D076 OA Questions and Correct Answers & Latest Updated
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Course
D076 OA
Institution
D076 OA
What does the term legal describe?
Encourage manipulation of accounting procedures to optimize the company's profit
Release managers who do not attempt to maximize immediate shareholder value
Set strict covenants that the company cannot uphold if it chooses a risky project
An action that is in ...
o :## Discount rate, required rate, and cost of capital.
What is the main purpose of charging interest?
interest can be a good tool because it summarizes the required return, but it is a detriment
because it requires a larger cost of capital.
Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update
,3|Page: 2024/2025 Grade A+
The higher risk an investor takes, the higher return the investor expects to receive.
Compounding interest can be a good tool to understand the time value of money, but it is a
detriment because it does not take inflation into account.
It allows borrowers to pay to use the assets of another entity to accomplish their own goals.
o :## It allows borrowers to pay to use the assets of another entity to accomplish their own
goals.
The required rate of return is also known as the BLANK in the context of corporate finance.
Inflation
Hurdle rate
Opportunity cost
Risk
o :## Hurdle rate.
The BLANK is the rate of return or compensation that an investor or lender will accept for
investments such as stocks, bonds, or loans.
Hurdle rate
Inflation
Opportunity cost
Required rate of return
Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update
, 4|Page: 2024/2025 Grade A+
o :## Required rate of return
BLANK Is the possibility that the realized or actual return will differ from the expected
return?
Hurdle rate.
Inflation
Opportunity cost
Risk
o :## Risk
Which components of an interest rate is an indicator of inflation and opportunity cost?
Capital growth rate
Risk-free rate
Sustainable growth rate
Sales growth rate
o :## Risk-free rate
What is the name for the interest rate expressed on an annual basis?
Sustainable growth rate
Master01: DO NOT COPY AND PASTE!! August 25, 2024 Latest Update
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