2. If a firms debt-to-equity ratio is.5, what is its total debt to total asset ratio? A.0.25 B.0.33 C.0.5 D.0.75 E.0.8 N 3. A firm wishes to maintain a sustainable growth rate of 12% per year and a retention ratio of 90%. The total assets turnover is constant at 0.6667, and profit margin is 10%. What must be the equity multiplier ratio? A.1.52 B.1.67 C.1.79 D.0.79 4. Debt service is A.interest payments plus repayment of debt principal. B.refinancing bonds with a lower interest rate, C.refinancing a bond with a higher interest rate. D.payment of bond interest only E.None of the above. 5. Which of the following is not included in the computation of operating cash flow? A.Earnings before interest and taxes OB.Interest paid C.Depreciation D.Current taxes E. All of the above are included. 8. The primary distinction between tangible and intangible assets is that Aintangible assets have a physical existence while tangible assets do not. B.intangible assets do not have a physical existence while tangible assets do. C.tangible assets do not show up on the balance sheet. D.intangible assets do not show up on the balance sheet. Eintangible assets do not show up on the balance sheet. 9. If forecasted net income is $3,600 and the expected dividend is $1,098 and the tax rate is 34%, what is the retention ratio? A.0.198 B.0.3 C.0.7 D.0.802 E.None of the above. 10. Cash flow to stockholders is defined as A.interest payments B.repurchases of equity less cash dividends paid plus new equity sold. C.cash flow from financing less cash flow to creditors. D.cash dividends plus repurchases of equity minus new equity financing E.None of the above. 11. Which of the following is not considered one of the basic questions of corporate finance? A.What long-term assets should the firm invest? B.How much inventory should the firm hold? C.How can the firm raise money for required capital expenditures? D.How should the short-term operating cash flows be managed? E.All of the above 12. Time preference refers to the fact that A.corporations match current assets with current liabilities to minimize the chance of bankruptcy B.corporations match both current and long-term assets with current and long-term liabilities to minimize the change of bankruptcy. C.investors prefer current cash flows to future cash flows. D.investors seek to time cash flows to minimize tax liabilities. E.None of the above. 13. Which of the following will increase sustainable growth? A.Buy back existing stock B.Decrease debt. Cincrease profit margin. D.Increase asset requirement ratio. E.Increase dividend payout ratio. 15. The primary market is defined as the A.market for insured securities. B.market for new issues. O C.market for securities of the largest firms. OD.over-the-counter market. E. None of the above