Question

11. The following is true about natural-logarithm (ln) changes (“log-changes”): a. They can be added together to explain a total log-change. b. They reflect a given dollar gain or loss symmetrically. c. For small changes, they are quite close to percentage changes. c. They are more reliable than percentage changes, which can be misleading. e. All of the above are correct.

12. Regarding financial statements: a. The balance sheet shows what a company owns and owes through time. b. The income statement shows what a company earned at a point in time. c. The cash-flow statement shows changes in revenue and liabilities. c. Both the income statement and the balance sheet show flows in time. e. None of the other choices are correct.

13. Entreprise Value is: a. generally larger than the market value of a company’s total assets. b. the combined value of a company’s assets, debt, and equity. c. the sum of the market value of a company’s debt and equity. c. the market values of interest-bearing debt and equity, net of cash. e. All of the above are correct.

Answer 1

11)  e. All of the above are correct.

12) e. None of the choisces are correct

Reason: Tbalance sheet shows what a company owns and owes at a point of time

The income statement shows what a company earned during a certainperiod

The cash-flow statement shows changes in working capital

13)  d. the market values of interest-bearing debt and equity, net of cash.

EV = Market capitalization + Market value of debt - cash