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Finance 3101 Keen Exam 2nd Edition with Questions and Correct Answers!!
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What are the four elements needed to appropriately compare alternative investments? - Correct Ans: ✔✔
3 other names for unsystematic risk? - Correct Ans: ✔✔
What are the forms of future cash flows that investors in stock might receive? - Correct Ans: ✔✔dividend or market value What are the 3 basic parts of the balance sheet? - Correct Ans: ✔✔ assets liabilities owners equity What is the Balance Sheet or Accounting Identity? - Correct Ans: ✔✔assets = liabilities + owners equity To whom does NI belong to and where does it go? - Correct Ans: ✔✔It belongs to shareholders and it goes in dividends or retained earnings Why does Finance focus on cash flow rather than NI? - Correct Ans: ✔✔You can't spend net income. Easier to manipulate net income? What are 3 factors cited by Brooks that cause NI to not equal cash flow? - Correct Ans: ✔✔
what are two major sources of financing for a corporation? - Correct Ans: ✔✔ debt equity Compared to equity, what is the major advantage and disadvantage of financing with debt? - Correct Ans: ✔✔Debt: is cheaper than equity is less risky has tax advantages with financial leverage, what is fixed and what gets magnified? - Correct Ans: ✔✔Cost gets fixed. Magnified: impact or change in EPS from a changed in EBIT What are two ways to determine if the use of debt will help or hurt shareholders? - Correct Ans: ✔✔