Financial Management - Study Mode

[#211] Size of firm and market or book ratio are variables which are related to
Correct Answer

(D) stock returns

Explanation

Solution: Size of firm and market or book ratio are variables which are related to stock returns. Stock Market Returns are the returns that the investors generate out of the stock market. This return could be in the form of profit through trading or in the form of dividends given by the company to its shareholders from time-to-time.

[#212] A model in which behavior of asset returns is measured for set of risk factors and market risk is classified as
Correct Answer

(C) multifactor model

Explanation

Solution: A model in which behavior of asset returns is measured for set of risk factors and market risk is classified as multifactor model. A multi-factor model is a financial model that employs multiple factors in its calculations to explain market phenomena and/or equilibrium asset prices.

[#213] Relationship between risk and required return is classified as
Correct Answer

(A) security market line

Explanation

Solution: Relationship between risk and required return is classified as security market line. The security market line (SML) is a line drawn on a chart that serves as a graphical representation of the capital asset pricing model (CAPM), which shows different levels of systematic, or market, risk of various marketable securities plotted against the expected return of the entire market at a given point in time.

[#214] Tendency of moving together of two variables is classified as
Correct Answer

(A) correlation

Explanation

Solution: Tendency of moving together of two variables is classified as correlation. Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other.

[#215] Of all stocks in a portfolio, required rate of return is classified as
Correct Answer

(D) market portfolio

Explanation

Solution: Of all stocks in a portfolio, required rate of return is classified as market portfolio. A market portfolio is a theoretical bundle of investments that includes every type of asset available in the world financial market, with each asset weighted in proportion to its total presence in the market.