scale differences' (i.e., the cost of the projects differ). Ranking these projects on the basis of IRR, NPV, and PI methods give contradictory results.

Will never
Will never
Will always
Will always
May
May
Will generally
Will generally
Suggested answer: C
asked 16/09/2024
Tina Christiansen
33 questions

Question 322

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If capital is to be rationed for only the current period, a firm should probably first consider selecting projects by descending order of .

Net present value
Net present value
Payback period
Payback period
Internal rate of return
Internal rate of return
Profitability index
Profitability index
Suggested answer: D
asked 16/09/2024
Charles Hagan
36 questions

Question 323

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The method provides correct rankings of mutually exclusive projects, when one is Not subject to capital rationing.

Net present value
Net present value
Internal rate of return
Internal rate of return
Payback period
Payback period
Profitability index
Profitability index
Suggested answer: A
asked 16/09/2024
Tom Säll
42 questions

Question 324

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In an NPV sensitivity graph, a steep sensitivity line for a particular input variable means that a in that variable results in a in NPV.

Small percentage change; large change
Small percentage change; large change
Large percentage change; small change
Large percentage change; small change
Large percentage change; large change
Large percentage change; large change
Small percentage change; small change
Small percentage change; small change
Suggested answer: A
asked 16/09/2024
John Hart
54 questions

Question 325

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One potential problem with sensitivity analysis is that it generally looks at sensitivity 'one variable at a time.' However, one way to judge the sensitivity of results to simultaneous changes in two variables, at least, is to construct an .

NPV profile
NPV profile
NPV sensitivity matrix
NPV sensitivity matrix
NPV sensitivity graph
NPV sensitivity graph
None of these
None of these
Suggested answer: B
asked 16/09/2024
Mercedes Gonzalez Riera
46 questions

Question 326

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A bond issue may be retired by:

calling the bonds if there is a call feature
calling the bonds if there is a call feature
converting the bonds (if convertible) into common stock
converting the bonds (if convertible) into common stock
making a single-sum payment at final maturity
making a single-sum payment at final maturity
All of the above
All of the above
Suggested answer: D
asked 16/09/2024
Opeyemi Oguntodu
41 questions

Question 327

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Protective covenants are:

To protect employees
To protect employees
To protect the interest of the company
To protect the interest of the company
To protect shareholders
To protect shareholders
To protect bondholders
To protect bondholders
Suggested answer: D
asked 16/09/2024
Pushparaj A
41 questions

Question 328

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Which of the following bonds offer the investor the most protection?

First-mortgage bonds
First-mortgage bonds
Debentures
Debentures
Sub Ordinated Debentures
Sub Ordinated Debentures
Income bonds
Income bonds
Suggested answer: A
asked 16/09/2024
55 Cantera Ct. Johnson
42 questions

Question 329

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A company refunds its bonds for any of the following reasons Except for:

To eliminate restrictive covenants
To eliminate restrictive covenants
To reduce interest costs
To reduce interest costs
To show higher reported profits
To show higher reported profits
To issue new bonds at higher rate of interest
To issue new bonds at higher rate of interest
Suggested answer: D
asked 16/09/2024
Jose Leonardo
30 questions

Question 330

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The call-option value of a callable bond is likely to be high when:

Interest rates are volatile
Interest rates are volatile
Interest rates are low and expected to remain low
Interest rates are low and expected to remain low
Interest rate are high and expected to remain high
Interest rate are high and expected to remain high
Markets are inefficient
Markets are inefficient
Suggested answer: A
asked 16/09/2024
Mark Josef Delos Santos
37 questions
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