When considering a replacement project, __________ must be included in the cash flow analysis.

• a.)
• unrecoverables
• b.)
• salvage value
• c.)
• sunk costs
• d.)
• depreciation

Which of the following is an example of a market risk for a company that manufactures automobiles?

• a.)
• Increasing costs in the supply chain of material, due to rising fuel costs
• b.)
• Difficulty attracting workers with the requisite skills to meet production demands
• c.)
• Rising tariffs that increase the price of automobiles sold overseas, thereby reducing demand
• d.)
• A union strike that halts production

Which of the following types of financing is typical for a business in its mature stage?

• a.)
• Bank loans
• b.)
• Expansion venture capital
• c.)
• Seed money
• d.)
• Issuing bonds

Which of the following is an advantage of venture capital?

• a.)
• Companies are obligated to repay venture capital funds, but at a much lower interest rate than a typical bank loan.
• b.)
• Although venture capital investments are typically high risk, they offer the potential for large returns for investors.
• c.)
• Once a company receives venture capital funding, it is free to operate without further interference or scrutiny.
• d.)
• Venture capital investors are guaranteed a return on their investment, although the return can vary from small to quite large.

Determine whether the following statement is true of a capital lease, an operating lease, neither or both.

"A commercial financing agreement wherein the company owns the asset when the lease terminates."

• a.)
• Both
• b.)
• Capital lease
• c.)
• Neither
• d.)
• Operating lease

Which of the following is true of the securities underwriting process?

• a.)
• Underwriters purchase securities from an issuer and then hope to sell them at a higher price.
• b.)
• Underwriters rate the creditworthiness of the issuer.
• c.)
• Underwriters determine if a company is eligible to issue an IPO.
• d.)
• Underwriters facilitate the sale of securities by quoting both a bid price and ask price.

What is one potential advantage of being a privately-held company?

• a.)
• It is easier to raise large amounts of capital as a private company.
• b.)
• Certain investors may find the ability to retain control over the company attractive.
• c.)
• A private company typically has an easier time attracting employee talent.
• d.)
• It puts the company in a better position to acquire other companies.