Financial Management

✅ The correct answer is D.
Standard deviation of tighter probability distribution is smaller. The smaller the standard deviation, the tighter the probability distribution, and the lower the risk.

✅ The correct answer is B.
Yield of interest rate which is below than coupon rate, this yield is classified as yield to call. Yield to call (YTC) is a financial term that refers to the return a bondholder receives if the security is held until the call date, before the debt instrument reaches maturity.

✅ The correct answer is B.

✅ The correct answer is A.
Cost which has occurred already and not affected by decisions is classified as sunk cost. A sunk cost is a cost that has already been incurred and cannot be recovered. A sunk cost differs from future costs that a business may face, such as decisions about inventory purchase costs or product pricing.

✅ The correct answer is B.
Type of cost which is used to raise common equity by reinvesting internal earnings is classified as cost of common equity. The cost of equity refers to two separate concepts depending on the party involved. If you are the investor, the cost of equity is the rate of return required on an investment in equity.

✅ The correct answer is D.
The market value of the firm is the result of trade-off between cost and risk. Market value is the price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization of a publicly traded company, and is obtained by multiplying the number of its outstanding shares by the current share price.

✅ The correct answer is C.
Financial security kept by non-financial corporations is short term treasury bills. Treasury bills are issued when the government need money for a shorter period while bonds are issued when it need debt for more than say five years.

✅ The correct answer is C.
According to probability distribution of rates of return, a close outcome to an expected value is shown by more peaked distribution. Data that is more peaked is data that has a sharper peak compared to data with a more gradual slope. Gradual peaks indicate that your data rose steadily whereas a sharp peak indicates that your values increased rapidly.

✅ The correct answer is D.
Cash flow which is available for all investors of company is classified as free cash flow. Free cash flow represents the cash a company generates after cash outflows to support operations and maintain its capital assets.

✅ The correct answer is A.
Free cash flow = Investment outlay cashflow + Operating cash flow + salvage cash flow =
4000 + 1000 + 5000 = Rs. 10000.