Which will be larger: accrual taxes payable or accounting income tax expense Correct Answer:  Accounting tax expense will be higher; actual taxes based on IRS rules will be lower

Which financial ratios measure "efficiency"? Correct Answer:  Asset turnover and Fixed Asset turnover

Which ratio is the best measure of a firm's ability to pay bills? Correct Answer:  Quick Ratio

Which decision requires using subjective estimates? Correct Answer:  Economic life of a new asset

What is the yield to maturity on a bond? Correct Answer:  The return earned from the purchase date to maturity

If a firm buys a 30-day CD, where is it carried on the balance sheet? Correct Answer:  Cash and ST in current assets

How does a "prudent investor" select investments? Correct Answer:  Seeks the highest return for "reasonable" amount of risk

What is the difference between WACC and CAPM's required return? Correct Answer:  CAPM includes only equity required return; WACC includes debt and equity

What do points on the Efficient Frontier measure? Correct Answer:  The maximum return for a given level of risk; maximum Return-to-risk ratio

What is Beta? Correct Answer:  Measure of volatility of a stock's risk relative to the market

Why are accurate forecasts important? Correct Answer:  Plan for resources to support sales

Which leverage measure shows the impact of EBIT changes on pre-tax profit (EBT)? Correct Answer:  Financial leverage