Financial Management Reviewer Outline PDF

# Management of Financial Institutions Association ## **Grab a Copy** **FMDFINA:** **Financial Management** Prepared by the Academics Committee of MaFIA 2023 **We Make Money Work** ## **Reviewer Outline** 1. **Introduction to Finance** 2. **Financial Ratio Analysis** 3. **Risk and Return**...

# Management of Financial Institutions Association ## **Grab a Copy** **FMDFINA:** **Financial Management** Prepared by the Academics Committee of MaFIA 2023 **We Make Money Work** ## **Reviewer Outline** 1. **Introduction to Finance** 2. **Financial Ratio Analysis** 3. **Risk and Return** 4. **Post-Test** ## **Introduction to Finance** ### **What is Finance?** * Finance is the study of how people and businesses evaluate investments and raise capital to fund them. (Titman, Keown, and Martin). * Finance can be defined as the science of money management. (Wikipedia). * Financial management means the efficient and effective management of money (funds) in such a manner as to accomplish the objectives of the organization. ### **Reasons for Studying Finance** * Knowledge of financial tools is critical to making good decisions in both the professional world and personal lives. * Finance is an integral part of the corporate world. * Many personal decisions require financial knowledge. * Examples: buying a house, planning for retirement, leasing a car. ### **Types of Financial Markets** 1. **Money Market** (short-term financial market). 2. **Capital Market** (long-term financial market). ### **Goal of Financial Management** * The primary financial goal is shareholder wealth maximization, which translates to maximizing stock price. ### **Stock Price vs. Intrinsic Value** * **Intrinsic Value:** * It is a stock's true value based on accurate risk and return data. Can be estimated but not measured precisely. * **Market (Stock) Price:** * It is the stock value based on perceived but possibly incorrect information as seen by the marginal investor. ### **Equilibrium** * The situation in which the actual market price equals the intrinsic value. * In this situation, investors are indifferent between buying and selling. ### **Overvaluation** * It is when the stock price exceeds the intrinsic value. * If a security is overvalued, it would be good to SELL the security. You are going to get more from the less that you have. ### **Undervaluation** * When the stock price is less than the intrinsic value. * If a security is undervalued, it is a good thing to buy it. It means that you are going to pay less for something that is valued more. A diagram is provided to illustrate the relationship between stock price and intrinsic value, with the x-axis representing the stock price and the y-axis representing the intrinsic value. The diagram illustrates the concepts of equilibrium, overvaluation, and undervaluation. ### **Basic Financial Management Principles** * **Principle 1: Money has time value** * A peso today, all things being the same, is worth more than a peso tomorrow. Therefore, it is important to compute the value of money from different time periods. * **Principle 2: There is a risk-return tradeoff** * Although investing in higher risk investments does not always result in a higher realized rate of return, generally, a higher risk is expected to generate higher returns. * **Principle 3: Cash flows are the source of value** * The net present value of the cash flow to the company is the difference between the cash flows it would produce with the potential new investment and the cash flows it would sacrifice for that investment. * **Principle 4: Market prices reflect information** * Investors respond to new information by buying or selling their investments. The speed with which they act and the way that prices respond to the information determine the efficiency of the market. ## **Basic Financial Statements** 1. **Income Statement** * An income statement provides the following information for a specific period of time (for example, a year, 6 months, or 3 months): Revenue, Expenses, and Profit. * Profit = Revenues (or Sales) - Expenses. * We can use the income statement to determine the *Earnings per Share (EPS)* and *Dividends*. * EPS= Net Income ÷ Number of Shares Outstanding. * Dividends per Share= Net Income ÷ Number of Shares. * The **Gross Profit Margin (GPM)**: * Gross Profit ÷ Sales. * The **Operating Profit Margin**: * Net Operating Income ÷ Sales. * **Net Profit Margin**: * Net Profit + Sales. 