Question 17 (1 point) Free Cash Flow is calculated in the same manner as is Cash

Question

Question 17 (1 point)

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.

Question 17 options:

True

False

Question 18 (1 point)

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

Question 18 options:

True

False

Question 19 (1 point)

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

Question 19 options:

True

False

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.

Question 20 options:

True

False

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.

Question 21 options:

True

False

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

Question 22 options:

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

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

Question 23 options:

True

False

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.

Question 24 options:

True

False

True

False

Explanation / Answer

17 Answer: True

Cash flows from assets does not consider the payments made to creditors. Under free cash flows, payments made to creditors shall be considered and shall be deducted from the total cash balance.

18 Answer: False

Cash flow from share holders shall form a part of cash flow from financing activity and cash flow to creditors shall be cash flow from operating activities and shall not form a part of cash flow from assets/investing activities.

19 Answer: False

Operating lease is generally short term while capital lease is generally long term and in the end the asset shall be transferred.

20 Answer: False

Horizon period is the period in which there is constant growth and it continues forever.

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