Name 1. When we say that the objective of the corporation is to create value for their investors, we really mean it is to: a. Create as many shares of stock as possible b. Maximize the fundamental price of the corporation's common stock c. Maximize the market price of the corporation's common stock 2. The time value of money refers to the fact that: a. Dollars paid or received at two different points in time are different b. Old currency needs to be taken out of circulation c. A dollar today is worth less than a dollar in the future 3. The reason a dollar in the future is worth less than a dollar today is because: a. Inflation erodes the value of a dollar b. There is a risk that the future dollar will be lost c. You can earn interest on money 4. The process of determining the future value of money is: a. Discounting b. Compounding c. Amortization 5. The process of determining the present value of money is: b. Compounding 6. Rational investors are risk averse which means: a. Investors will only invest in assets with fixed returns b. Investors are unwilling to assume risk unless they expect to be adequately compensated c. Investors will assume risk even if returns are expected to decline 7. The risk/return tradeoff curve is: a. Upward sloping b. Downward sloping c. A horizontal line that intersects the vertical axis at the risk-free rate of return 8. Corporate equity consists of: a. Preferred stock, common stock and retained earnings b. Retained earnings and bonds c. Preferred, common stock and bonds