2. **Balance Sheet** * The balance sheet provides a snapshot of the following on a specific date (for example, as of December 31, 2010): * Assets (value of what the firm owns). * Liabilities (value of firm's debts). * Shareholder’s equity (the money invested by the company owners). * **Total Assets = Total Liabilities + Total Shareholder's Equity.** * **The Stockholder's Equity** * *Par value* is the stated or face value a firm puts on each share of stock. * *Paid-in capital* is the additional amount the firm raised when it sold the shares. * *Retained earnings* are the portion of net income that has been retained (i.e. not paid in dividends) from prior years operations. * Par value of common stock + Paid Capital + Retained Earnings. * **Firm Liquidity and Net Working Capital** * Liquidity refers to the speed with which an asset can be converted to cash without loss of value. * We can thus measure a firm's liquidity by computing the *Net Working Capital= Current Assets - Current Liabilities*. * **Debt and Equity Financing** * *Payment*: Payment for debt holders is generally fixed (in the form of interest); Payment for equity holders (dividends) is not fixed nor guaranteed. * *Seniority*: Debt holders are paid before equity holders in the event of bankruptcy. * *Maturity*: Debt matures after a fixed period while equity securities do not mature. 3. **Cash Flow Statement** * It reports cash received and cash spent by the firm over a period of time (for example, over the last 6 months.) * Used by firms to explain changes in their cash balances over a period of time by identifying all of the sources and uses of cash. * **Components:** * **Operating activities:** represent the company's core business including sales and expenses. Basically, any activity that affects net income for the period. * **Investing activities:** include the cash flows that arise out of the purchase and sale of long-term assets such as plant and equipment. * **Financing activities:** represent changes in the firm's use of debt and equity such as the issue of new shares and payment of dividends. * **Cash Flow Analysis Summary:** * Change in Cash = Ending Cash - Ending Cash * Balance for 2010 Balance for 2010 Balance for 2009 * **Sources of Cash:** * Decrease in an asset account. * Increase in a liability account. * Increase in owner’s equity account. * **Uses of Cash:** * Increase in an asset account. * Decrease in a liability account. * Decrease in owner’s equity account. * Ending Cash Balance = Beginning Cash Balance + Cash Flow from Operating Activities + Cash Flow from Investing Activities + Cash Flow from Financing Activities. 4. **Statement of Shareholder's Equity** * It provides a detailed account of the firm's activities in the following accounts over a period of time (for example, last six months): * Common stock account. * Preferred stock account. * Retained earnings account. * Changes to owner’s equity. ## **Accounting Principles Used to Prepare Financial Statements** 1. **The Revenue Recognition Principle** * It states that the revenue should be included in the firm's income statement for the period in which: * Its goods and services were exchanged for cash or accounts receivable; or * The firm has completed what it must do to be entitled to the cash.. 2. **The Matching Principle** * This principle determines whether specific costs or expenses can be attributed to this period's revenues. * The expenses are matched with the revenues they helped produce. * For example, employees' salaries are recognized when the product produced as a result of that work is sold, and not when the wages were paid. 3. **The Historical Cost Principle** * This principle provides the basis for determining the dollar values the firm reports in its balance sheet. * Most assets and liabilities are reported in the firm's financial statements at *historical cost*, i.e. the price the firm paid to acquire them. The historical cost generally does not equal the current market value of the assets or liabilities. ## **Cost of Capital** * Refers to financial resources available for use to start, run, or expand a business. * Cost of Debt = % Interest Charge. * Cost of Equity = % Expected Return. ### **1. Weighted Average Cost of Capital (WACC)** $WACC = [(kd \times (1-T) \times wd)] + (kps \times Wps) + (Kcs \times Wcs)$ Where: * $k_d$ = Cost of Debt * $w_d$ = Proportion of Capital Raised by Debt * $k_{ps}$ = Cost of Preferred Stock * $W_{ps}$ = Proportion of Capital Raised by Preferred Stock * $k_{cs}$ = Cost of Common Stock * $W_{cs}$ = Proportion of Capital Raised by Common Stock * After-Tax