1. The money market is usually thought of as dealing with long-term debt instruments issued by firms with excellent credit ratings.
2. For a firm to have its securities listed on an exchange, it must meet certain requirements. These usually include measures of profitability, size, market value, and public ownership.
3. When fixed expenses increase relative to sales, it indicates that there is not enough productive
capacity to absorb an increase in sales.
4. The more frequent the compounding periods in a year, the higher the future value.
5. In measuring cash flows we are interested only in the incremental or differential after-tax cash flows that are attributed to the investment proposal being evaluated.
6. Additional cash needed to fill increased working capital requirements should be included in the initial cost of a product when analyzing an investment.
7. The weighted average cost of capital is the minimum required return that must be earned on additional investment if firm value is to remain unchanged.
8. The weighted cost of capital assumes that the company maintains a constant dividend payout ratio.
9. In most instances, as the amount of debt rises, the common stockholders will decrease their required rate of return.
10. The objective of hedging strategy is to have a zero net asset position in a foreign currency.