Financial Management

✅ The correct answer is C.
If the Dow Jones Industrials had a price appreciation of 6 percent one year and yet Total return for the year was 11 percent; the difference would be due to dividends. A dividend is the distribution of reward from a portion of the company’s earnings and is paid to a class of its shareholders.

✅ The correct answer is B.
Current value of stock included in portfolio is subtracted from current option price to calculate present value of portfolio. Present value (PV) is the current value of a future sum of money or stream of cash flows given a specified rate of return. Future cash flows are discounted at the discount rate, and the higher the discount rate, the lower the present value of the future cash flows.

✅ The correct answer is C.
Conglomerates that combine many financial institutions within a single corporation are classified as financial services corporations. Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises.

✅ The correct answer is A.
In calculation of internal rate of return, an assumption states that received cash flow from project must be reinvested. The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.

✅ The correct answer is A.
Total amount of depreciation charged on long term assets is classified as accumulated depreciation. Accumulated depreciation is the total amount of a plant asset’s cost that has been allocated to depreciation expense (or to manufacturing overhead) since the asset was put into service.

✅ The correct answer is D.
Price for debt is called interest rate. An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed (called the principal sum).

✅ The correct answer is D.
Movement of price or rise or fall of prices of options is classified as binomial lattice. The binomial options pricing model provides a generalizable numerical method for the valuation of options. Essentially, the model uses a “discrete-time” model of the varying price over time of the underlying financial instrument, addressing cases where the closed-form Black–Scholes formula is wanting.

✅ The correct answer is A.
Riskless rate in addition with risk premium is multiplied by standard deviation of portfolio for using to calculate expected return rate on efficient portfolio.

✅ The correct answer is B.
Rate of return that an investment provides its investor is classified as internal rate of return. The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.

✅ The correct answer is A.
Market value of option which is out-of-money is greater than zero. The market price of the option is the price you pay when you buy the option and the price you get when you sell the option. The market price of the option consists of two parts, intrinsic value and time value.