Financial Management - Study Mode
[#731] Political stability is the major factor concerning_______________.
Correct Answer
(D) country risk
Explanation
Solution: Political stability is the major factor concerning country risk. Political stability in this case refers to the lack of real competition for the governing elite. The 'politically stable' system enforces stringent barriers to personal freedoms.
[#732] Arbitrage is the level processing technique introduced in _________.
Correct Answer
(B) MM approach
Explanation
Solution: Arbitrage is the level processing technique introduced in MM approach. Arbitrage is the simultaneous purchase and sale of an asset to profit from an imbalance in the price.
[#733] The rational expectations model of dividend policy says that ______________.
Correct Answer
(D) If the declared dividend is in accordance with the expectations, the change in the firms value will be minimal
Explanation
Solution: The rational expectations model of dividend policy says that If the declared dividend is in accordance with the expectations, the change in the firms value will be minimal.
[#734] Liquidity risk_____________.
Correct Answer
(D) increases whenever interest rates increase.
Explanation
Solution: Liquidity risk increases whenever interest rates increase. Liquidity risk is the risk that a company or bank may be unable to meet short term financial demands.
[#735] An expected rate of return is subtracted from capital gains yield to calculate
Correct Answer
(A) expected dividend yield
Explanation
Solution: An expected rate of return is subtracted from capital gains yield to calculate expected dividend yield. The dividend yield is the ratio of a company's annual dividend compared to its share price.