Financial Management

✅ The correct answer is A.
In Current assets sections of a balance sheet are “Inventories” are listed. Inventory is commonly thought of as the finished goods a company accumulates before selling them to end users.

✅ The correct answer is A.
Falling interest rate leads change to bondholder income which is reduction in income. An income bond is a type of debt security in which only the face value of the bond is promised to be paid to the investor, with any coupon payments paid only if the issuing company has enough earnings to pay for the coupon payment.

✅ The correct answer is C.
An investor who buys shares and writes a call option on stock is classified as hedger. A commercial hedger is an organization which uses futures contracts to lock in the price of specific commodities it uses in running its business.

✅ The correct answer is A.
Net Income Approach advocates that the costs of equity capital and debt capital remain unaltered when the degree of leverage varies. Net Income Approach suggests that value of the firm can be increased by decreasing the overall cost of capital (WACC) through higher debt proportion.

✅ The correct answer is A.
New York Stock Exchange’ is an example of capital markets. Capital markets refer to the places where savings and investments are moved between suppliers of capital and those who are in need of capital. Capital markets consist of the primary market, where new securities are issued and sold, and the secondary market, where already-issued securities are traded between investors.

✅ The correct answer is B.
In situation of bankruptcy, stock which is recorded above common stock and below debt account is preferred stock. Preferred stock refers to a class of ownership that has a higher claim on assets and earnings than common stock has.

✅ The correct answer is C.
A model in which behavior of asset returns is measured for set of risk factors and market risk is classified as multifactor model. A multi-factor model is a financial model that employs multiple factors in its calculations to explain market phenomena and/or equilibrium asset prices.

✅ The correct answer is A.
The expansion of EAR is equivalent annual rate. The Effective Annual Rate (EAR) is the interest rate that is adjusted for compounding over a given period. Simply put, the effective annual interest rate is the rate of interest that an investor can earn (or pay) in a year after taking into consideration compounding.

✅ The correct answer is D.
Bonds with deferred call have protection which is classified as call protection. A call protection is a protective provision of a callable security prohibiting the issuer from calling back the security for a specified period of time.

✅ The correct answer is B.
In order to determine the compound growth rate of an investment over some period, an investor would calculate the geometric mean. The geometric mean is the average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio.