Financial Management

✅ The correct answer is A.
Nominal interest rates and nominal cash flows are usually reflected the inflation effects. Inflation has the following effects on production activities: Inflation may or may not result in an increase in production. As long as the economy does not reach the full employment stage, inflation has a favorable effect on production. Usually, as the price level increases, profits increase too.

✅ The correct answer is D.
Price at which European and American options can be exercised is classified as exercise price and strike price.

✅ The correct answer is A.
Demat account has helped to eliminate the use of stock certificates by placing stock transactions on computers. Demat Account is an account that is used to hold shares and securities in electronic format. The full form of Demat account is a dematerialised account.

✅ The correct answer is A.
Formula written as market risk premium divided by standard deviations of returns on market portfolio is used to calculate capital market line. Capital market line (CML) is a graph that reflects the expected return of a portfolio consisting of all possible proportions between the market portfolio and a risk-free asset.

✅ The correct answer is D.
According to put call parity relationship, a call option minus put option in addition with present value of exercise is equal to stock. Put-call parity is a principle that defines the relationship between the price of European put options and European call options of the same class, that is, with the same underlying asset, strike price, and expiration date.

✅ The correct answer is A.
Cash outflows are costs of project and are represented by negative numbers. Cash outflow is the amount of cash that a business disburses.

✅ The correct answer is C.
A company who issues bonds or stocks in result raised funds which finally increases cash.

✅ The correct answer is B.
Variability for expected returns for projects is classified as stand-alone risk. Standalone risk measures the dangers associated with a single facet of a company’s operations or by holding a specific asset, such as a closely-held corporations. In portfolio management, standalone risk measures the undiversified risk of an individual asset.

✅ The correct answer is B.
A method of inventory recording which produces high inventories in balance sheet is classified as First in first out. First in, first out (FIFO) is an asset-management and valuation method in which the assets produced or acquired first are sold, used or disposed of first and may be used by an individual or a corporation.

✅ The correct answer is A.
A higher accounts receivable turnover ratio mean lower debt collection period. Debtor Collection Period indicates the average time taken to collect trade debts. In other words, a reducing period of time is an indicator of increasing efficiency.