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FIN 370 W5 Final Exam
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True or False Questions

1. Financial management is concerned with the maintenance and creation of wealth. True

2. The current ratio and the acid test ratio are both measures of financial leverage. True

3. Sales occurring in the secondary markets increase the total stock of financial assets that exist in the economy. False

4. The key ingredient in a firm's financial planning is the sales forecast. True

5. The present value of an annuity increases as the discount rate increases. False

6. As the volume of production increases, the fixed cost per unit of the product decreases. False

7. Whenever the IRR on a project equals that project's required rate of return, the NPV equals zero. True

8. The hedging principle involves matching the cash flow from an asset with the cash flow requirements of the financing used. True

9. Because they operate within a highly uncertain environment, utilities hold a large percentage of their total assets in cash. False

10. Accounts receivable are an asset that reflects sales made on credit. True

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