1. Combining assets that have highly correlated returns will reduce portfolio risk.

A. True B. False

2. The concept of being risk averse means A. for a given situation investors would prefer relative certainty to uncertainty. B. investors would prefer investments with low standard deviations and greater opportunity for gain. C. that the lower the risk the lower the expected return must be. D. all of the above answers are correct

3. Expected future value of a currency is reflected in its spot rate.

A. True

B. False

4. Eurodollars are A. Canadian dollars deposited in foreign banks. B. foreign dollars deposited in Canadian banks. C. investments of common market countries. D. none of the other answers are correct

5. A firm has targeted a 40% growth in sales this year. Last year's cash as a percent of sales was 15%, accounts receivable 30%, and inventory 35%. What percentage growth in current assets is required to support the growth in sales under the percent-of-sales forecasting method? A. 32% B. 26% C. 18% D. Not enough information to tell