1. What does the Discounted Cash Flow (or Gordon) model suggest to be the most likely variable available to management for maximizing the price of the stock?

1. Declared dividend
2. Beta of the stock
3. Rate of growth of corporate assets
4. Firms cost of capital

2 The identification, valuation, and selection of growth opportunities or projects is referred to as a firm's:

1. Capital structure decision
2. Financing decision
3. Financial risk decision
4. Capital budgeting decision

3 Which of the following statements about the payback criterion for project selection is NOT correct?

1. The payback period attempts to give managers an idea of how soon the original investment in a project will be recovered.
2. The payback period attempts to give managers a rough idea of a projects risk and liquidity.
3. The payback period for project selection, though an incorrect concept for project evaluation, is widely used.
4. . The payback period is widely employed and is therefore an acceptable project selection criterion.