1. A model
a. Cannot be useful unless it mirrors a real situation in great detail
b. is a tool for decision-making
c. is rarely revised once it has been constructed
d. all of the above

2. In a probabilistic model, some element of the problem
a. takes on various values that must be precisely calculated before the model can be solved
b. will not be known until the model had been clearly formulated
c. is a random variable with a known distribution
d. is a random variable about which nothing is known

3. The following is true of deterministic models

a. data input is single point estimates
b. given data input will not always produce the same output
c. all the relevant data are assumed to be known
d. a, b, and c
e. a and c
f. none of the above

4. Acceptable ways to validate models include

a. employing a common sense litmus test
b. using the model with known historical data to assess similarities
c. auditing assumptions and formulas to identify errors, oversights, or bugs
d. comparing model results to other types of models that used the same data
e. b & c
f. all of the above

5. Which of the following would NOT be an optimal chart choice for the data?

a. relationship between two variables: scatter plot
b. categorical data from a supply budget: pie chart
c. dollar amount of sales for top 10 customers: line graph
d. annual expenses for 5-year period: line graph

6. Which of the following is TRUE of linear trend extrapolation in Excel, it

a. is good for long-range forecasts
b. can accommodate breaks in historical data
c. looks to historical data to statistically predict future results
d. does not employ a least-squares approach to generate forecasts

7. In a short-run financial planning model, the current month's accounts receivable balance is the previous month's balance plus

a. the current month's credit sales
b. the current month's sales
c. current month's sales less the current month's receipts
d. the current month's sales less the previous month's receipts

8. Associated with the Additional Funds Needed or DFN model, which of the following constitute(s) a spontaneous financing source?
I. accounts receivable
II. accounts payable
III. deferred expenses
IV. inventories
V. accrued expenses

a. I and II
b. I and IV
c. II and III
d. III and IV
e. II and V

10. When evaluating the accuracy of regression analysis using r2, which of the following represents the highest accuracy (coefficient of determination):
a. 0 to 1.0
b. 0 to 0.5
c. 0 to -1.0
d. 0.7 to 1.0