Financial Management - Study Mode

[#1116] Realized and required return for individual stocks are classified as function of fundamental
Correct Answer

(B) economic factors

Explanation

Solution: Realized and required return for individual stocks are classified as function of fundamental economic factors. Realized yield is the actual return earned during the holding period for an investment, and may include dividends, interest payments and other cash distributions.

[#1117] First factor in Fama French three factor model is
Correct Answer

(A) CAPM stock beta

Explanation

Solution: First factor in Fama French three factor model is CAPM stock beta. The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk and expected return for assets, particularly stocks.

[#1118] One reason for the declining importance of pension funds is the_______________.
Correct Answer

(B) downsizing of US companies

Explanation

Solution: One reason for the declining importance of pension funds is the downsizing of US companies.

[#1119] Under which of the following approaches cost of equity capital is assumed to be constant with the change in leverage?
Correct Answer

(A) Net income approach

Explanation

Solution: Net income approach of the following approaches cost of equity capital is assumed to be constant with the change in leverage. Net Income Approach suggests that value of the firm can be increased by decreasing the overall cost of capital (WACC) through higher debt proportion.

[#1120] Most financial advisors are registered with the Securities and Exchange Commission as_______________.
Correct Answer

(C) registered financial planners

Explanation

Solution: Most financial advisors are registered with the Securities and Exchange Commission as registered financial planners. A financial planner is a qualified investment professional who helps individuals and corporations meet their long-term financial objectives.