Finance Questions

Does an unlettered firm have debt?

The use of more debt increases financial risk, which leads to (more/less) risky equity

The use of more debt translates to (higher/lower) interest tax shield

Cash flow statement presents net cash flows relating to what three criteria over a certain period?

T/F: MV is rarely different from BV

T/F: A non cash item is an expense charged against revenues that does not directly affect cash flow

T/F: Balance sheet and income statement combined give a reasonable estimate of the firm's cash flows and market values

T/F: The value of a firm's assets as they appear on the balance sheet of the firm are generally equal to the market value of the firm.

T/F: Financial managers should evaluate book values, not market values

What is the most important pieces of information that can be derived from financial statements?

T/F: The income statement reflects a summary of activity that occurs over some period of time while the balance sheet is a snapshot taken at a single point in time

Can we define the relationship between the risk premium and beta so that we can estimate the expected return?

The higher the beta, the (greater/lower) the risk premium should be

Security market line: portion of the line that is leading up to the market portfolio

Security market line: portion of the line that goes beyond the market portfolio

From the put option holder's viewpoint, the underlying stock is expected to (rise/decline) in value, i.e., "put down."

How many rights does it take to purchase one new share?

The cash position $ in the replicating portfolio is always the minimum of three numbers:

From the call option holder's viewpoint, the underlying stock is expected to (rise/decline) in value, i.e., "call up."

Each existing share has how many rights?