1. What is the goal of the Firm? a. To maximize shareholder value b. To only invest in environmentally safe ideas C. To employ as many people as possible d. To treat all stakeholders equally 2. When interest rates go up, what will happen to bond prices: a. They will go up as well b. It depends what is happening in the stock market c. They will go down, as existing bonds are less attractive with lower coupons d. It depends on the amount of demand in the market for bonds 3. In a bankruptcy who is the last to get paid? a. Common stockholders b. Preferred stockholders C. Subordinated debt holders d. Unsecured debt holders 1 4. Which of the following is NOT true regarding security risks: a. There are two types, diversifiable and systemic b. Diversifiable risks can be mitigated by holding a diverse portfolio C. Investors can eliminate systemic risk by holding stocks for a long time d. Investors can not eliminate systemic risk 5. If the beta for an asset is negative, how do the returns for that asset move relative to the overall market? a. They don't correlate with the market at all b. They are less volatile than the market C. They move in the opposite direction of the market d. The beta for an asset with value can't be negative