Question

1.) Capital budgeting is concerned with:

a.) managing a firm's cash budgeting procedures

b.) whether a company's assets should be financed with debt or equity

c.) planning sales of a corporation's equity capital

d.) what long-term investments a firm should undertake

2.) A "normal" yield curve is

a.) upward sloping

b.) downward sloping, then upward sloping

c.) downward sloping

d.) upward sloping, then downward sloping

Answer 1

1) d) what long-term investments a firm should undertake

Capital budgeting always concerned with evaluating the projects or long term investments based on their profitability and choosing them

2) a)Upward sloping

In normal yeild curve, short term debt instruments will have lower yeild than long term debt instruments whose credit quality is same, which gives upward sloping curve