1. One of the key functions of financial management is the allocation of existing resources with the expectation of reaping benefits in the present. True/False.
2. The relationship between investment, that is, allocation of resources and returns (future benefits) is symmetrical. True/False.
3. The benefit stream from investments is uncertain because it may fall short of the expected return or it may exceed the initial estimate. True/False.
4. Uncertainty can be managed and avoided. True/False.
5. For successful financial management, the external environment is not important. True/False.
6. An important part of any planning discipline is the sensitivity testing of the results to approximate the probable impacts of changing circumstances. True/False.
7. It is prudent to predict the impact of changed sales volume on profitability in the abstract. True/False.
8. The uncertainties that make forecasting such a hazardous endeavor are viewed by management as business risks. True/False.
9. In monopolistic situations, the risk is very high. True/False.
10. Risk is the convergence likely to be experienced from the expected returns. True/False.
11. A risk averse manager will accept an even bet. True/False.
12. All investments that lie on the Capital Market Line (CML) is inefficient. True/False.
13. Interest, the time value of money, is the price paid to potential lenders and investors to induce them to consume. True/False.
14. The use of any fund entails an opportunity cost as it can be invested elsewhere and earns a return. True/False.