. Questions 1. Classify as true or false a. Utility functions are mathematical representations of attitudes toward risk and return. b. Net income, or net profit, is the proverbial "bottom line," defined as total revenue less total expenses. c. Operating income is profit realized from day-to-day operations excluding taxes, interest income and expense, and what are known as extraordinary items. d. An extraordinary item is one that is both unusual in nature and infrequent in occurrence. e. EBITDA is a proxy of cash flow generation by a company f. EBITDA is earnings after taxes and depreciation g. Free cash flow is total cash available for distribution to owners and creditors after funding all worthwhile investment activities h. Discounted cash flow is a sum of money today having the same value as a future stream of cash receipts and disbursements i. The price of any asset should reflect the cash flows it is expected to generate. In corporate bonds the cash flows take the form of coupons and there is no default risk. j. The value of equities is the present value of the expected cash flows at a risk free discount rate. k. The value of any asset is the future value of expected future cash flows on it. l. As the discount rate increases, the value of an asset increases. m. As the expected growth rate in cash flow increases, the value of an asset increases. n. As the life of an asset is lengthened the value of that asset increases.