Financial Management

✅ The correct answer is A.
ADRs are a way U. S. investors can invest in foreign companies. American depositary receipts (ADRs) can simplify the access of U.S. investors to foreign markets. Listed on the New York Stock Exchange and Nasdaq, they can be traded, settled and held as if they were ordinary shares of U.S.-based companies.

✅ The correct answer is B.
Greater value of option, larger span of time value is usually results in longer call option. A call option, often simply labeled a “call”, is a financial contract between two parties, the buyer and the seller of this type of option.

✅ The correct answer is A.
Financial security in which there is no default risk and issues by U.S governments is classified as U.S treasury bonds. Treasury bonds are U.S. government debt securities with a maturity range between 10 and 30 years and which are marketable and set at a fixed interest rate. T-bonds pay semiannual interest payments until maturity, at which point the face value of the bond is paid to the owner.

✅ The correct answer is A.
Indexed bonds that are issued by linking payments to inflation are classified as treasury inflation protected securities. Treasury Inflation-Protected Securities (TIPS) are a form of U.S. Treasury bond designed to help investors protect against inflation. These bonds are indexed to inflation, have U.S. government backing, and pay investors a fixed interest rate as the bond’s par value adjusts with the inflation rate.

✅ The correct answer is C.
Cash flows that could be generated from an owned asset by company but not use in project are classified as opportunity costs. Opportunity costs represent the benefits an individual, investor or business misses out on when choosing one alternative over another.

✅ The correct answer is A.
Price of an outstanding bond decreases when market rate is increased.

✅ The correct answer is B.
Third factor in Fama French three factor model is ratio which is classified as market to book ratio. The Fama and French model has three factors: size of firms, book-to-market values and excess return on the market. In other words, the three factors used are SMB (small minus big), HML (high minus low) and the portfolio’s return less the risk free rate of return.

✅ The correct answer is D.
Stock option is considered more valuable in situation when stock have highly volatile. A stock option gives an investor the right, but not the obligation, to buy or sell a stock at an agreed upon price and date.

✅ The correct answer is B.
Stated value of bonds or face value is considered as par value. Par value is the face value of a bond, or for a share, the stock value stated in the corporate charter.

✅ The correct answer is A.
A company purchases goods but does not pay payments to suppliers immediately and record them as account payable. Accounts payable (AP) is money owed by a business to its suppliers shown as a liability on a company’s balance sheet. It is distinct from notes payable liabilities, which are debts created by formal legal instrument documents.