Unit 3 Checkpoint

Yield Curve Analysis Shows

Bonds of single issuer over varying maturities

Large Cap Stocks To Reduce Systematic Risk

Buy broad index options Lower standard deviation Reduce correlation coefficient

When a company recognizes a sale only when payment is made, it is using which form of accounting?

Cash

When an analyst adds back the current year's depreciation to the net income, she is computing the company's

Cash flow from operations

If Value Of US Dollar Decrease

Domestic goods more competitive Foreign goods less competitive

Inflation Risk

Fixed income is susceptible

Under the net present value (NPV) method of evaluating investments, an investment is acceptable if the net present value of the expected returns is

Greater than zero

Liquidity Risk

Municipal bonds

Cash Flow From Operations

Net income + depreciation deduction

With respect to the fiscal policy of the United States, the annual budget request is submitted by the

President

Inflation Inertia

Price will rise slowly then rise fast

High Unemployment Shows

Reduction in inflation

Lower Interest Rates

Result of inflation, not cause or predictor

Limit Business Risk

S & P Index