Financial Management - Study Mode

[#106] Rate of return which is asked by investors is classified as
Correct Answer

(D) weighted average cost of capital

Explanation

Solution: Rate of return which is asked by investors is classified as weighted average cost of capital. The weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All sources of capital, including common stock, preferred stock, bonds, and any other long-term debt, are included in a WACC calculation.

[#107] Characteristic of corporation that it can continue its work even owners are decreased can be classified as
Correct Answer

(B) unlimited life

Explanation

Solution: Characteristic of corporation that it can continue its work even owners are decreased can be classified as unlimited life.

[#108] Type of financial securities that matures in less than a year are classified as
Correct Answer

(A) money market securities

Explanation

Solution: Type of financial securities that matures in less than a year are classified as money market securities. There are several money market instruments in most Western countries, including treasury bills, commercial paper, bankers' acceptances, deposits, certificates of deposit, bills of exchange, repurchase agreements, federal funds, and short-lived mortgage- and asset-backed securities.

[#109] Conglomerates that combine many financial institutions within a single corporation are classified as
Correct Answer

(C) financial services corporations

Explanation

Solution: Conglomerates that combine many financial institutions within a single corporation are classified as financial services corporations. Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises.

[#110] The underwriter has to take up ________________.
Correct Answer

(B) the unsubscribed part of the agreed portion

Explanation

Solution: The underwriter has to take up the unsubscribed part of the agreed portion. The underwriter undertakes the guarantee for only part of the issue offered to the public and his liability is limited to the extent of unsubscribed portion of the issue underwritten by him.