EE quiz

There are two basic types of alternatives:

• Investment Alternatives & Cost Alternatives

• Profit Alternatives & Revenue Alternatives

• 1. Risk Alternatives & Benefit Alternatives

• 1. Long-term Alternatives & Short-term Alternatives

Which type of alternative is characterized by fixed (or constant) revenues for all alternatives?

• 1. Cost Alternatives

• 1. Investment Alternatives

Use a MARR of 12% and useful life of 4 years to select between the cost alternatives below.

• PWC= -155.933;  PWD= -151.119 . C is better economically.

• 1. PWC= -153.942;  PWD= -150.119 . D is better economically.

• PWC= -155.933;  PWD= -151.119 . D is better economically.

• PWC= -153.942;  PWD= -150.119 . C  is better economically.

 Which of the following statements accurately describes Cost Alternatives?

• 1. Negative cash flows throughout the project's useful life, with no cash flow from asset disposal.

• Cost Alternatives generate both positive and negative cash flows evenly throughout the project's useful life

• Cost Alternatives entail initial (or front-end) capital investment that produces positive cash flows from increased revenue, savings through reduced costs, or both.

• Cost Alternatives entail negative cash flows, except for a potential positive cash flow from asset disposal at the end of the project's useful life.

For cost alternatives the PW of all cash flows will be negative. Select the alternative with______

• 1. the largest PW

• 1. the largest (smallest in absolute value) PW

• the smallest PW

• 1. the smallest (largest in absolute value) PW

Why is portfolio diversification an important factor for alternative investments?

• It helps alternative investments become traditional investments.

• 1. It provides other options than those offered by traditional investments.

• It gives consumers more information in the form of pamphlets and representatives.

• It helps financial institutions make more money.

Which of the following is NOT a disadvantage of alternative investments?

• 1. tax benefits

• 2. high financial risk

• available to a small

• portion of population

  1. fraud risk

What is a common characteristic of a high-yield bond?

• 1.  Lower interest rates compared to other bonds

• Higher risk due to issuer's poor credit rating

• 1. Guaranteed returns

• 1. Tax-free income

Which of the following investment alternatives involves purchasing ownership stakes in companies?

• 1. Stocks

• 1. Certificates of Deposit (CDs)

• Government bonds

• 1. Commodities

What type of fund is designed to mimic the performance of a specific market index?

• 1.  Balanced fund

• 1. Sector fund

• 2. Index fund

• 2. Hedge fund