Financial Management

✅ The correct answer is C.
The return component that gives periodic cash flows to the investor is known as the yield. Yield is the periodic cash flow (or return on investment in the form of interest or dividends).

✅ The correct answer is D.
Value of preferred stock = Dividend/required rate of return x 100

= 60/20 x 100 = 300

✅ The correct answer is B.
Cost of capital is equal to required return rate on equity in case if investors are only common stockholders. Cost of capital refers to the opportunity cost of making a specific investment. It is the rate of return that could have been earned by putting the same money into a different investment with equal risk.

✅ The correct answer is B.
Portfolio weights are found by calculating the percentage each asset is to the total portfolio value. A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds.

✅ The correct answer is A.
Money supply factors lead to activity of stock market. The money supply is the entire stock of currency and other liquid instruments circulating in a country’s economy as of a particular time. The money supply can include cash, coins, and balances held in checking and savings accounts, and other near money substitutes.

✅ The correct answer is B.
Type of relationship exists between an expected return and risk of portfolio is classified as linear.

✅ The correct answer is B.
Dividend changes are perceived important than the absolute level of dividends because dividend changes are thought to signal future expectations.

✅ The correct answer is D.
Walters model on dividend policy assumes that equal to current assets plus current liabilities including bank borrowings. Walter’s model shows the relevance of dividend policy and its bearing on the value of the share.

✅ The correct answer is D.
Markowitz diversification is concerned with the interrelationships between security returns. A strategy that seeks to combine in a portfolio assets with returns that are less than perfectly positively correlated, in an effort to lower portfolio risk (variance) without sacrificing return.

✅ The correct answer is B.
In expected rate of return for constant growth, an expected dividend yield must be constant. The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR).