Financial Management

✅ The correct answer is C.
In stock option, a little chance exists for large gain on stock when price of stock rarely moves. A stock option gives an investor the right, but not the obligation, to buy or sell a stock at an agreed upon price and date.

✅ The correct answer is A.
Economists consider effects of started project on other parts of company or on environment of company is called externalities. An externality is an economic term referring to a cost or benefit incurred or received by a third party. However, the third party has no control over the creation of that cost or benefit. An externality can be both positive or negative and can stem from either the production or consumption of a good or service.

✅ The correct answer is D.
Type of variability in which a project contributes in return of company is considered as variable risk and within firm risk.

✅ The correct answer is A.
Degree of financial leverage is a measure of relationship between EPS and EBIT. The degree of financial leverage (DFL) measures the percentage change in EPS for a unit change in operating income, also known as earnings before interest and taxes (EBIT). This ratio indicates that the higher the degree of financial leverage, the more volatile earnings will be.

✅ The correct answer is C.
Method of stock valuation which is multiple of earning per share, book value and net income is classified as market multiple analysis. A market multiples analysis is a financial modeling method of assigning a value to assets or to a business.

✅ The correct answer is A.
An annual interest payment divided by current price of bond is considered as current yield. Current yield is an investment’s annual income (interest or dividends) divided by the current price of the security. This measure examines the current price of a bond, rather than looking at its face value.

✅ The correct answer is D.
Cash inflows are revenues of project and are represented by positive numbers.

✅ The correct answer is A.
Method in which company finds other companies considered in same line of business to evaluate divisions is classified as pure play method. Pure play method is an approach used to estimate beta coefficient of a company whose stock is not publicly traded.

✅ The correct answer is B.
Rate on debt that increases as soon market rises is classified as floating rate debt. A bond or other type of debt whose coupon rate changes with market conditions (short-term interest rates).

✅ The correct answer is D.
Sector rotation shifts the weights of securities in the portfolio to take advantage of areas that is expected to do relatively better than other areas. Sector rotation is a theory of stock market trading patterns. In this context, a sector is understood to mean a group of stocks representing companies in similar lines of business.