Financial Management - Study Mode
[#601] Process in which stockholders transfer right to vote to any other person is classified as
Correct Answer
(A) proxy
Explanation
Solution: Process in which stockholders transfer right to vote to any other person is classified as proxy. A proxy is an agent legally authorized to act on behalf of another party or a format that allows an investor to vote without being physically present at the meeting.
[#602] Right of common stockholders to purchase additional stock issued by company is classified as
Correct Answer
(B) pre-emptive right
Explanation
Solution: Right of common stockholders to purchase additional stock issued by company is classified as pre-emptive right. A preemptive right offers select shareholders of a corporation the right to buy a proportional interest in any future issue of the company's common stock.
[#603] Type of stock in which dividends are tied to any particular part of a firm is classified as
Correct Answer
(D) tracking stock
Explanation
Solution: Type of stock in which dividends are tied to any particular part of a firm is classified as tracking stock. A tracking stock is an equity issued by a parent company that tracks the financial performance of a particular division. Tracking stocks trade in the open market separately from the parent company's stock. Gains or losses in the tracking stock price are based only on the division's performance
[#604] Rate of return which considers riskiness and an available returns on investments is classified as
Correct Answer
(D) minimum acceptable rate of return
Explanation
Solution: 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.
[#605] A portfolio which lies below the efficient frontier is described as________________.
Correct Answer
(D) dominated
Explanation
Solution: A portfolio which lies below the efficient frontier is described as dominated. A portfolio is a compilation of materials that exemplifies your beliefs, skills, qualifications, education, training and experiences.