Financial management

31. Case in which average investors risk aversion is greater than slope of line and risk premium respectively is

steeper, greater
steeper, smaller
steeper, zero
Both A and B

Detailed SolutionCase in which average investors risk aversion is greater than slope of line and risk premium respectively is

32. The decision function of financial management can be broken down into the__________ decisions.

financing and investment
investment, financing, and asset management
financing and dividend
capital budgeting, cash management, and credit management

Detailed SolutionThe decision function of financial management can be broken down into the__________ decisions.

33. A company who issues bonds or stocks in result raised funds which finally

increases liabilities
increases equity
increases cash
decreases cash

Detailed SolutionA company who issues bonds or stocks in result raised funds which finally

34. Project whose cash flows are sufficient to repay capital invested for rate of return then net present value will be

negative
zero
positive
independent

Detailed SolutionProject whose cash flows are sufficient to repay capital invested for rate of return then net present value will be

35. International investing is________________.

is only practical for institutional investors
increases the overall risk of a stock portfolio
always leads to higher returns than a domestic portfolio
can reduce risk due to increased diversification

Detailed SolutionInternational investing is________________.

36. Marketable securities are primarily:

Equity shares
Preference shares
Fixed deposits with companies
Short-term debt investments

Detailed SolutionMarketable securities are primarily:

37. Traditional theorists believe that.

there exists an optimal capital structure
no optimal capital structure
equal optimal capital structure
100% debt financial organizations

Detailed SolutionTraditional theorists believe that.

38. If the Real rate of return is 10% and Inflation rate is 40%, then Money Discount Rate is:

14.40%
2.50%
25%
14%

Detailed SolutionIf the Real rate of return is 10% and Inflation rate is 40%, then Money Discount Rate is:

39. Stocks in market portfolio are graphically represented with

dashed line
straight line
market line
risk line

Detailed SolutionStocks in market portfolio are graphically represented with

40. In capital asset pricing model, investors assume that buying and selling activity will

affect stock prices
not affect stock prices
have high taxes
high transaction cost

Detailed SolutionIn capital asset pricing model, investors assume that buying and selling activity will

Page 1Page 2Page 3Page 4Page 5
Test 1Test 2Test 3Test 4Test 5Test 6Test 7Test 8Test 9Test 10Test 11Test 12Test 13Test 14Test 15Test 16Test 17Test 18Test 19Test 20Test 21Test 22Test 23