Which of the following is not a term used to describe the denominator in the discounted cash flow model?

		Discount rate
		Compounding rate
		Required rate of return
		Capitalization rate

QUESTION 13

When building a portfolio, what are the two basic components of an investors investment decision?

		Risk and return
		Buying and selling
		Cash flows and capital gains
		Asset allocation and security selection

QUESTION 14

In the U.S., the largest component of GDP is:

		government spending.
		business investment.
		consumer spending.
		real estate expenditures.

QUESTION 15

Which of the following increases the price an investor is willing to pay for stock?

		The investor increases his estimate of the constant growth rate for dividends.
		The investor decreases his estimate of the constant growth rate for dividends.
		The investor increases his estimate of the required rate of return.
		The investor assumes a higher beta for the stock.

QUESTION 16

What are two major approaches used to value stocks?

		Discounted cash flow techniques and absolute valuation techniques
		Discounted cash flow techniques and relative valuation techniques
		Compound free cash flow techniques and relative valuation techniques
		Markowitz diversification techniques and relative valuation techniques

QUESTION 17

Which of the following statements concerning index funds and actively managed funds is true?

		Their performance is about equal.
		They tend to have an inverse relationship.
		Actively managed funds tend to outperform index funds.
		Index funds tend to outperform actively managed funds.