Financial management

21. Financial assets ______.

directly contribute to the country's productive capacity
indirectly to the country's productive capacity
contribute to the country's productive capacity both directly and indirectly
do not contribute to the country's productive capacity either directly or indirectly

Detailed SolutionFinancial assets ______.

22. An unsecured bond that provides no lien against property as security for bond obligation is classified as

secured bond
debenture
obligation bond
specific bond

Detailed SolutionAn unsecured bond that provides no lien against property as security for bond obligation is classified as

23. Portfolios lying on the upper right portion of the efficient frontier are likely to be chosen by_______________.

aggressive investors
conservative investors
risk-averse investors
defensive investors

Detailed SolutionPortfolios lying on the upper right portion of the efficient frontier are likely to be chosen by_______________.

24. In uneven cash flow, ‘IRR’ is an abbreviation of an

internal rate of return
international rate of return
intrinsic rate of return
investment return rate

Detailed SolutionIn uneven cash flow, ‘IRR’ is an abbreviation of an

25. The measure of business risk is __________.

operating leverage
financial leverage
total leverage
working capital leverage

Detailed SolutionThe measure of business risk is __________.

26. Bond yield is 12% and bond risk premium is 4.5% then cost of common stock would be

37.50%
7.50%
16.50%
2.67%

Detailed SolutionBond yield is 12% and bond risk premium is 4.5% then cost of common stock would be

27. Constant growth rate is 8% and an expected dividend yield is 5.4% then expected rate of return would be

-3.40%
3.40%
13.40%
-13.40%

Detailed SolutionConstant growth rate is 8% and an expected dividend yield is 5.4% then expected rate of return would be

28. High price to earning ratio shows company’s

low dividends paid
high risk prospect
high growth prospect
high marginal rate

Detailed SolutionHigh price to earning ratio shows company’s

29. Protective covenant devised in market to reduce event risk and to control debt cost is classified as

super poison covenant
super poison put
super poison call
super poison redemption

Detailed SolutionProtective covenant devised in market to reduce event risk and to control debt cost is classified as

30. Unsystematic risk is______.

the risk associated with movements in security prices
reduced through diversification
higher when interest rates rise
the risk of loss of purchasing power

Detailed SolutionUnsystematic risk is______.

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