Financial Management

✅ The correct answer is A.
Beta which is estimated as regression slope coefficient is classified as historical beta. A beta coefficient is a measure of the volatility, or systematic risk, of an individual stock in comparison to the unsystematic risk of the entire market. In statistical terms, beta represents the slope of the line through a regression of data points from an individual stock’s returns against those of the market.

✅ The correct answer is D.
Underlying all investments is the trade-off between expected return and risk. Risk simply means that the future actual return may vary from the expected return.

✅ The correct answer is B.
Student loans, mortgages and car loans are examples of deferred annuity. A deferred payment annuity is an insurance product that provides future payments to the buyer rather than an immediate stream of income.

✅ The correct answer is A.
If risk can be eliminated with help of diversification, then relevant risk is smaller than stand-alone risk. Standalone risk measures the dangers associated with a single facet of a company’s operations or by holding a specific asset, such as a closely-held corporations. In portfolio management, standalone risk measures the undiversified risk of an individual asset. Relevant risk is the fluctuation of returns caused by the macroeconomic factors that affect all risky assets.

✅ The correct answer is B.
Present Value = FV / ( 1 + r/100 )ⁿ
= 5000 / ( 1 + 7/100)²⁰
= Rs. 1292.10

✅ The correct answer is B.
The decision function of financial management can be broken down into the investment, financing, and asset management decisions.

✅ The correct answer is A.
Values recorded as determined in marketplace are considered as market values. Market value is the price an asset gets in a marketplace. Market value also refers to the market capitalization of a publicly traded company.

✅ The correct answer is A.
The Degree of Financial Leverage (DFL) measures financial risk of the firm. The degree of financial leverage (DFL) measures the percentage change in EPS for a unit change in operating income, also known as earnings before interest and taxes (EBIT).

✅ The correct answer is D.
Future value of interest if it is calculated two times a year can be a classified as semi-annual compounding. A semiannual event happens twice a year, typically every six months.

✅ The correct answer is D.
Prices of bonds will be increased if interest rates declines. Bond price is the present discounted value of future cash stream generated by a bond. It refers to the sum of the present values of all likely coupon payments plus the present value of the par value at maturity.