Financial Management - Study Mode

[#506] Probability distribution is classified as normal if expected return lies between
Correct Answer

(A) ( + 1 and -1)

Explanation

Solution: Probability distribution is classified as normal if expected return lies between ( + 1 and -1). A probability distribution is a statistical function that describes all the possible values and likelihoods that a random variable can take within a given range.

[#507] Value of future dividends after horizon date is classified as
Correct Answer

(D) Both B and C

Explanation

Solution: Value of future dividends after horizon date is classified as horizon value and terminal value.

[#508] Pre-emptive right of common stockholders are necessarily included in company
Correct Answer

(C) corporate charter

Explanation

Solution: Pre-emptive right of common stockholders are necessarily included in company corporate charter. A corporate charter sets forth a corporation's basic information, its location, profit/ nonprofit status, board composition, and ownership structure.

[#509] Constant growth rate is 8% and an expected dividend yield is 5.4% then expected rate of return would be
Correct Answer

(C) 13.40%

Explanation

Solution: Expected rate of return = Constant growth rate + Expected dividend yield = 8% + 5.4% = 13.40%.

[#510] Real rate of return, risk and expected inflation are primary determinants of
Correct Answer

(A) minimum rate of return

Explanation

Solution: Real rate of return, risk and expected inflation are primary determinants of minimum rate of return. The required rate of return is the minimum return an investor expects to achieve by investing in a project. An investor typically sets the required rate of return by adding a risk premium to the interest percentage that could be gained by investing excess funds in a risk-free investment.