1. The "portfolio effect" in capital budgeting refers to
the degree of correlation between various investments.
the coefficient of variation.
the relationship of stocks to bonds.
the risk-adjusted discount rate.
2. Which of the following is NOT true about the life-cycle growth and dividend policy?
In the growth stage, a firm pays stock dividends.
In the expansion stage, a firm pays low to moderate cash dividends and occasionally may have stock splits.
In the development stage, a firm usually pays stock dividends and some low cash dividends.
In the maturity stage, a firm usually pays moderate to high dividends.