Financial Management

✅ The correct answer is A.
A portfolio with securities all having positive correlation with each other has the least reduction of risk. 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.
Third step in calculating value of stock with non-constant growth rate is to find PV of expected dividends. The first component of value is the present value of the expected dividends during the high growth period.

✅ The correct answer is D.
Stock portfolio with lowest book for market ratios is considered as L portfolio.

✅ The correct answer is A.
Setup cost is a type of fixed cost. Setup cost is the cost incurred to get equipment ready to process a different batch of goods. Hence, setup cost is regarded as a batch-level cost in activity based costing. Setup cost is considered to be a non-value-added cost that should be minimized.

✅ The correct answer is B.
After-the-fact rate of return often consider as realized or actual can be denoted r bar s.

✅ The correct answer is B.
An increase in value of option leads to low present value of exercise cost only if it has interest rates are high. Because higher interest rates mean higher borrowing costs, people will eventually start spending less. The demand for goods and services will then drop, which will cause inflation to fall.

✅ The correct answer is B.
Mr. A is a daring portfolio manager. He wants to increase the return in his portfolio. He should choose stocks from industry at a growth stage.

✅ The correct answer is A.
An inflation rate including in quoted interest rate on security, is inflation rate expected over security life. Inflation is measured in a variety of ways depending upon the types of goods and services considered and is the opposite of deflation which indicates a general decline occurring in prices for goods and services when the inflation rate falls below 0 percent.

✅ The correct answer is C.
According to put call parity relationship, call option plus present value of exercise price minus stock is to calculate put option. A put option is an option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time frame.

✅ The correct answer is C.
Coupon payment is calculated with help of interest rate, then this rate considers as coupon interest. A coupon rate is the yield paid by a fixed-income security; a fixed-income security’s coupon rate is simply just the annual coupon payments paid by the issuer relative to the bond’s face or par value.