Financial Management - Study Mode

[#691] An original investment is Rs 30 and an expected capital gain is Rs 10 then an expected final stock price will be
Correct Answer

(B) Rs 40.00

Explanation

Solution: Final stock price = Original investment + Expected capital gain = Rs. 30 + Rs. 10 = Rs. 40.00

[#692] Constant growth rate is 6.5% and an expected dividend yield is 3.4% then an expected rate of return would be
Correct Answer

(A) 9.90%

Explanation

Solution: Expected rate of return = Constant growth rate + Expected dividend yield = 6.5% + 3.4% = 9.90%

[#693] According to investors point of view, an expected rate of return is rate on stocks which they
Correct Answer

(A) receive in future

Explanation

Solution: According to investors point of view, an expected rate of return is rate on stocks which they receive in future. The expected rate of return is the return on investment that an investor anticipates receiving.

[#694] Second step in calculating value of stock with non-constant growth rate is to find out an
Correct Answer

(C) expected price of stock

Explanation

Solution: Second step in calculating value of stock with non-constant growth rate is to find out an expected price of stock. Nonconstant growth models assume the value will fluctuate over time. You may find that the stock will stay the same for the next few years, for instance, but jump or plunge in value in a few years after that.

[#695] Corporations that buy financial instruments with money accepted from savers are classified as
Correct Answer

(C) mutual funds

Explanation

Solution: Corporations that buy financial instruments with money accepted from savers are classified as mutual funds. A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities such as stocks, bonds, money market instruments, and other assets.