Finance 301Practice ExamFall 20161Which of the following is true about Asset Diversification?AIt is necessary to invest in at least 500 assets to achieve significant risk reductionBIt is a way of selecting the highest growth stocks in a portfolioCIt involves allocating 100% of investments in the same industry (opposite of diversification)DIt is a method of calculating expected return on an assetEIt is used to reduce exposure to firm-specific risk
2Which of the following is nota tool of finance?
3Which of these statements concerning the Principles of Finance is true?
4Which of the following is common element of a financial crises
5Which of the following statements regarding the cash flow statement is true? APrimary Sourse of Cash is Operating Activities; Primary Use of Cash is Investing ActivitiesBFinancing Activities do not have an impact on the Cash Flow Statement ( you have operating, investing, and financing cash flows)CA typical company has a positive cash flow from Investing Activities. (investingexpenditure area, always negative)DPurchases of PP&E (capital expendituresinvesting activity) can be either an Operating or Financing Activity, based on the size of the purchaseEDepreciation is classified as a cash flow from Financing Activities. (operating activities, added back to net income)
6Which of the following statements about stockholders and stakeholders is true?