7

Question 1

A project’s net present value, ignoring income tax considerations, is normally affected by the:

Answer 1

process from the sale of the asset being replaced

Question 2

a letter of credit:

Answer 2

is an arrangement whereby a bank agrees to stand behind the obligation of the importer. gives virtual assurance of collection

Question 3

working capital

Answer 3

current assets and current liabilities

Question 4

aggressive working capital

Answer 4

focus on high profitability potential, despite the cost of high risk and low liquidity.

would reduce current assets, in relation to current liabilities

Question 5

marketable security

Answer 5

easily coverted into cash

Question 6

default risk

Answer 6

(the probability of receiving principal and interest payments in a timely manner)

Question 7

Two general rules can be developed related to present value calculations:

Answer 7

1. Increases in cash inflows (decreases in cash outflows) will result in higher present values, all else being equal.
2. The earlier the cash inflows (the later the cash outflows) the higher the present value, all else being equal.

Question 8

NPV=

Answer 8

present vaue of cash inflows - present value of cash outflows

Question 9

IRR

Answer 9

present value of future cash flows = initial investment

Question 10

sharpe measure formula:

Answer 10

(portfolio return - risk-free rate) / stadard deviation

Question 11

Treynor index

Answer 11

(Portfolio return - Risk-free rate) ÷ Beta.

Question 12

jensen measure:

Answer 12

Risk-free rate + ((Return on market index - Risk-free rate) × Beta).

Question 13

A Trojan horse is:

Answer 13

an unauthorized program that attaches itself to another legitimate program but does not replicate itself like a virus.

Question 14

In a continuous improvement environment

Answer 14

automated monitoring of controls is optional

manual monitoring can help

Question 15

DEPOSITORY CHECKS

Answer 15

aka bank checks

involve concentration banks

not cashable at every bank

Question 16

query utility programs

Answer 16

use for ad hoc, online access to items in database

Question 17

One of the first steps in the creation of a database is to:

Answer 17

define common variables and their attributes used throughout the firm.

Question 18

The acquisition of a major part or all of another enterprise may result in the recognition of the intangible asset known as:

Answer 18

goodwill

Question 19

assure the accuracy of computerized output by:

Answer 19

input, processing/storage, and output.

Question 20

network administrator should be assigned with:

Answer 20

managing remote access

Question 21

discount rates:

Answer 21

the higher the risk, the higher the discount rate, the lower the present value