Financial Management

✅ The correct answer is B.
Realized and required return for individual stocks are classified as function of fundamental economic factors. Realized yield is the actual return earned during the holding period for an investment, and may include dividends, interest payments and other cash distributions.

✅ The correct answer is D.
Cost of money is affected by factors which includes inflation. The cost of money changes with variance in interest rates, and is used to gauge the opportunity costs involved in the potential investment of that money in securities or other assets.

✅ The correct answer is A.
In financial planning, most high option price will lead to longer option period. option period is a time frame or period of time, which is valid for an option to be exercised before or on the expiration date. On the expiration date, the investor no longer has a choice but has to exercise the option.

✅ The correct answer is A.
Loans by finance companies, banks and credit unions is classified as consumer credit loans. Consumer credit is personal debt taken on to purchase goods and services. A credit card is one form of consumer credit.

✅ The correct answer is D.
Profit margin multiply assets turnover multiply equity multiplier is used to calculate return on equity. Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders’ equity.

✅ The correct answer is C.
Bond Yeild = Cost of common stock – Bond risk premium
= 13% – 5% = 8%.

✅ The correct answer is A.
Two alternative expected returns are compared with help of coefficient of variation. The coefficient of variation (CV) is a statistical measure of the dispersion of data points in a data series around the mean.

✅ The correct answer is A.
First step in determining an efficient portfolio is to consider set of attainable portfolios. The feasible, or attainable, set represents all portfolios that can be constructed from a given set of stocks. This set is only efficient for part of its combinations. An efficient portfolio is that portfolio which provides the highest expected return for any degree of risk.

✅ The correct answer is B.
Other factors held constant, but lesser project liquidity is because of greater payback period. Payback period in capital budgeting refers to the period of time required to recoup the funds expended in an investment, or to reach the break-even point.

✅ The correct answer is B.
Markets which deal with buying and selling of bonds, mortgages, notes and stocks are considered as financial asset markets. A financial asset’s worth may be based on an underlying tangible or real asset, but market supply and demand influence its value as well.