Use the Table for the Question(s)below

question 68

Multiple Choice

Use the table for the question(s) below.

-Visby Rides,a livery car company,is considering buying some new luxury cars.After extensive research,they come up with the above estimates of free cash flow from this project.The cars belong to asset class 10 and have a capital cost allowance (CCA) rate of 30%.What is the present value of the overall CCA tax shields,given that the cost of capital is 10%,and the company faces a marginal tax rate of 25%?

• A)$32,562
• B)$53,693
• C)$93,465
• D)$150,000
• E)$162,452

Understand the concept of beta and its relation to an asset's expected return.

Grasp the fundamental principles of portfolio diversification and its benefits.

Learn the method to compute the standard deviation of returns for both individual assets and portfolios.

Interpret the implication of different economic states (boom, normal, recession) on asset returns.

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Definitions:

Market Efficiency

A market characteristic where prices fully reflect all available information, making it impossible to consistently achieve higher returns.

Arbitrage Opportunities

The chance to buy an asset at a low price in one market and sell it at a higher price in another, exploiting the price difference for profit.

Real Asset Markets

Markets that deal with physical assets like real estate, commodities, and natural resources, as opposed to financial assets.

TSX

The Toronto Stock Exchange, a major stock exchange in Canada.