Multiple choice

1) Ideas for capital budgeting projects come from all levels within an organization. The bottom-up process results in ideas moving __________ through organization.

A. downward 

B. upward 

C. sideways 

D. any way

2) The main source of short-term operating capital is _________.

A. trade credit 

B. bank loans 

C. bonds 

D. sale of treasury stock 

3) An investor’s risky portfolio is made up of individual stocks. Which of the following statements about this portfolio is true?

A. Each stock in the portfolio has its own beta. 

B. Selling any stock in this portfolio will lower the beta of the portfolio. 

C. An investor cannot change the risk of this portfolio by her choice about personal leverage. 

D. Each stock in the portfolio will have a beta greater than 1. 

4) Dimensions of risk include __________.

A. uncertainty about the future outcome 

B. the certainty of a negative outcome 

C. the impossibility of the same return 

D. uncertainty about yesterday’s outcome