1) Using the percent of sales method, projected common stock on the 2010 pro forma
balance sheet is equal to (Common Stock 2009/Sales 2009) times Projected Sales 2010.
2) The hedging principle is also called the principle of self-liquidating inventory.
3) If a firm were to earn exactly its cost of capital, we would expect the price of its
common stock to remain unchanged.
4) Issuers of commercial paper usually maintain lines of credit with banks to back up
their short-term financing needs.
5) For a project with multiple sign reversals in its cash flows, the net present value can
be the same for two entirely different discount rates.
6) When solving time value of money problems on a financial calculator, you must
select the “end mode” when you enter the final years cash flow.
7) An extremely liquid asset is one that can be sold for cash quickly without a reduction
in price below its current market value.
8) A real interest rate is the interest rate on a fixed-income security that has no risk in an
economic environment of high inflation.
9) International Financial Reporting Standards (IFRS) is a set of principle-based
accounting standards that were established by the International Accounting Standards
Board (IASB).
10) Its ability to raise capital by selling stock makes the corporation the best form of
organization in terms of raising capital.