Which of the following statements best describes the difference between financial leverage and financial risk?

• A.Financial risk refers to the risk that a company may default on its debt and thus transfers the possession of the firm away from shareholders and onto creditors. Financial leverage, on the other hand, measures the effect interest payments have on pre-tax profits.
• B.As financial risk increase, financial leverage ratios will decrease.
• C.While increase in financial leverage may increase the volatility in pre-tax earnings, it does not necessarily mean that a company's probability of default will increase.

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Which of the following statements is recommended with regards to personal investing?
I). Restrictions on participation in an IPO of equity or equity-related securities.
II). Preclearance of all trades.
III). Disclosure of all holdings in which the employee has a beneficial interest.

• A.I and III.
• B.I, II and III.
• C.II and III.

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A list of the percentages of the total number of cases observed at each score value or each subinterval of scores is:

• A.a relative frequency distribution
• B.a histogram
• C.a cumulative frequency polygon

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An industry experiencing rapidly increasing demand and improving profitability is best characterized as being in the _____ stage.

• A.embryonic
• B.growth
• C.shakeout

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A project has a conventional cash flow pattern and positive NPV. If the cash flows for the project, initial outlay, and future after-tax cash flows all double, then

• A.The IRR would increase and NPV would increase.
• B.The IRR would stay the same and NPV would increase.
• C.The IRR would stay the same and NPV would stay the same.

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