Financial management

1. Ratios which relate firm’s stock to its book value per share, cash flow and earnings are classified as

return ratios
market value ratios
marginal ratios
equity ratios

Detailed SolutionRatios which relate firm’s stock to its book value per share, cash flow and earnings are classified as

2. Risk on a stock portfolio which cannot be eliminated or reduced by placing it in diversified portfolio is classified as

diversifiable risk
market risk
stock risk
portfolio risk

Detailed SolutionRisk on a stock portfolio which cannot be eliminated or reduced by placing it in diversified portfolio is classified as

3. Operating leverage x Financial leverage = ________

Combined Leverage
Financial Combined Leverage
Operating Combined Leverage
Fixed leverage

Detailed SolutionOperating leverage x Financial leverage = ________

4. Risk in average individual stock can be reduced by placing an individual stock in

low risk portfolio
diversified portfolio
undiversified portfolio
high risk portfolio

Detailed SolutionRisk in average individual stock can be reduced by placing an individual stock in

5. A price for equity is called

interest rate
cost of equity
debt rate
investment return

Detailed SolutionA price for equity is called

6. Forecast by analysts, retention growth model and historical growth rates are methods used for an

estimate future growth
estimate option future value
estimate option present value
estimate growth ratio

Detailed SolutionForecast by analysts, retention growth model and historical growth rates are methods used for an

7. Use of safety stock by a firm would:

Increase Inventory Cost
Decrease Inventory Cost
No effect on Cost
None of the above

Detailed SolutionUse of safety stock by a firm would:

8. Premium which is considered as difference of expected return on common stock and current yield on Treasury bonds is called

current risk premium
past risk premium
beta premium
expected premium

Detailed SolutionPremium which is considered as difference of expected return on common stock and current yield on Treasury bonds is called

9. Total return is equal to________.

capital gain and yield
yield and interest
capital gain
yield

Detailed SolutionTotal return is equal to________.

10. A type of contract in which contract holder has right to sell an asset at specific period for predetermining price is classified as

option
written contract
determined contract
featured contract

Detailed SolutionA type of contract in which contract holder has right to sell an asset at specific period for predetermining price is classified as

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