Financial Management

✅ The correct answer is C.
High price to earning ratio shows company’s high growth prospect. The price-to-earnings ratio indicates the dollar amount an investor can expect to invest in a company in order to receive one dollar of that company’s earnings.

✅ The correct answer is A.
An earning before interest, taxes, depreciation and amortization average multiple for publicly traded companies is classified as entity multiple. Enterprise multiple, also known as the EV multiple, is a ratio used to determine the value of a company. The enterprise multiple looks at a firm in the way that a potential acquirer would by considering the company’s debt.

✅ The correct answer is A.
An earning before interest, taxes, depreciation and amortization are calculated by subtracting operating cost from net sales. Earnings before interest and taxes is a measure of a firm’s profit that includes all incomes and expenses except interest expenses and income tax expenses.

✅ The correct answer is D.
Portfolio which consists of perfectly positive correlated assets having no effect of diversification. Diversification reduces the variability when the prices of individual assets are not perfectly correlated. In other words, investors can reduce their exposure to individual assets by holding a diversified portfolio of assets. As a result, diversification will allow for the same portfolio return with reduced risk.

✅ The correct answer is C.

✅ The correct answer is A.
According to capital asset pricing model assumptions, quantities of all assets are given and fixed. The Capital Asset Pricing Model (CAPM) measures the risk of a security in relation to the portfolio. It considers the required rate of return of a security in the light of its contribution to total portfolio risk.

✅ The correct answer is C.
Most financial advisors are registered with the Securities and Exchange Commission as registered financial planners. A financial planner is a qualified investment professional who helps individuals and corporations meet their long-term financial objectives.

✅ The correct answer is B.
Long-term equity anticipation security is usually classified as long-term options. Long-term equity anticipation securities (LEAPS) are publicly traded options contracts with expiration dates that are longer than one year.

✅ The correct answer is D.
Value generally promises to pay at maturity date and a firm borrows is considered as bonds par value. The par value of a bond also called the face amount or face value is the value written on the front of the bond.

✅ The correct answer is B.
Real risk-free interest rate in addition with an inflation premium is equal to quoted risk-free interest rate. The Risk-Free Rate of return is the interest rate an investor can expect to earn on an investment that carries zero risk.