FM-Finals-1-30

What does a balance sheet forecast include?

• Revenue and expense estimates

• Asset and liability estimates

• Marketing and sales forecasts

• Cash inflow and outflow estimates

What is the primary goal of a company seeking bankruptcy protection?

• Increase stock prices

• Reorganize debt obligations

• Eliminate all liabilities

• Liquidate all assets

Using a significant amount of borrowed money is typical of:

• A merger

• A leveraged buyout

• A stock split

• An IPO

A perfectly diversified portfolio has:

• No systematic risk

• No diversifiable risk

• No unsystematic risk

• Equal amounts of stocks and bonds

For a highly risk-averse investor, the best asset allocation is:

• 50% stocks, 50% bonds

• 80% stocks, 20% bonds

• 80% bonds, 20% stocks

• 100% stocks

What is the purpose of assumptions in financial modeling?

• To add complexity to financial projections

• To simplify real-world complexities for financial projections

• To ensure all variables are considered

• To guarantee accurate results

Predicting a company’s future financial position based on current data is the role of:

• A revenue forecast

• A balance sheet forecast

• A marketing plan

• A cash flow projection

A legal process allowing a company to reorganize while halting creditor claims is known as:

• Bankruptcy protection

• Debt consolidation

• Asset liquidation

• Financial leverage

The risk-return tradeoff for portfolios combining risk-free assets and the market portfolio is represented by:

• The Security Market Line

• The Efficient Frontier

• The Capital Market Line

• The Asset Allocation Curve

Future cash inflows and outflows are estimated through:

• A balance sheet forecast

• A cash flow projection

• A capital budget

• An income statement analysis