Financial Management

✅ The correct answer is C.
Calculation of formula in common stock valuation does not include number of stock issued. Common stock valuation is the process of determining the value of a share of stock in a company. The holder of one share in a company that has one million shares outstanding is actually the owner of one-millionth of the company; the value of that share should represent that percentage of the company’s worth.

✅ The correct answer is B.
The time required to process and execute an order is called lead time. Lead time is the amount of time that passes from the start of a process until its conclusion.

✅ The correct answer is A.
In capital market line, risk of efficient portfolio is measured by its standard deviation. The standard deviation is a statistic that measures the dispersion of a dataset relative to its mean and is calculated as the square root of the variance.

✅ The correct answer is C.
Expected rate of return = Standard deviation + Coefficient of variation
= 18% + 1.5% = 19.50%.

✅ The correct answer is D.
Positive minimum risk portfolio of any security shows that market security sold greater than original price. A minimum variance portfolio indicates a well-diversified portfolio that consists of individually risky assets, which are hedged when traded together, resulting in the lowest possible risk for the rate of expected return.

✅ The correct answer is B.
Coupon rate of convertible bond is lower. Investors will generally accept a lower coupon rate on a convertible bond, compared with the coupon rate on an otherwise identical regular bond, because of its conversion feature.

✅ The correct answer is D.
In internal rate of returns, discount rate which forces net present values to become zero is classified as internal rate of return. The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.

✅ The correct answer is A.
Notes, mortgages, bonds, stocks, treasury bills and consumer loans are classified as financial instruments. Financial instruments are assets that can be traded, or they can also be seen as packages of capital that may be traded. Most types of financial instruments provide efficient flow and transfer of capital all throughout the world’s investors.

✅ The correct answer is A.
Negative minimum risk portfolio of any security shows that market security sold less than original price. Assets that have a negative correlation with each other produce negative portfolio variance. Variance is one measure of the volatility of an asset. An asset with higher variance also carries greater risk.

✅ The correct answer is D.
Dividend policy of a firm affects both the long-time financing and Shareholders wealth. Dividend policy is the policy a company uses to structure its dividend payout to shareholders.