Financial Management

✅ The correct answer is B.
An unsystematic risk which can be eliminated but market risk is the An unsystematic risk which can be eliminated but market risk is the remaining risk. Unsystematic risk is the risk that is inherent in a specific company or industry. By investing in a range of companies and industries, unsystematic risk can be drastically reduced through diversification.

✅ The correct answer is D.
EBIT means Operating Income, Operating Profit and Earnings before interest and tax. It is a calculation commonly used to measure the profitability of a company.

✅ The correct answer is D.
Retained earnings are the cumulative earnings of the company after dividends. Retained earnings are the profits that a company has earned to date, less any dividends or other distributions paid to investors. This amount is adjusted whenever there is an entry to the accounting records that impacts a revenue or expense account.

✅ The correct answer is C.
Technology adopted factors influence the capital structure of a business entity. The capital structure is how a firm finances its overall operations and growth by using different sources of funds.

✅ The correct answer is B.
Bond which is offered below its face value is classified as original issue discount bond. Bonds that trade at a value of less than face value would be considered a discount bond.

✅ The correct answer is C.
In retention growth model, payout ratio is subtracted from one to calculate retention ratio. The retention ratio refers to the percentage of net income that is retained to grow the business, rather than being paid out as dividends.

✅ The correct answer is D.
According to Black Scholes model, trading of securities and stock prices moves continuously and randomly respectively.

✅ The correct answer is D.
The rational expectations model of dividend policy says that If the declared dividend is in accordance with the expectations, the change in the firms value will be minimal.

✅ The correct answer is A.
Contribution/EBIT is the expression for operating leverage. Operating leverage is a cost-accounting formula that measures the degree to which a firm or project can increase operating income by increasing revenue.

✅ The correct answer is B.
Mostly in financial, risk of portfolio is smaller than that of assets is weighted average. One of the most basic principles of finance is that diversification leads to a reduction in risk unless there is a perfect correlation between the returns on the portfolio investments. Owing to the diversification benefits, standard deviation of a portfolio of investments (stocks, projects, etc.) should be lower than the weighted average of the standard deviations of the individual investments.