Indicate whether the sentence or statement is true or false. 17. The profitabili
ID: 2741755 • Letter: I
Question
Indicate whether the sentence or statement is true or false.
17. The profitability index is the ratio of the present value of the cost to the present value of the benefits.
18. A mutually exclusive investment is one where one investment is chosen and others are ultimately sacrificed or excluded.
19. Funds used to start a business are usually your own and borrowed financial capital.
20. As your individual business assets increase, the complexity of determining how to invest and protect these assets also increases.
21. Risk is a term based on the uncertainty of outcomes.
22. A holder of a U.S. Government bond has a greater uncertainty of getting back principal and interest than the holder of a corporate bond.
23. Speculative risk is uninsurable.
24. Pure risk involves only a chance of a loss.
25. A company that requires only cash in dealing with customers is following risk avoidance.
26. Insurance policies are examples of risk transfer.
27. A term life insurance policy has cash surrender value.
28. Municipal bonds are issued by government agencies other than the Federal government.
29. Preferred stock may be convertible.
30. Balanced funds invest in solid growth stocks only.
31. Trusts are legal arrangements that divide legal and beneficial interests among two or more people.
32. A draft (as used in international trade) is simply an order to pay money from one person (or company) to another.
33. The exporter is the party in the international transaction who initiates the events leading up to the issuance of banker’s acceptances.
34. Individuals who invest by themselves in venture capital opportunities are called “angel investors”.
35. Generating returns for venture capital investors is often referred to as harvesting a return.
Explanation / Answer
17. No. Profitability Index is the ratio of payoff by investment
18. No - Mutually exclusive investment means investment in one project doesn't affect the investment in the other one.
19. Yes. Funds used to start a business are usually own and debt raised by shares issual or borrowing.
20. Yes. The bigger the funds, more complex is the investment plan.
21. Yes. Risk is a term that's used to describe the uncertainty of investment.
22. No. US government bonds are the safest investment.