1) The main disadvantage of the NPV method is the need for detailed, long-term
forecasts of free cash flows generated by prospective projects.
2) The ex-dividend date occurs prior to the declaration date.
3) Two approaches that allow for the retirement of preferred stock are call provisions
and sinking fund provisions.
4) Organized stock exchanges provide the benefits of a continuous market, fair security
pricing, and helping businesses raise new capital.
5) Only individual investors participate in public offerings, while institutional investors
participate in private placements.
6) The corporation is a legal entity separate from its owners; thus it is possible for the
corporation to continue even upon the death of one or more shareholders.
7) The industry in which a firm operates has relatively little effect on the relative
amounts of transaction cash held.
8) Triangular arbitrage eliminates exchange rate differentials across three markets for
three currencies.
9) Accrued taxes and salaries payable are both sources of spontaneous financing.
10) The initial outlay for a new project is an example of an opportunity cost.
11) Cash markets are often referred to as spot markets.
12) Two projects that have the same cost and the same expected cash flows will have
the same net present value.
13) In a chattel mortgage, specific items of inventory are identified in the security
agreement.