Risk return theory states that the higher the risk

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Reference no: EM13873369

TRUE/FALSE

1. Risk return theory states that the higher the risk, the higher the required return.

2. The present value of $50,000 to be received 10 years from now at 8% interest is about $23,160.

3. The current share price is $25, most recent dividend is $1.25, so dividend yield is 5%.

4. Net income is $2 million. A $1.20 dividend is paid to the 1 million shareholders. Retained earnings is $200,000.

5. Present value for a cash flow stream of $300 per year for 5 years at 3% is $1373.91.

6. If an additional $1,000,000 in income is earned and the marginal tax is 34% an additional $340,000 in taxes will be paid.

Reference no: EM13873369

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