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Introduction to Corporate Finance 2e

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Total Possible: 23.0

Which of the following firms would qualify as an S Corporation? A firm with 51 different shareholders. a. b.
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A firm that is wholely owned by another corporation. A firm that is wholely owned by a trust that is owned by a corporation. c. d. All of the above would qualify as an S Corporation.
status: correct score: 1.0 correct answer: a your answer: a rejoinder: Correct.


If free cash flow equals operating cash flow then: a. FA = ( CA - A/P - Accruals) b. FA = - ( CA - A/P - Accruals)


c. FA + ( CA - A/P - Accruals) = 1 d. none of the above

status: incorrect score: 0.0 correct answer: b your answer: a rejoinder: Incorrect. FCF = OCF - FA - (CA - A/P - Accruals)

You are going to receive $1,000 six years from today. If the discount rate associated with that cash flow is 11% then what is the present value of the amount? a. $934.00

actively managed beta Capital Asset Pricing Model (CAPM) efficient markets hypothesis (EMH) expected return index fund market portfolio market risk premium passively managed

portfolio weights selling short

An approach to running a mutual fund in which the fund manager does research to identify under valued and over valued stocks. A standardized measure of the risk of an individual asset, one that captures only the systematic component of its volatility. States that the expected return on a specific asset equals the riskfree rate plus a premium that depends on the asset's beta and the expected risk premium on the market portfolio. Asserts that financial asset prices fully reflect all available information (as formally presented by Eugene Fama in 1970). A forecast of the return that an asset will earn over some period of time. A passively managed fund that tries to mimic the performance of a market index such as the S&P 500. A portfolio that contains some of every asset in the economy. The additional return earned (or expected) on the market portfolio over and above the risk-free rate. An approach to running a mutual fund in which the fund manager makes no attempt to identify over valued or under valued stocks, but instead holds a diversified portfolio and attempts to minimize the costs of operating the fund. The percentage invested in each of several securities in a portfolio. Portfolio weights must sum to 1.0 (or 100%). Borrowing a security and selling it for cash at the current market price. An investor who sells short must eventually return the security to the lender by purchasing it at the then-current market price. Therefore, a short seller hopes that either (1) the price of the security sold short will fall, or (2) the return on the security sold short will be lower than the return on the asset in which the proceeds from the short sale were invested.