Financial Management

✅ The correct answer is D.
Payments if it is made at end of each period such as an end of year is classified as ordinary annuity and deferred annuity.

✅ The correct answer is A.
Financial assets directly contribute to the country’s productive capacity. A financial asset is a liquid asset that gets its value from a contractual right or ownership claim.

✅ The correct answer is D.
Unsecured bonds which is designated for only notes payable or all other debts are classified as subordinated bonds. Subordinated debt is a loan or security that ranks below other loans or securities with regard to claims on assets or earnings. Subordinated debt is also known as a junior security or subordinated loan.

✅ The correct answer is B.
Flexibility is not a feature of an optimal capital structure. An optimal capital structure is the objectively best mix of debt, preferred stock, and common stock that maximizes a company’s market value while minimizing its cost of capital.

✅ The correct answer is C.
A situation in which an outside group solicit proxies to take control of business is classified as proxy fight. A proxy fight is the action of a group of shareholders joining forces, in a bid to gather enough shareholder proxies to win a corporate vote.

✅ The correct answer is C.
In options pricing, an exercise price rises from lower to higher which leads to option value decreases. Before venturing into the world of trading options, investors should have a good understanding of the factors determining the value of an option. These include the current stock price, the intrinsic value, time to expiration or the time value, volatility, interest rates, and cash dividends paid.

✅ The correct answer is C.
Diversification reduces Unique risk. Diversification is a technique that reduces risk by allocating investments among various financial instruments, industries, and other categories.

✅ The correct answer is C.
A technique uses in comparative analysis of financial statement is common size analysis. Common size, or vertical analysis, is a method of evaluating financial information by expressing each item in a financial statement as a percentage of a base amount for the same time period. A company can use this analysis on its balance sheet or its income statement.

✅ The correct answer is C.
The sustainable growth rate of a firm can be calculated as the product of the retention rate and the return on equity. The sustainable growth rate (SGR) is the maximum rate of growth that a company can sustain without having to finance growth with additional equity or debt.

✅ The correct answer is B.
A theory which states that assets are traded at price equal to its intrinsic value is classified as efficient market hypothesis. The Efficient Markets Hypothesis is an investment theory primarily derived from concepts attributed to Eugene Fama’s research work as detailed in his 1970.