1 A treasury security that has less than a year to maturity is called Municipal Bond Treasury Bill Treasury Note Treasury Bond 2 Which one of the following is false regarding to differences between debt and equity Equity provides ownership Debtholders receive interest payments As debt of a company increases the default probability of not being able to pay the debt increases Equity holders do not have any voting right 3 Which one of the following is not one of the short comings of dividend growth model Erratic dividend payments dividend payments may not follow a pattern Long period of no dividends there are many companies that do not pay dividend payments Equity holders are entitled to receive dividend payments In recent years companies utilize repurchases more than dividend payments 4 Which one of the following is false related to payback and discounted payback period models As long as the discount rate is positive discounted payback period is longer than payback period for a given project In payback period model cash flows are discounted to time period zero Cash flows after the cutoff period are not included in payback and discounted payback period calculation There is an arbitrary cut off period 5 Which one of the following is the best decision method NPV IRR Payback period Profitability Index 6 Which one of the following is false regarding long term projects They involve longer time horizons They cost larger sums of money Cost of capital is lower They require a lot more information to be collected as part of their analysis 7 A cost that should be ignored when evaluating a project because that cost has already been incurred and cannot be recouped is referred to as a(n) fixed cost forgotten cost variable cost sunk cost 8 Which one of the following terms is most commonly used to describe the cash flows of a new project that are simply an offset of reduced cash flows for a current project Opportunity cost Sunk cost Erosion Replicated flows

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1. A treasury security that has less than a year to maturity is called Municipal Bond Treasury Bill Treasury Note Treasury Bond 2. Which one

1. A treasury security that has less than a year to maturity is called

	Municipal Bond
	Treasury Bill
	Treasury Note
	Treasury Bond

2. Which one of the following is false regarding to differences between debt and equity?

	Equity provides ownership
	Debtholders receive interest payments
	As debt of a company increases the default probability of not being able to pay the debt increases.
	Equity holders do not have any voting right.

3. Which one of the following is not one of the short comings of dividend growth model?

	Erratic dividend payments: dividend payments may not follow a pattern.
	Long period of no dividends: there are many companies that do not pay dividend payments
	Equity holders are entitled to receive dividend payments.
	In recent years companies utilize repurchases more than dividend payments.

4.Which one of the following is false related to payback and discounted payback period models?

	As long as the discount rate is positive discounted payback period is longer than payback period for a given project.
	In payback period model cash flows are discounted to time period zero.
	Cash flows after the cutoff period are not included in payback and discounted payback period calculation.
	There is an arbitrary cut off period.

5. Which one of the following is the best decision method?

	NPV
	IRR
	Payback period
	Profitability Index

6. Which one of the following is false regarding long-term projects?

	They involve longer time horizons.
	They cost larger sums of money.
	Cost of capital is lower.
	They require a lot more information to be collected as part of their analysis.

7. A cost that should be ignored when evaluating a project because that cost has already been incurred and cannot be recouped is referred to as a(n):

	fixed cost.
	forgotten cost.
	variable cost.
	sunk cost.

8. Which one of the following terms is most commonly used to describe the cash flows of a new project that are simply an offset of reduced cash flows for a current project?