Financial Management

✅ The correct answer is A.
Relationship between total risk of stock, diversifiable risk and market risk is classified as total risk. Total risk is an assessment that identifies all of the risk factors associated with pursuing a specific course of action.

✅ The correct answer is A.
An attitude of investor towards dealing with risk determines the rate of return. A rate of return (RoR) is the net gain or loss on an investment over a specified time period, expressed as a percentage of the investment’s initial cost. Gains on investments are defined as income received plus any capital gains realized on the sale of the investment.

✅ The correct answer is C.
If bond’s call provision is practiced in first year of issuance then an additional payment is classified as call provision. A call provision is a provision on a bond or other fixed-income instrument that allows the issuer to repurchase and retire its bonds.

✅ The correct answer is B.
Risk on a stock portfolio which cannot be eliminated or reduced by placing it in diversified portfolio is classified as market risk. Market risk is the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets in which he or she is involved.

✅ The correct answer is A.
Term structure premium, an inflation of bond and bond default premium are included in risk factors. Term Premium is the amount by which the yield-to-maturity of a long-term bond exceeds that of a short-term bond. Because one collects coupons on a long-term bond for a longer period of time, its yield-to-maturity will be more. The amount of a term premium depends on the interest rates of the individual bonds. Inflation-linked bonds, or ILBs, are securities designed to help protect investors from inflation. A default premium is the additional amount a borrower must pay to compensate a lender for assuming default risk. All companies or borrowers indirectly pay a default premium, through the rate at which they must repay the obligation.

✅ The correct answer is A.
The Debt-Equity ratio of a Company measure its financial leverage. The debt-to-equity (D/E) ratio is calculated by dividing a company’s total liabilities by its shareholder equity.

✅ The correct answer is D.
Trading procedures dimensions include location dimension and method of matching orders. Trading process consists of two major steps Order openingand Order closing.

✅ The correct answer is D.
Rate of return which considers riskiness and an available returns on investments is classified as minimum acceptable rate of return. A minimum acceptable rate of return (MARR) is the minimum profit an investor expects to make from an investment, taking into account the risks of the investment and the opportunity cost of undertaking it instead of other investments.

✅ The correct answer is A.
Risk of doing business in particular country and arises from foreign investments is classified as country risk. Country risk is the risk that a foreign government will default on its bonds or other financial commitments. Country risk also refers to the broader notion of the degree to which political and economic unrest affect the securities of issuers doing business in a particular country.

✅ The correct answer is B.
Purchase cost of assets over its useful life is classified as depreciation. Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value. Businesses depreciate long-term assets for both tax and accounting purposes.