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, If accounts receivable increases, what is the impact on CFO? - correct ans:CFO decreases
Are actual taxes paid the same as how on the GAAP income statement? - correct ans:No.
Actual Taxes = IRS Rules
Income Statement = GAAP
Which decisions require using subjective estimates? - correct ans:Economic life of a new asset.
If there is a 30% change of a recession, what is the probability of expansion? - correct ans:70%
*The sum of probabilities must equal 100%
How much interest is paid on a 6% bond over 2 years and 3 months? - correct ans:2 years and 3 months:
2 + (3/12) = 2 + (.25) = 2.25
6% x 1,000 = $60 per year
$60 x 2.25 = $135
How does a "prudent investor" select investments? - correct ans:Seeks the highest return for
"appropriate" amount of risk.
What do points on the Efficient Frontier measure? - correct ans:The maximum return for a given level of
risk; maximum Return-to-Risk ratio.
What is "Beta?" - correct ans:Measure of a stock's risk relative to the market.