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TRUE/FALSE. 1)Acompanywithnegativenetincomewillalsohavenegativeoperatingcashflow. 2)Theoretically,marketvaluesofassetsarebetterforevaluatingthecreationofshareholderwealththanaccountingnumbers,butaccountingnumbersareusedbecausetheyaremorereadilyavailable. 3)Ifaprojectsprofitabilityindexislessthanone,thentheprojectshouldberejected. 4)Reducingtheprobabilityofbankruptcyisabenefitofdiversification. 5)Borrowingfundsusingshort-termdebt,suchascommercialpaper,andusingtheproceedstoinvestinlong-terminvestments,createsarefinancingriskthatcanforcefirmstosellassetsatdistressedpricesiffinancingbecomesunavailable.

TRUE/FALSE.

1)Acompanywithnegativenetincomewillalsohavenegativeoperatingcashflow.

2)Theoretically,marketvaluesofassetsarebetterforevaluatingthecreationofshareholderwealththanaccountingnumbers,butaccountingnumbersareusedbecausetheyaremorereadilyavailable.

3)Ifaprojectsprofitabilityindexislessthanone,thentheprojectshouldberejected.

4)Reducingtheprobabilityofbankruptcyisabenefitofdiversification.

5)Borrowingfundsusingshort-termdebt,suchascommercialpaper,andusingtheproceedstoinvestinlong-terminvestments,createsarefinancingriskthatcanforcefirmstosellassetsatdistressedpricesiffinancingbecomesunavailable.

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