Question

6.Which of the following is (are) the reasons for some people to choose interest only loan? (There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.)

Select one or more:

a. The interest only loan provides more tax deductions for investment properties.

b. The interest only loan is less expensive over the whole loan term.

c. Banks usually apply lower interest rate for interest only loans.

d. Interest only loan requires lower periodic repayment over the whole term of the loan.

e. The interest only loan requires lower periodic repayment during the interest-only term.

7.Which of the following is(are) the advantage(s) of the discounted payback period method comparing to the normal form of payback period method? (There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.)

8.

Which of the following statements is(are) true about capital market efficiency? (There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.)

Select one or more:

a. In a weak form efficient market, it is not possible for an investor to earn an abnormal high return by acting on private information.

b. In a weak form efficient market, it is possible for an investor to earn an abnormal high return by studying the past patterns in assets prices.

c. In a semi-strong form efficient market, it is not possible for an investor to earn an abnormal high return by acting on public information.

d. In a strong form efficient market, it is not possible for an investor to earn an abnormal high return by acting on private information.

e. Informational efficiency focuses on bringing buyers and sellers together at the lowest possible cost.

Select one or more:

a. The discounted payback period method considers time value of money.

b. The discounted payback period method avoids projects with negative net present value (NPV) to be chosen.

c. It is easier to calculate the discounted payback period of a project.

d. The discounted payback period method considers all cash flows of a project.

e. The discounted payback period method does not bias against long-term projects.

9.

Which of the following statements is(are) true about ordinary shares? (There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.)

Select one or more:

a. Ordinary shareholders have unlimited liability in the case of a company liquidation.

b. Ordinary shareholders enjoy limited liability in the case of a company liquidation.

c. Ordinary shareholders do not have voting rights on important matters affecting the company.

d. Ordinary shareholders are not guaranteed dividend payments from the company.

e. Ordinary shareholders have priority over creditors in the case of a company liquidation.

10.

Which of the following can be used by venture capitalists to reduce the risk of their investments in emerging businesses? (There may be more than one correct answer. You will lose marks by choosing a wrong answer. The minimum mark for the question is zero.)

Select one or more:

a. To require a higher expected return for the investment.

b. To have in-depth knowledge of the industry and technology invested in.

c. To provide funds stage by stage.

d. To invite other venture capitalist to syndicate the venture capital investments.

e. To require the entrepreneur to make a substantial personal investment in the business.

Answer 1

q6-

option a and e ;

Using interest loans, you can temporarily pays only the interest cost . This will be lower initially since it only has interest payment and has tax benefits

q7-

options a, & b ( if options are the points given after question 8 )

In Discounted payback, the future cashflows are discounted at a discount rate and compared with initial investment to find the payback year

q8-

options c& d

semi strong market efficiency states that it is not possible to get higher returns than market by using public information. Strong form says that it is not possible to get return using public or private informations. Weak form states that it is not possible to get abnormal returns using past data.

q9-

option b and d

Ordinary share holders have limited liabilit and are not guarenteed a dividend payment

q10-

option b,c,d and e