Cost of Debt: * $k_d \times (1-T)$. * Cost of Preferred Stock: * $k_{ps} = \frac{Div_{ps}}{P_{ps}}$. Where: * $k_{ps}$ = Cost of Preferred Stock. * $Div_{ps}$ = Dividend on Preferred Stock. * $P_{ps}$ = Present Value of Preferred Stock. * Note: Preferred Dividend = Par/Face Value of Preferred Stock x Dividends per Preferred Stock. ### **Cost of Common Stock** * **CAPM Model**: * E(r_asset_j) = r_f + β_asset_j[E(r_market) - r_f] * **Dividend Growth Model**: * $k_{cs} = \frac{D_1}{P_{cs}} + g$. Where: * Kcs = Cost of Common Stock. * D1= Dividend on Period 1. * Pcs = Present Value of Common Stock. * g = Growth Rate. ## **Financial Ratio Analysis** ### **Five Major Categories** 1. **Liquidity**: Ability to pay currently maturing debts 2. **Asset Management**: Efficient use of assets 3. **Debt Management**: How assets are financed and the ability to pay long-term debt 4. **Profitability**: Profitability and asset utilization. 5. **Market Value**: Stock price and value of the firm ### **Liquidity Ratios** * **Current Ratio**: * $Current Ratio = \frac{Current Assets}{Current Liabilities}$. * **Working Capital**: * Current Assets - Current Liabilities. * Current Assets = Cash, Marketable Securities, Receivables, Prepayments, and Inventories. * **Quick/Acid Test Ratio**: * $\frac{Cash + Marketable Securities + Receivables}{Current Liabilities}$. ### **Asset Management Ratios** * **Inventory Turnover**: * $\frac{COGS}{(\frac{Beginning Inventory + Ending Inventory}{2})}$. * **Days of Inventory**: * $\frac{365 Days}{Inventory Turnover}$. * **Receivables Turnover**: * $\frac{Net Sales}{(\frac{Beginning Receivables + Ending Receivables}{2})}$. * **Days of Receivables**: * $\frac{365 Days}{Receivables Turnover}$. * **Fixed Assets Turnover**: * $\frac{Net Sales}{Net Fixed Assets}$. * **Total Assets Turnover**: * $\frac{Net Sales}{Total Assets}$. ### **Debt Management Ratios** * **Payables Turnover**: * $\frac{COGS}{(\frac{Beginning Accounts Payable + Ending Accounts Payable}{2})}$. * **Days of Payables**: * $\frac{365 Days}{Accounts Payable Turnover}$. * **Debt Ratio**: * $\frac{Total Liabilities}{Total Assets}$. * **Times Interest Earned**: * $\frac{Total Liabilities}{Total Stockholders' Equity}$. * **Cash Coverage Ratio**: * $\frac{Operating Income or EBIT}{Interest Expense}$. * **Cash Coverage Ratio**: * $\frac{EBITDA}{Interest Expense}$. * **Debt to Long-term Capital**: * $\frac{Long-term Liabilities}{Long-term Liabilities + Stockholders' Equity}$. ### **Profitability Ratios** * **Operating Margin**: * $\frac{Gross Profit}{Net Sales}$. * **Profit Margin**: * $\frac{Operating Profit or EBIT}{Net Sales}$. * **Net Profit Margin**: * $\frac{Net Income}{Net Sales}$. * **Return on Assets**: * $\frac{Net Income}{Average Assets or Total Assets}$. * **Return on Equity**: * $\frac{Net Income}{Common Equity}$. * **Return on Equity (Du Pont)**: * Net Profit Margin × Assets Turnover × Equity Multiplier * **Net Profit Margin**: * $\frac{Net Income}{Sales}$. * **Assets Turnover**: * $\frac{Sales}{Total Assets}$. * **Equity Multiplier**: * $\frac{Total Assets}{Common Equity}$. ### **Market Value Ratios** * **Price-Earnings Ratio**: * $\frac{Stock Price per Share}{Earnings per Share}$. * **Market-Book Ratio**: * $\frac{Market Price per Share}{Book Value per Share}$. ### **Other Ratios** * Horizontal/Trend. * Vertical/Common Size. ## **Risk and Return** ### **Risk** * The possibility that an actual return will differ from our expected return. * Uncertainty in the distribution of possible outcomes. * It is measured by *standard deviation.* * The greater the *standard deviation*, the greater the uncertainty, and, therefore, the greater the risk. ### **Types of Risks** 1. **Stand-Alone Risk**: the risk an investor would face if he held only one asset. 2. **Portfolio Risk**: the risk an investor would face of he held a number of assets. 3. **Market Risk (Systematic Risk)**: non-diversifiable; this type of risk cannot be diversified away. 4. **Company Unique Risk (Unsystematic Risk)**: diversifiable (prevented); this type of risk can be reduced through diversification. ### **Return** * A profit from an investment. ### **Types of Return** 1. **Expected Return**: the return that an investor expects to earn on an asset, given its price, growth potential, etc. 2. **Required Return**: the return that an investor requires on an asset given its risk and market interest rates. * *Rate of Return*: * $\frac{(Amount Received - Amount Invested)}{Amount Invested}$ ### **Risk-Return Tradeoff** * The higher the RISK, the greater the RETURN. ### **Calculating Realized and Expected Return** 1. **Realized/Actual Return** * **Cash Amount**: * Cash Return = $\frac{(Ending Price + Cash Distribution)-Beginning Price}{Beginning Price}$. * **Percentage**: * Rate of Cash Return = $\frac{(Ending Price + Cash Distribution)-Beginning Price}{Beginning Price}$. 