Financial Management - Study Mode

[#866] Having defined working capital as current assets, it can be further classified according to __________.
Correct Answer

(D) components and time

Explanation

Solution: Having defined working capital as current assets, it can be further classified according to components and time. Working capital is a financial metric which represents operating liquidity available to a business, organisation or other entity, including governmental entities.

[#867] The weak form of the EMH is supported if successive price changes over time are________.
Correct Answer

(A) independent of each other

Explanation

Solution: The weak form of the EMH is supported if successive price changes over time are independent of each other. The efficient-market hypothesis (EMH) is a theory in financial economics that states that asset prices fully reflect all available information.

[#868] Dividend policy of a firm affects both the long-time financing and __________ wealth.
Correct Answer

(D) Shareholders

Explanation

Solution: Dividend policy of a firm affects both the long-time financing and Shareholders wealth. Dividend policy is the policy a company uses to structure its dividend payout to shareholders.

[#869] The random walk hypothesis is most related to the___________.
Correct Answer

(A) weak-form EMH

Explanation

Solution: The random walk hypothesis is most related to the weak-form EMH. Weak form efficiency, also known as the random walk theory, states that future securities' prices are random and not influenced by past events. Advocates of weak form efficiency believe all current information is reflected in stock prices and past information has no relationship with current market prices.

[#870] ______________ is the distribution of the profits of a company among its shareholders.
Correct Answer

(C) Dividend

Explanation

Solution: Dividend is the distribution of the profits of a company among its shareholders. A dividend is the distribution of reward from a portion of the company's earnings and is paid to a class of its shareholders.