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1) Most managers are risk-averse, since for a given increase in risk they require an
increase in return.
2) Marketable securities are short-term, interest-earning, money market instruments that
can easily be converted into cash.
3) Purchasers of a stock selling ex dividend receive the current dividend.
4) In a bond indenture, the term 'security interest" refers to the fact that most firms that
issue bonds are required to establish sinking fund provisions to protect bondholders.
5) If a project's IRR is greater than 0 percent, the project should be accepted.
6) If an investment in a new asset results in a change in current assets that exceeds the
change in current liabilities, this change in net working capital represents an initial cash
outflow.
7) In establishing a dividend policy, a firm should retain funds for investment in
projects yielding higher returns than the owners could obtain from external investments
of equal risk.