2. **Expected Rate of Return**: * $∑(Rates of Return × Probabilities of Return)$. * Steps: * 1. Calculate for the percentage of the rate of return. * 2. Multiply the percentage rate of return by the probability. * 3. Sum up all the products in step 2. ### **Measuring Risk** 1. **Variance (σ²):** * The average of possible returns, where each possible return is weighted by the probability that it occurs. * This is the average of the squared deviations from the expected rate of return. * $Variance in Rates of Return = ∑(Rates of Return - Expected Rate of Return)^2 × (Probabilities)$ * Steps: * 1. Calculate for the expected rate of return. * 2. Subtract the expected rate of return from each of the possible rates of return and square the difference. * 3. Multiply the squared differences calculated in Step 2 by the probability that those outcomes will occur. * 4. Sum all values calculated in step 3. * 5. Take the square root of variance in step 4. 2. **Standard Deviation(σ) = √ Variance** ### **Markowitz Portfolio Theory** **Results**: * Quantifies risk. * Derives the expected rate of return for a portfolio of assets and the expected risk measure. * Shows that the variance of the rate of return is a meaningful measure of portfolio risk. * Derives the formula for computing the variance of a portfolio, showing how to diversity a portfolio effectively. **Assumptions for Investors**: 1. Consider investments as probability distributions of expected returns over some holding period. 2. Maximize one-period expected utility, which demonstrates diminishing marginal utility of wealth. 3. Estimate the risk of the portfolio on the basis of the variability of expected returns. 4. Base decisions solely on expected return and risk. 5. Prefer higher returns for a given risk level. Similarly, for a given level of expected returns, investors prefer less risk to more risk. Using the five assumptions stated above, a single asset or portfolio of assets is considered to be efficient if no other asset or portfolio of assets offers: * Higher expected return with the same or lower risk * Lower risk with the same or higher return. ### **Efficient Frontier and Investor Utility** A portfolio dominates another portfolio if: * It has a higher expected return than another portfolio with the same level of risk. * A lower level of expected risk than another portfolio with equal expected return. * A higher expected return and lower expected risk than another portfolio. The *Markowitz efficient frontier* is simply a set of portfolios that are not dominated by any portfolio. ### **Alternative Measures of Risk** * Variance or standard deviation of expected return. * Range of returns. * **Returns below expectations**: * Semivariance - a measure that only considers deviations below the mean. These measures of risk implicitly assume that investors want to minimize the damage from returns less than some target rate. * **Advantages of Using Standard Deviation of Returns**: * This measure is somewhat intuitive. * It is a correct and widely recognized risk measure. * It has been used in most of the theoretical asset pricing models. ### **Expected Rates of Return ** * **For An Individual Asset**: * It is equal to the sum of the potential returns multiplied with the corresponding probability of the returns. * **For A Portfolio of Investments**: * It is equal to the weighted average of the expected rates of return for the individual investments in the portfolio. * The formula for Expected Rate of Return for a Portfolio of Risky Assets: $E(R_{port}) = \sum_{i=1}^{n} W_iE(R_i)$ where: * W_i = the percent of the portfolio in asset i. * E(R) = the expected rate of return for asset i. ### **Diversification** * Putting your eggs NOT IN ONE BASKET, REDUCE RISKS * Investing in more than one security/ASSET to reduce risk. * Lowering the variance of the portfolio; variance is considered a measure of the risk of the portfolio. * If two stocks are perfectly positively correlated, diversification has no effect on risk. * If two stocks are perfectly negatively correlated, the portfolio (BASKET) is perfectly diversified. ### **Covariance** * A measure of the degree to which two variables “move together” relative to their