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1) For most modern corporations, the more cash they have, the better off they are.
2) "Poison pills" are strategies that reduce the value of a firm if it is taken over by a
corporate raider.
3) Operating leverage emphasizes the impact of using fixed assets in the business.
4) Ratios are only useful for those areas of business that involve investment decisions.
5) Between 1990 and 2009, the average first-day return for IPOs in the U.S. was over
30%.
6) Inflation is assumed to be a temporary problem that does not affect financial
decisions.
7) The P/E ratio provides no indication of investors' expectations about the future of a
company.
8) Net working capital is the difference between current assets and current liabilities.
9) "Balance of payments" is a method of keeping the foreign exchange market in
equilibrium.
10) Many companies try to maintain investment grade status due to the significant yield
differential when rated with a junk-bond status.
11) Free cash flow is equal to cash flow from operating activities plus depreciation.
12) A money market hedge does not require the use of a futures exchange.
13) It would not be unusual for an investment banking syndicate to include as many as
30 investment banking houses in large offerings.
