1. A firm has a WACC of 10% and $50,000,000 in assets. They feel that that they can reduce their WACC to 9% by doing a better job of managing risk. How much should they be willing to pay for risk reduction?

a) $450,000 b) $500,000   c) $1,000,000 d) $5,000,000

2. _____________ was passed in 2010 as a response to the Financial Crisis.

a. Bush-Cheney

b. Dodd-Frank

c. Glass-Steagall

d. Gramm-Bailey

3. The process of pooling loans into bonds is called ___________.

a. Dollarization

b. Monetizing

c. Securitization

d. Tranching

4. The idea that the failure of one firm can cause other firms to fail is called ___________.

a. Contagion

b. Engineering

c. Laundering

d. Rationing