Financial management

11. In arbitrage pricing theory, required returns are functioned of two factors which have

dividend policy
market risk
historical policy
Both A and B

Detailed SolutionIn arbitrage pricing theory, required returns are functioned of two factors which have

12. Type of option which cannot be exercised before an expiry date which is classified as

European option
American option
Australian option
money option

Detailed SolutionType of option which cannot be exercised before an expiry date which is classified as

13. Call options situation in which strike price is greater than current price of stock is classified as

out-of-the-portfolio
in-the-portfolio
in-the-money
out-of-the-money

Detailed SolutionCall options situation in which strike price is greater than current price of stock is classified as

14. Which of the following is / are assumption behind the realized yield approach?

The yield earned by investors has been, on average, in conformity with their expectations
The dividends will continue growing at a constant rate forever
The market price will continue growing at a constant rate forever
Both a and b

Detailed SolutionWhich of the following is / are assumption behind the realized yield approach?

15. Future value of interest if it is calculated two times a year can be a classified as

semi-annual discounting
annual discounting
annual compounding
semi-annual compounding

Detailed SolutionFuture value of interest if it is calculated two times a year can be a classified as

16. Capital gains yield is multiplied for beginning price to calculate

capital gain
growth gain
regular yield
variable yield

Detailed SolutionCapital gains yield is multiplied for beginning price to calculate

17. Stock selling price is Rs 65, expected dividend is Rs 20 and cost of common stock is 42% then expected growth rate will be

0.1123 times
11.23%
11.23 times
Rs 11.23

Detailed SolutionStock selling price is Rs 65, expected dividend is Rs 20 and cost of common stock is 42% then expected growth rate will be

18. Mutual fund allows investors to sale out their share during any normal trading hours is classified as

exchange traded fund
management expense
money trade fund
capital trade fund

Detailed SolutionMutual fund allows investors to sale out their share during any normal trading hours is classified as

19. Risk which is caused by events such as strikes, unsuccessful marketing programs and other lawsuits is classified as

stock risk
portfolio risk
diversifiable risk
market risk

Detailed SolutionRisk which is caused by events such as strikes, unsuccessful marketing programs and other lawsuits is classified as

20. Type of financial security in which loans are secured by borrower’s property is classified as

municipal bonds
corporate bonds
U.S treasury bonds
mortgages

Detailed SolutionType of financial security in which loans are secured by borrower’s property is classified as

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