Financial management

11. The coupon rate is another name for the__________.

market interest rate
current yield
stated interest rate
yield to maturity

Detailed SolutionThe coupon rate is another name for the__________.

12. In asset portfolio, number of stocks are increased to

reduce return
reduce average
reduce risk
increase prices

Detailed SolutionIn asset portfolio, number of stocks are increased to

13. Bond’s promised rate of return is also considered as

yield to earning
yield to investors
yield to maturity
yield to return

Detailed SolutionBond’s promised rate of return is also considered as

14. Second step in binomial approach of option pricing is to define range of values

at expiration
at buying date
at exchange closing time
at exchange opening time

Detailed SolutionSecond step in binomial approach of option pricing is to define range of values

15. Risk of a Capital budgeting can be incorporated:

Adjusting the cash flows
Adjusting the discount rate
Adjusting the life
All of the above

Detailed SolutionRisk of a Capital budgeting can be incorporated:

16. Cost of common stock is 14% and bond risk premium is 9% then bond yield will be

1.56%
5.00%
23.00%
64.28%

Detailed SolutionCost of common stock is 14% and bond risk premium is 9% then bond yield will be

17. Return on assets = 6.7% and equity multiplier = 2.5% then return on equity will be

16.75%
2.68%
0.37%
9.20%

Detailed SolutionReturn on assets = 6.7% and equity multiplier = 2.5% then return on equity will be

18. An option that gives investors right to sell a stock at predefined price is classified as

put option
call option
money back options
out of money options

Detailed SolutionAn option that gives investors right to sell a stock at predefined price is classified as

19. Miller-Orr Model deals with

Optimum Cash Balance
Optimum Finished Goods
Optimum Receivables
All of the above

Detailed SolutionMiller-Orr Model deals with

20. Which of the following would be considered a risk-free investment?

Gold
Equity in a house
High-grade corporate bonds
Treasury bills

Detailed SolutionWhich of the following would be considered a risk-free investment?

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