| Analysis of a change in a projects npv when a single variable is changed is | sensitivity analysis |
| Scenario analysis is defined by | when what if questions are posed |
| An analysis that combines scenario analysis with sensitivity analysis | simulation |
| fixed costs | regardless of quantity produced |
| The change in variable costs that occurs when production is increased by one unit | marginal costs |
| Variable costs can be defined | vary directly with sales |
| The change in revenue that occurs when one more unit of output is sold | marginal revenue |
| Operating leverage is the degree of dependence a firm places on | operating cash flows |
| Which one of these combinations must increase contribution margin | increasing sale price and decreasing variable cost per unit |
| Which of the following characteristics best describes a project that has a low degree of operating leverage | high variable costs relative to fixed costs |
| Standard deviation is a measure of which of the following | volatility |
| The average compound return earned per year over a multiyear period os called the _____ average return | geometric |
| Describes dividend yield | next years dividend divided by todays stock price |
| If inflation rate is positive, the real rate of return on security will be ______ the nominal rate of return | less than |
| Inside info has the least value when financial markets are | strong |
| Year ago Stock 32.15; dividend 0.20; today stock 33.09; what is capital gain | 0.94 |
| Stock 49.60; loss of 16.54%; capital gain was -9.92; dividend yield? | capital gain divided by stock price; that plus dividend loss equals 3.46 |
| A stock has annual return of 5, 21, -12, 7, -6; arithmetic and geometric | 3, 2.37 |
| What will increase cost of equity? Annual dividend of 1; beta of 1.2 | a reduction in the risk free rate |
| The dividend growth model cannot be used to compute the cost of equity for a firm that | has a retention rate of 100% |
| Which of the following increases a firms after tax cost of debt | decrease in the firms tax rate |
| What is the after tax cost of debt in the firms weighted average cost of capital if the tax rate is 34% | 5.94 |
| What is the firms dividend | 0.08= x/75-3.15 |
| Dividend valutaiton model | determines the value of a share of stock by taking present value |
| Optimal capital structure | if the result is the lowest possible wacc |
| Marginal costs of capital | the cost of the last dollar of capital raised, essentially the cost of another unit of capital raised |
| Capital asset pricing model | the equation of the sml showing the relationship between expected return and beta |
| Wacc | the cost of capital for the firm as a whole, and it can be interpreted as the required return on the overall firm |
| Cost of capital | minimum required return |
| Financial capital | financial assets or the financial value of assets, such as cash and funds held in deposit accounts, as well as the tangible machinery and production equipment used in environments such as factories and other manufacturing facilities |
| flotation costs | essentially the costs of accepting a new project |
