If I had only one asset in my portfolio, I should be worried about:

Question 8 options:

	stand alone risk
	There is no risk in holding just one asset
	portfolio risk
	systematic risk

If a tobacco selling firm like Tobacco Supreme, Inc., is hit with a lawsuit it is an example of:

Question 9 options:

	systematic risk
	diversifiable risk
	market risk
	total risk

Preemptive right gives preferred stockholders the right to:

Question 10 options:

	sell their preferred stock for common stock
	purchase common stock
	preferred stockholders do not have preemptive rights
	convert preferred stock to warrants

Everything else remaining the same, which of the following is likely to be costliest source of capital?

Question 12 options:

	External cost of equity
	Cost of debt after tax
	Internal cost of equity
	Cost of Preferred stock

Using the CAPM, the higher the beta of a stock, the ................. the stock's required rate of return.

Question 14 options:

	higher
	lower
	same
	Can be any one of the above

If there is a rise in the inflation premium there is likely to be an exact parallel shift upwards in the SML.

Question 17 options:

	True
	False

If the initial outlay for a project is $100 and the cash inflows are $60 per year for ten years, and your cost of capital is 18%, you would accept the project using the IRR method?

Question 20 options:

	True
	False

Managers moves to make takeovers difficult has been countered by large institutional stockholders, since these moves decrease the chances of maximizing equity stockholder wealth.

Question 21 options:

	True
	False

The IRR is considered to be a better method than the NPV because IRR does not react to negative cash flows after time 0 in a project.

Question 22 options:

	True
	False

Discounted payback period overcomes all the deficiencies of the payback period

Question 23 options:

	True
	False

Which of the following is considered the best measure in capital budgeting:

Question 24 options:

	NPV
	IRR
	discounted payback period
	payback period