individual mean values over time. * Is a measure of the DIRECTIONAL RELATIONSHIP between the returns on two risky assets: * $xy = \frac{\sum_{i=1}^{n}(x_i - \bar{x})(y_i - \bar{y})}{n-1}$. Where: * x = Expected rate of return of Investment x. * y = Expected rate of return of Investment y. * n = Number of samples. * x = Mean of investment x. * y = Mean of investment y. **Results and Interpretation:** * COV = 1 or near to 1, then direct correlation in return between 2 risky assets. * COV = -1 or less than 0, then inverse correlation between 2 risky assets. * COV = 0, no correlation at all; no relationship. ### **Covariance and Correlation** * Correlation coefficient is obtained by standardizing (dividing) the covariance by the product of individual standard deviations. * Computing correlation from covariance: $\tau_{ij} = \frac{Cov_{ij}}{\sigma_i\sigma_j}$, where: * $\tau_{ij} $ = the correlation coefficient of returns. * $\sigma_i$ = the standard deviation of R_it. * $\sigma_j$ = the standard deviation of R_jt. ### **Correlation Coefficient** * The coefficient can vary in the range +1 to -1. * A value of +1 would indicate *perfect positive correlation*. This means that returns for the two assets move together in a positively and completely linear manner. * A value of -1 would indicate *perfect negative correlation*. This means that the returns for two assets move together in a completely linear manner, but in opposite directions. ### **Standard Deviation of a Portfolio** * **Computation with A Two-Stock Portfolio**: * Any asset of a portfolio may be described by two characteristics: * 1. The expected rate of return * 2. The expected standard deviations of returns. * *The correlation, measured by covariance, affects the portfolio standard deviation*. * Low correlation reduces portfolio risk while not affecting the expected return. * **Results:** * Assets may differ in expected rates of return and individual standard deviations. * Negative (or low positive correlation) reduces portfolio risk. * Combining two assets with +1.0 correlation will not reduce the portfolio standard deviation. * Combining two assets with -1.0 (or low positive) correlation may reduce the portfolio standard deviation to zero or low standard deviation. * *Perfect negative correlation gives a mean combined return for the two securities over time equal to the mean for each of them*, so the returns for the portfolio show no variability. * Any returns above and below the mean for each of the assets are completely offset by the return for the other asset, so there is no variability in returns, i.e. no risk for the portfolio. * *This combination of two assets that are completely negatively correlated provides the maximum benefits of diversification - it completely eliminates risk*. * **Formula** $\sigma_{port} = \sqrt{ \sum_{i=1}^{n} w_i^2\sigma_i^2 + 2 \sum_{i=1}^{n} \sum_{j=1}^{n} w_iw_jCov_{ij}}$, where: * $\sigma_{port}$ = the standard deviation of the portfolio. * $w_i$ = the weights of the individual assets in the portfolio, where weights are determined by the proportion of value in the portfolio. * $\sigma_i^2$ = the variance of rates of return for asset i. * $Cov_{ij}$ = the covariance between the rates of return for assets i and j, where $Cov_{ij} = \tau_{ij}\sigma_i\sigma_j$. ### **Market Risk Measured By Beta** * **Market Portfolio**: * (Value-weighted) Portfolio of all assets in the economy. In practice, a broad stock market index, such as the S&P Composite or NY Stock Exchange or PSEi, is used to represent the market. * **Beta (β)** * A measure of market risk. * Specifically, beta is a measure of how an individual stock's returns vary with market returns. * It's a measure of the “sensitivity” of an individual stock's returns to changes in the market. * A firm that has a beta = 1 has average market risk. The stock is no more or less volatile than the market. * A firm with a beta > 1 is more volatile than the market (ex: technology firms). * A firm with a negative beta < 1 is less volatile than the market (ex: utilities). ### **How Individual Securities Affect Portfolio Risk** * The risk of a well-diversified portfolio depends on the market risk of the securities included in the portfolio. * If you want to know the contribution of an individual security to the risk of a well-diversified portfolio, it is no good thinking about how risky that security is if held in isolation; you need to measure its market risk, i.e. how sensitive it is to market movements. * *Market risk is measured by beta*. ### **Capital