1.)The accounting department is now evaluating a potential project and an analyst is calculating the OCF for the project, which of the following statements are correct? I) Since depreciation is a non-cash item, an error in the depreciation calculation would not affect the final result. II) If the variable cost per unit is overstated, the OCF will be under-estimated. III) If the cash balance is overstated in the calculation, the OCF will be under-estimated.IV) If fixed costs are omitted, the OCF will be over-estimated.

Question 19 options:

a	III, IV only.
b	II, IV only.
c	IV only.
d	I, IV only.

2.)Which of the following statements about the volatility of bond prices are correct? I) All else equal, the price of a five-year bond is more volatile than a 10-year bond. II) All else equal, the price of a bond with 5% coupon rate is more volatile than a bond with 8% coupon rate. III) All else equal, the price of bond making coupon payments annually is more volatile than a bond making coupon payment quarterly.IV) All else equal, a zero-coupon bond is less volatile than a bond with coupons

a	II, III only.
b	II only.
c	I, IV only.
d	II, III, IV only.

3.) A stock with a beta of zero would be expected to:

a	Have a rate of return equal to the market risk premium.
b	Have a rate of return equal to zero.
c	Have a rate of return equal to the risk-free rate.
d	Have a rate of return equal to the market rate.

4.)Which one of the following statements is true?

a	None of the other statements are true.
b	Assuming homogenous expectations, all investors will hold an equal-weighted portfolio of all existing securities.
c	A security lying above the SML is overpriced.
d	The choice of a portfolio along the capital market line is a function of the investors risk tolerance.