Financial Management - Study Mode
[#76] Risk affects any firm with factors such as war, recessions, inflation and high interest rates is classified as
Correct Answer
(B) market risk
Explanation
Solution: Risk affects any firm with factors such as war, recessions, inflation and high interest rates is classified as market risk. Market risk is the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets in which he or she is involved.
[#77] Risk on a stock portfolio which cannot be eliminated or reduced by placing it in diversified portfolio is classified as
Correct Answer
(B) market risk
Explanation
Solution: Risk on a stock portfolio which cannot be eliminated or reduced by placing it in diversified portfolio is classified as market risk. Market risk is the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets in which he or she is involved.
[#78] In investment returns, a received amount is subtracted from an invested amount which is used to calculate
Correct Answer
(B) dollar return
Explanation
Solution: In investment returns, a received amount is subtracted from an invested amount which is used to calculate dollar return. The dollar amount of the rate of return over a given period of time.
[#79] Past realized rate of return in period t is denoted by
Correct Answer
(D) r bar t
Explanation
Solution: Past realized rate of return in period t is denoted by r bar t. The letter R has a different meaning when applied as part of financial formula where it usually means some form of return.
[#80] In case of Net Income Approach, the Cost of equity is:
Correct Answer
(A) Constant