Financial Management

✅ The correct answer is B.
In weighted average cost of capital, cost of capital which is risk adjusted and developed for each category of industry [industrial] projects. The weighted average cost of capital (WACC) is a calculation of a firm’s cost of capital in which each category of capital is proportionately weighted.

✅ The correct answer is B.
Owners of corporation having certain rights and privileges are considered as common stockholders. Common stockholders are usually given voting rights, with the number of votes directly related to the number of shares owned.

✅ The correct answer is B.
Situation in which firm limits expenditures on capital is classified as capital rationing. Capital rationing is the process of putting restrictions on the projects that can be undertaken by the company or the capital that can be invested by the company.

✅ The correct answer is D.
Rational traders immediately sell stock when price is too high.

✅ The correct answer is A.
Stock in small companies, owned by few people but not actively traded is classified as closely held stock. A closely-held stock is a circumstance wherein a company’s common shares are predominantly owned by one individual owner or by a small group of controlling stockholders.

✅ The correct answer is A.
First step in binomial approach of option pricing is to define ending price of stock. valuation method developed in 1979. The binomial option pricing model uses an iterative procedure, allowing for the specification of nodes, or points in time, during the time span between the valuation date and the option’s expiration date.

✅ The correct answer is B.
If market interest rate fall below coupon rate then bond will be sold above its par value. The prevailing rate of interest on loans determined by the demand and supply of credit and based on the duration (the longer the duration, the higher the rate) of loan and type of security offered (the higher the quality of security, the lower the rate).

✅ The correct answer is B.

✅ The correct answer is B.
Investors seeking to avoid actively managing their portfolios will prefer Commercial bank deposits. A commercial bank accepts deposits in the form of current, savings and fixed deposits.

✅ The correct answer is C.