Financial Management

✅ The correct answer is C.
Second factor in Fama French three factor model is the size of company. The Fama and French model has three factors: size of firms, book-to-market values and excess return on the market. In other words, the three factors used are SMB (small minus big), HML (high minus low) and the portfolio’s return less the risk free rate of return.

✅ The correct answer is A.
In time value of money, nominal rate is not shown on timeline. The time value of money (TVM) is the concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity.

✅ The correct answer is D.
Idiosyncratic risk, also known as unsystematic risk or residual risk or diversifiable risk, is risk that is not correlated to overall market risk – it is the risk of price change caused by the unique circumstances of a particular security, or the risk that is sector-specific or company-specific.

✅ The correct answer is B.
Characteristic of corporation that it can continue its work even owners are decreased can be classified as unlimited life.

✅ The correct answer is A.
A right which controls and prevents transfer from current stockholders to other new stockholders is considered as corporate charter. A corporate charter, also known as a “charter” or “articles of incorporation,” is a written document filed with the Secretary of State (or registrar in Canada) by the founders of a corporation.

✅ The correct answer is A.
If two independent projects having hurdle rate then both projects should be accepted.

✅ The correct answer is A.
Stock option is more worthwhile if it is extremely volatile. 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 C.
Relationship between Economic Value Added (EVA) and Net Present Value (NPV) is considered as direct relationship.

✅ The correct answer is B.
Depreciation is include in costs in case of Accounting rate. Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value. Businesses depreciate long-term assets for both tax and accounting purposes.

✅ The correct answer is C.
Pre-emptive right of common stockholders are necessarily included in company corporate charter. A corporate charter sets forth a corporation’s basic information, its location, profit/ nonprofit status, board composition, and ownership structure.