1. Which of the following is NOT true of WACC?

a. It is the required rate of return

b. It is a rate at which we can discount future cash flows

c. It accounts for both the cost of debt and equity

d. We must account for the tax benefit of equity when calculating it

e. It stands for weighted average cost of capital

2. Which of the following is true about the balance sheet?

a. Which of the following is true about the balance sheet?

b. The balance sheet shows investors the value of what the company has owned and owed over a period of time

c. The balance itemizes a companys profitability

d. Net Working Capital (NWC) is an account on the balance sheet

e. Accumulated depreciation can be found on the balance sheet

3. What is the cost of equity for a firm with a beta of 1.2, alpha of 3%, risk free rate of 2%, market cap of $1.4 Billion, and expected market return of 15%?

a. 2.40%

b. 15.15%

c. 15.60%

d. 17.60%

e. 18.00%

4. Which of the following is considered a levered multiple?

a

. P/E/G

b. EV/EBITDA

c. EV/Sales

d. Operating Margin

e. Current Ratio

5. Which of the following can be eliminated through effective diversification?

a. Market risk

b. Idiosyncratic risk

c. Credit risk

d. Cross-currency risk

e. Risk