A collection of assets held by an investor is called
1.corporate bond
2.random returns
3.risk premium
4.portfolio
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A firms investment decision is also called the
1.financing decision
2.capital budgeting decision
3.liquidity decision
4.none of these
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According to the Efficient Market Hypothesis, which from the following is NOT true?
1.Analysis predicts price pattern
2.No money machines
3.No arbitrage opportunities
4.Security prices reflect true underlying value of assets
Posted Date:-2021-08-18 06:31:29
According to the weak form of market efficiency __________ past information is included in the stock price.
1.no
2.all
3.marginal
4.only a few
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An asset that pays a fixed amount of cash each year for a specified number of years is called
1.perpetuity
2.dividend
3.liquidity
4.annuity
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An investment should be accepted if
1.Rate of Return > Opportunity Cost
2.Rate of Return < Opportunity Cost
3.Rate of Return = Opportunity Cost
4.A, B and C are irrelevant
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An investment should be accepted if its NPV is
1.0
2.1
3.positive
4.negative
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Any economic resource that can produce economic value to the holder is called
1.asset
2.return
3.maturity
4.yield
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At maturity the bond holders get back their principal. The principal is called
1.coupon
2.face value
3.yield
4.return
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Conflicts between shareholders and managers interest is called
1.management problem
2.area of the board of directors
3.risk
4.agency problem
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Corporations can return cash to their shareholders by
1.paying cash dividends
2.stock repurchase
3.both A and B
4.none of these
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Governments and corporations issue bonds to
1.borrow money
2.lend money
3.both A and B
4.none of these
Posted Date:-2021-08-18 06:31:29
In a well-functioning capital market if the firm pays no taxes then what is better about borrowing?
1.Borrowing is not a good idea in this case
2.No difference who (firm or shareholders) borrows
3.It is better that the firm borrows
4.It is better that the shareholders borrow
Posted Date:-2021-08-18 06:31:29
In a well-functioning markets two investments that offer the same payoff must have the same
1.beta
2.return
3.risk
4.price
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In Finance, risk is calculated by calculating the
1.mean
2.variance
3.standard deviation
4.kurtosis
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In the principle-agent framework
1.managers are the principals
2.directors are the principals
3.shareholders are the principals
4.shareholders are the agents
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Investors require higher return on
1.levered equity
2.unlevered equity
3.both levered and unlevered
4.bond equity
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Net Present Value is calculated as
1.cash inflow - cash outflow
2.cash outflow - cash inflow
3.PV of cash inflow - PV of cash outflow
4.PV of cash outflow - PV of cash inflow
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Regular interest payment to the bond holders is called
1.principal
2.coupon
3.face value
4.yield
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Risk is best judged in
1.portfolio context
2.individual security context
3.both of these
4.none of these
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The average beta of all stocks in a market is
1.1
2.0
3.1
4.1.5
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The construction of new manufacturing plant is also referred to as the
1.Capital decision
2.CFO decision
3.Finacing decision
4.Investment decision
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The contribution of an individual security to the risk of a well-diversified portfolio is measured by?
1.beta
2.variance
3.standard deviation
4.CAPM
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The cost of an item is $100. The seller has a mark-up of 20%. What is the selling price?
1.$80
2.$100
3.$120
4.$140
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The following are the examples of financial assets except?
1.Stocks
2.Bank loan
3.Bond
4.Raw material
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The mixture of debt and equity, used to finance a corporation is also known as
1.capital structure
2.capital budgeting
3.investing
4.treasury
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The money a investor receive for taking on a risk is called
1.Risk premium
2.risk free rate
3.option value
4.arbitrage
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The present value of $100 expected in two years from today at a discount rate of 5% is
1.$105
2.$110.7
3.$95
4.$90.7
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The ratio between the amount of profit and investment is called the
1.NPV
2.opportunity cost
3.risk premium
4.rate of return
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The risk of a well-diversified portfolio depends on the __________ of the securities included in the portfolio.
1.specific risk
2.market risk
3.both A and B
4.none of these
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The risk that can be eliminated by diversification is called
1.specific risk
2.security risk
3.market risk
4.beta
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The sale of bonds by a country or a corporation is referred to as the
1.Investment decision
2.financing decision
3.offering loan
4.capital structure
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The sale of financial assets is also referred to as the
1.Capital decision
2.CFO decision
3.Financing decision
4.Investment decision
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The sensitivity of an asset to the market movements is called
1.beta
2.variance
3.standard deviation
4.CAPM
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The spread of possible outcomes of an investment returns is measured by
1.variance
2.standard deviation
3.skewness
4.kurtosis
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We say about a particular investment that it is risky, because
1.it is dangerous
2.it has low returns
3.its returns are uncertain
4.its raw material is unavailable
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What should be the goal of a corporation?
1.to maximize the profit of the shareholders
2.to maximize the value of the corporation
3.both A and B
4.to take care of the interests of the management
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What will be value of $100 after two years, if the interest rate during this period is 5%?
1.$105
2.$107.5
3.$110.25
4.$95
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Which from the following is the safest investment?
1.Treasury bills
2.Government bond
3.Corporate bond
4.Stocks
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Which from the following is true about stock repurchases?
1.Repurchases are more flexible
2.Repurchases are tax-advantaged
3.both A and B
4.none of these
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