Financial Management - Study Mode

[#296] The Markowitz model identifies the efficient set of portfolios, which offers the ____________.
Correct Answer

(A) highest return for any given level of risk or the lowest risk for any given level of return

Explanation

Solution: The Markowitz model identifies the efficient set of portfolios, which offers the highest return for any given level of risk or the lowest risk for any given level of return. Harry Markowitz model (HM model), also known as Mean-Variance Model because it is based on the expected returns (mean) and the standard deviation (variance) of different portfolios, helps to make the most efficient selection by analyzing various portfolios of the given assets.

[#297] Operating leverage examines.
Correct Answer

(A) The effect of the change in the quantity on EBIT

Explanation

Solution: Operating leverage examines the effect of the change in the quantity on EBIT. Operating leverage is a cost-accounting formula that measures the degree to which a firm or project can increase operating income by increasing revenue. A business that generates sales with a high gross margin and low variable costs has high operating leverage.

[#298] Which of the following is not normally one of the reasons for a change in an investor's circumstances?
Correct Answer

(B) Change in legal considerations

Explanation

Solution: Change in legal considerations is not normally one of the reasons for a change in an investor's circumstances.

[#299] 'That personal leverage can replace corporate leverage' is assumed by:
Correct Answer

(B) MM Model

[#300] Which of the following cost of capital require tax adjustment?
Correct Answer

(C) Cost of Debentures