1. Within the context of forecasting, which of the following ratios best links the income statement to the balance sheet? a. Net profit margin b. Current Ratio c. Return on Equity d. Asset Turnover e. Day's Sales outstanding 2. You have just computed the Beta of a stock to be 1.5 and the estimate the expected market return next period is 7.3333%. The estimated cost of equity is 16%. With an estimated long run market risk premium of 8.0%, what risk free rate supports this cost of equity? a. 2.00% b. 3.00% c. 4.00% d. 5.00% e. 6.00% 3. You are trying to value Baxter, Inc. (financials on the spreadsheet). Today is June 23, 2014. In one week valuation forecasts will be made. Assume Baxter publishes its 10-K's no earlier than 6 weeks after the fiscal year end and 10-Q's no earlier than 2 weeks after the period end, how many quarters of activity must you forecast (in one week) when estimating the annual net income that will be reported on the next published 10-K? a. 0 b. 1 c. 2 d. 3 e. 4 f. 5 4. Which statistic is assess the whether the estimate of Beta significantly differs from zero in a statistical sense? a. Beta b. T-Statistic of the intercept c. T-Statistic of the independent variable d. Adjusted R-squared e. Correlation coefficient