59. What type of investors hold the most equities in the USA?

A. Federal Government

B. Insurance Companies

C. Retirement plans (Pension plans, 401K, etc.)

D. Foreign governments

E. Hedge Funds

60. When evaluating different projects, it is important compare the risk profile of those projects. If the risk profile is similar, then you can use the same discount rate. However, if you are comparing to a riskier project which of the following apply?

A. Riskier projects would require a higher discount rate which would result in a lower NPV

B. Riskier projects would require a lower discount rate which would result in a higher NPV

C. Riskier projects would require a lower discount rate which would result in a lower NPV

D. Riskier projects would require a higher discount rate which would result in a higher NPV

61. Market capitalization (market cap) is the product of what two numbers?

A. Total capital structure and authorized shares

B. Book equity and number of outstanding shares

C. Price per share and number of shares outstanding

D. Price/Earnings ratio and beta

62. Working capital is;

A. Assets minus Liabilities

B. Current Assets minus Current Liabilities

C. Fixed Assets (net of accumulated depreciation) minus amortized goodwill

D. Current Assets divided by LTD

63. Free cash flow (FCF) is a term often used by bankers to determine the credit worthiness of a potential customer. It is determined by which of the following formulas?

A. Net profit before taxes times the federal income tax rate

B. Net profit minus depreciation plus fixed assets purchases

C. Net profit plus depreciation minus fixed asset purchases

D. Cash plus working capital

64. When calculating the value of a potential acquisition, the accountants must calculate the NPV of projected future cash flows. Because you cannot project forever, all future cash flows beyond a certain point are usually lumped into one number. What is that number called?

A. Sunset value

B. Sunrise value

C. Tangent

D. Horizon value

65. What is a credit default swap?

A. An option in bank negotiations that allows the borrower to use a different financial year other than the current year.

B. A specific type of federal deficit related to entitlements to states.

C. The process of approving mortgages.

D. A kind of insurance that allows the borrower to shift exposure to a third party