1.What types of risk can an investor eliminate through diversification? a. Industry Risk b. Company Risk c. Market Risk d. Project Risk

2. What is the WACC for the following? Stock price = $ 12.00 1 million shares outstanding Risk Free Rate = 3% Market risk Premium = 6% Stock Beta = 2.3 30,000 bonds Bond market price. $ 1025 Bond YTM is 6% Tax Rate 25% a. 9.0 % b. 7.94 % c. 8.6% d. 4.32% e. 11.4% f. 10.3%

3. ABC company wants to reduce its cash cycle which of the following will help? a. Making customers pay in 60 days. This will increase the AR balance b. Only taking credit cards. No sales credit. c. Pay accounts payable early so as to reduce the current liabilities d. Negotiate with vendors to pay them in 45 days. e. Reduce inventory turns so we have more inventory to sell. f. Increase inventory turns so we convert inventory to sales faster. g. All of the above h. None of the above.

4. Calculate the Cash Cycle for: DSO = 45 days Inventory Turnover = 3.6 Accounts payable payment terms 30 days a. 90 days b. 145 days c. 116 days d. 176 days e. 86 days

5. Which equation calculates the required rate return on a stock? a. Earnings Per Share/Share Price b. Earnings Per Share / (debt to equity ratio) c. Risk free rate + (Market Risk Premium) *Beta d. Risk free rate + liquidity premium + inflation + default risk + maturity risk. e. Stock Beta / Market Beta f. Price Earnings Ratio / Beta