Financial Management - Study Mode

[#546] Which of the following is not true with reference capital budgeting?
Correct Answer

(C) Existing investment in a project is not treated as sunk cost

[#547] Professionals such as doctors, accountants and lawyers often make corporations are classified as
Correct Answer

(D) Both B and C

Explanation

Solution: Professionals such as doctors, accountants and lawyers often make corporations are classified as Professional Corporation and professional association.

[#548] Markets which deals with high liquid and short term debt securities are classified as
Correct Answer

(B) money markets

Explanation

Solution: Markets which deals with high liquid and short term debt securities are classified as money markets. The money market is the trade in short-term debt investments.

[#549] Low default-risk security issued by financially secure firms is classified as
Correct Answer

(B) commercial paper

Explanation

Solution: Low default-risk security issued by financially secure firms is classified as commercial paper. Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts payable and inventories and meeting short-term liabilities.

[#550] Firm's promise to pay and is backed or guaranteed by bank is classified as
Correct Answer

(B) banker's acceptance

Explanation

Solution: Firm's promise to pay and is backed or guaranteed by bank is classified as banker's acceptance. A banker's acceptance (BA) is a short-term debt instrument issued by a company that is guaranteed by a commercial bank. Banker's acceptances are issued as part of a commercial transaction.