Financial Management - Study Mode
[#931] The last step in fundamental analysis is__________.
Correct Answer
(D) technical analysis
Explanation
Solution: The last step in fundamental analysis is technical analysis. Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume.
[#932] Excess working capital results in ________.
Correct Answer
(A) Block of cash
Explanation
Solution: Excess working capital results in Block of cash. Excess working capital overall, though, is bad because it means that the amount of money available within the company is much more than what it needs for its operations.
[#933] The value of a derivative security _______.
Correct Answer
(A) depends on the value of the related primitive security
Explanation
Solution: The value of a derivative security depends on the value of the related primitive security. A derivative security is a financial instrument whose value depends upon the value of another asset. The main types of derivatives are futures, forwards, options, and swaps.
[#934] The market value of the firm is the result of __________.
Correct Answer
(D) trade-off between cost and risk
Explanation
Solution: The market value of the firm is the result of trade-off between cost and risk. Market value is the price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization of a publicly traded company, and is obtained by multiplying the number of its outstanding shares by the current share price.
[#935] Money market funds were a financial innovation partly inspired to circumvent __________.
Correct Answer
(A) Regulation Q, which is no longer in existence
Explanation
Solution: Money market funds were a financial innovation partly inspired to circumvent Regulation Q, which is no longer in existence. A money market fund is a kind of mutual fund that invests only in highly liquid instruments such as cash, cash equivalent securities, and high credit rating debt-based securities with a short-term, maturity less than 13 months. As a result, these funds offer high liquidity with a very low level of risk.