1) Which of the following statement is incorrect? A) In general, money today is worth more than money in one year. B) For most financial decisions, costs and benefits occur at different points in time. C) We define the risk-free interest rate, r, for a given period as the interest rate at which money can be borrowed or lent without risk over that period. D) We refer to (1 - ) as the interest rate factor for risk-free cash flows. - 2) Which of the following is not a type of financial cash flows? A) Interest expenses on commercial papers B) Capital raised from a private firm's initial public offering (IPO) C) Larger bonus payments to the senior executives due to an elevated share price D) Cash spent on share repurchases in the secondary stock markets 3) Which of the following is not a diversifiable risk? A) The risk that the CEO is killed in a plane crash B) The risk that oil prices rise, increasing production costs C) The risk of a key employee being hired away by a competitor D) The risk of a product liability lawsuit What type of risk matters to an investor with a well-diversified portfolio? How is this type of risk measured? A) Systematic risk; beta B) Unique risk; standard deviation C) Idiosyncratic risk; beta D) Total risk; standard deviation Which of the following new projects would cause a negative side effect (i.e., cannibalization) to your existing business? I. A gas station owner expands floor space to make room for a convenience store. You begin selling coffee in small-sized pouches alongside coffee you sell in regular- sized containers. You build a Taco Bell just down the street from your McDonalds franchise. A) I and II only B) I and III only C) II and III only D) All of the above