Financial Management - Study Mode
[#1041] Which of the following is a basic principle of finance as it relates to the management of working capital?
Correct Answer
(C) Profitability moves together with risk
Explanation
Solution: Profitability moves together with risk is a basic principle of finance as it relates to the management of working capital. Profitability is ability of a company to use its resources to generate revenues in excess of its expenses.
[#1042] The return relative solves the problem of______________.
Correct Answer
(B) negative returns
Explanation
Solution: The return relative solves the problem of negative returns. A negative return occurs when a company or business has a financial loss or lackluster returns on an investment during a specific period of time.
[#1043] Shareholder wealth in a firm is represented by___________.
Correct Answer
(D) the market price per share of the firms common stock
Explanation
Solution: Shareholder wealth in a firm is represented by the market price per share of the firms common stock. Shareholder wealth is defined as the present value of the expected future returns to the owners (that is, shareholders) of the firm.
[#1044] In order to determine the compound growth rate of an investment over some period, an investor would calculate the_____________.
Correct Answer
(B) geometric mean
Explanation
Solution: In order to determine the compound growth rate of an investment over some period, an investor would calculate the geometric mean. The geometric mean is the average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio.
[#1045] Net present value is a popular method which falls
Correct Answer
(B) With in discount cash flow method
Explanation
Solution: Net present value is a popular method which falls with in discount cash flow method. Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its future cash flows.