1. What are the three elements illustrated in a risk mapping of a specific risk?

1. Impact, time, level of control
2. Probability, time, level of control
3. Probability, impact, level of control
4. Probability, impact, time
5. Downside, impact, time

2. What are the component of the total systemic risk of the firms equity?

1. Business risk and bankruptcy risk
2. Business risk, financial risk, and industry risk
3. Financial risk and bankruptcy risk
4. Business risk and financial risk

3. Which of the following capital budgeting method can always be used to rank projects based on wealth?

1. Net present value
2. Average accounting rate of return
3. Profitability index
4. Internal rate of return
5. Discounted payback method

1. Which of the following is true about the payback method of capital budgeting?

1. Its main advantage is that it ignores more distant cash flows which are more uncertain.
2. It is difficult to implement in Excel
3. It is often or always used by a majority of large firms
4. It is preferred when the cash flow is complicated or change signs from positive to negative
5. It is counter-intuitive

2. Which of the following statements about dividends is true?

1. Investors in high tax brackets prefer to invest in companies that pay a high dividend
2. A dividend increase is seen as a negative signal for a high growth company
3. Having a stock dividend for investor is better than a cash dividend
4. Highly taxed investor appropriate stock splits
5. All companies are eventually required to pay dividends