A financial manager reviewing a project is concerned about the level of forecast

Question

A financial manager reviewing a project is concerned about the level of forecasting risk in the project's estimated cash flows. The manager should use to identify the variable that presents the highest degree of forecasting risk a. scenario analysis b. simulation analysis c. sensitivity analysis d. forecasting analysis 14· The difference between the bid price and the ask price is called : a. Dealers price b. Brokers price c. Dealers spread d. Bid-ask spread 15. Tim has been promoted and is now in charge of inventory management. In other words, Tim is in charge of a. Capital structure management b. Capital budgeting management c. Working capital management d. Risk Management 16. A financial manager is responsible for deciding whether or not new manufacturing equipment should be purchased to replace existing equipment. The financial manager has decided to purchase the new equipment using a bank loan (60%) and retained earnings (408). Which of the financial management areas would be involved in the decision process? I. Capital budgeting II. Capital structure management IIIWorking capital management a. I only b. I and III only c. II and III only d. I and I1 only e. I, II and III 7. A NPV of zero implies that an ivestment a. has a value greater than its cost. b. has a value equal to its cost. c. has a value less than its cost d. has a long payback period.

Explanation / Answer

First answer is sensitivity analysis.

Difference between bid price and ask price is called dealers spread.

Tim is in charge of working capital management

16. Answer is capital budgeting.

17. NPV of Zero implies investment has a value equall to its cost

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