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Part A (A 1-page response is required)

Consider the information below from a firm’s balance sheet for 2011and 2012.

Current Assets 2012 2011 Change
Cash and Equivalents $1,561 $1,800 -$  239
Short-Term  Investments $1,052 $3,010 -$1,958
Accounts Receivable $3,616 $3,129 $  487
Inventories $1,816 $1,543 $  273
Other Current Assets                                $ 707             $601                            $  106
Total Current Assets $8,752 $10,083 -$1,331
Current Liabilities
Accounts Payable $5,173 $5,111 $62
Short-Term Debt $  288 $  277 $11
Other Current Liabilities $1.401 $1,098 $  303
Total Current Liabilities $6,862 $6,486 $  376


1. What is the Net Working Capital for 2012?

2. What is it for 2011?

3. What is the Change in Net Working Capital (NWC)?

4. Assuming the Operating Cash Flows (OCF) are $7,155 and the Net Capital Spending (NCS) is $2,372, what is the Cash Flow from Assets?

Part B (A 1/2page response is required)

Assume that you are 23 years old and that you place $3,000 year-end deposits each year into a stock index fund that earns an average of 9.5°/o per year for the next 17 years.

1. How much money will be in the account at the end of 17 years?

2. How much money will you have in the account 15 years later at age 55 if the account continues to earn 9.5% per year but you discontinued making new contributions?

3. How much money would you have at the end of 17 years if you had made the same number of deposits but at the beginning of the year instead of at the end of the year?

4. How much money will you have in the account 15 years later at age 55 if the account continues to earn 9.5% per year but you discontinued making new contributions?

Part C (A 1/2, page response is required)

1. What is the possible range for a correlation coefficient?

2. For purposes of diversification, what type of correlation coefficient among asset returns is preferred by investors? Provide a brief explanation.

3. Describe the two (2) investment rules identified in the text.

4.  Explain the validity of the following statement and provide one (1) supporting fact to justify your reasoning. “Investors do not like risk and will always choose the investment with the least risk.”







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