Asset Pricing Model (CAPM)** * Developed by Sharpe (1964), Linter (1965), & Mossin (1966). * Built on the MPT by taking into account the risk-free asset (R_f). * CAPM ties the concepts of systematic risk and return of assets. The model: * Uses past data. * Presupposes EFFICIENT MARKETS. ### **Kinds of Risk:** * Non-Diversifiable Risk or Systematic Risk or Market Risk or Beta Coefficient. * Diversifiable Risk or Unsystematic Risk. * Total Security Risk = Non-Diversifiable Risk + Diversifiable Risk. * Linear relationship between risk and required return. * Risk = return (required), implies = direct relationship. * Hisk risk = high return = (-) (+). ### **Formula** E(r_asset_j) = r_f + β_asset_j[E(r_market) - r_f]. * Expected Return on Risky Asset j = Risk free Rate of Return + B for Asset j x (Expected Return on the Market Portfolio - Risk free Rate of Return). ### **Example** AUV Company gathered the following data relating to Asset M: risk-free rate = 2%, market return = 8%, & beta = .50. Calculate the asset's required return. **Solution:** * = 2% + [0.5 * (8% - 2%)] * = 2% + 4% - 1% * = 5%. ### **CAPM Assumptions** * Limitless funds may be obtained by investors. * Investors use identical time horizons. * Investors assess investment opportunities by using the portfolio returns' expected value & standard deviations. * Investors project the same "probability distributions for rates of return." * All assets are perfectly divisible - it is possible to buy fractional shares of any assets or portfolio. * Investments are free from taxes/ transaction costs. * The market demonstrates efficiency. ## **Post-Test** 1. What is the primary goal of Financial Management? 1. To produce profit 2. To maximize shareholders’ wealth 3. To provide concise financial statements 4. To maximize profit. 2. This type of financial statement provides the Revenue, Expenses, and Profit. 1. Income Statement 2. Balance Sheet 3. Cash Flow Statement 4. Statement of Shareholders' Equity. 3. The following accounts fall under Statement of Shareholders’ Equity EXCEPT: 1. Preferred stock 2. Retained earnings 3. Accounts receivable 4. Common stock. 4. It is when the stock price equals intrinsic value: 1. Undervaluation 2. Overvaluation 3. Equilibrium 4. None of the above. 5. It is the principle that states money could have a new worth tomorrow. 1. Market prices reflect information. 2. There is a risk-return tradeoff. 3. Cash flows are the source of value. 4. Money has time value. 6. Refers to the speed at which an asset can be converted to cash. 1. Retained earnings 2. **Liquidity** 3. Seniority 4. Maturity. 7. This activity involves the purchasing of long-term assets. 1. Investing Activities 2. Financing Activities 3. Operating Activities 4. None of the above. 8. Refers to the ability to pay long-term debts. 1. Market Value 2. Asset Management 3. **Debt Management** 4. Profitability. 9. Formula for Debt Ratio. 1. $\frac{Total Liabilities}{Total Stockholders' Equity}$ 2. **$\frac{Total Liabilities}{Total Assets}$** 3. $\frac{Long- term Liabilities}{Long-term Liabilities + Stockholders' Equity}$ 4. $\frac{Operating Income or EBIT}{Interest Expense}$. 10. Formula for Days of Inventory. 1. $\frac{Net Sales}{(\frac{Beginning Receivables + Ending Receivables}{2})}$ 2. $\frac{365 Days}{Receivables Turnover}$ 3. $\frac{365 Days}{Accounts Payable Turnover}$. 4. None of the above. 11. Which of the following statements is true? 1. The lower the risk, the greater the return 2. **The higher the risk, the greater the return** 3. The lower the risk, the lower the return 4. There is no correlation between the risk and the return. 12. It is the risk an investor would face if he held a number of assets. 1. Portfolio risk 2. Stand-alone risk 3. Market risk 4. Company-unique risk. 13. Investing in more than one security in order to reduce risk 1. **Diversification** 2. Capital Asset Pricing Model 3. Financial Management 4. Risk-Return Tradeoff. 14. Cash Return involves the following accounts except; 1. Rate of return 2. Ending price 3. Cash distribution 4. **Beginning price**. 15. A firm with a beta greater than 1. 1. Has average market risk. 2. Is less volatile than the market. 3. **Is more volatile than the market**. 4. Does not mean anything. ## **Answer Key** * 1. B * 2. A * 3. C * 4. C * 5. D * 6. B * 7. A * 8. C * 9. B * 10. D * 11. B * 12. A * 13. A * 14. A * 15. C. ## **Disclaimer:** Please note that the references used in creating this reviewer are from students. Professors were not involved in the making of this reviewer.