1. Free Cash Flow is calculated in the same manner as is Cash Flow From Assets except that payments to creditors are subtracted in the calculation of Free Cash Flow.

True

False

2. Cash flow from assets = cash flow to stockholders + cash flow to creditors

True

False

3. A capital lease differs from an operating lease in that operating leases are long term leases, while capital leases tend to be short term.

True

False

4. In the non-constant growth dividend model, the portion of the analysis in which the dividend is assumed to grow at a constant rate forever is called the Analysis Period.

True

False

5. The Profitability Index is calculated by summing all of the future estimated cash inflows generated by the project, and dividing that sum by the required investment amount.

True

False

6. Which of the below would be most likely to lower the value of the USD against the CAD?

Fewer products are exchanged between the two countries

Inflation increases by a higher percent in the USA than it does in Canada

Inflation increases by a lower percent in the USA than it does in Canada

Interest rates increase by a smaller percent in the USA than they do in Canada

7. An increase in the exchange rate between the USD and the EUR would indicate a stronger USD.

True

False

8. If one wants to build an efficient portfolio consisting of two stocks, it would be bestif returns of those two stocks have a correlation coefficient = 0.

True

False