Financial Management - Study Mode

[#666] The method of raising equity capital from existing members by offering securities on pro rata basis is referred to as __________.
Correct Answer

(B) Right Issue

Explanation

Solution: The method of raising equity capital from existing members by offering securities on pro rata basis is referred to as Right Issue. A rights issue is an invitation to existing shareholders to purchase additional new shares in the company.

[#667] The expected return on an investment in stock is___________.
Correct Answer

(C) the sum of expected dividends and capital gains

Explanation

Solution: The expected return on an investment in stock is the sum of expected dividends and capital gains. The expected return on an investment is the expected value of the probability distribution of possible returns it can provide to investors.

[#668] Which of the following is not a source of long-term finance?
Correct Answer

(C) Commercial papers

Explanation

Solution: Commercial papers is not a source of long-term finance. 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.

[#669] If the dispersion around a security's return is larger ____________.
Correct Answer

(D) the security's risk is higher

Explanation

Solution: If the dispersion around a security's return is larger the security's risk is higher. A security risk assessment identifies, assesses, and implements key security controls in applications.

[#670] EBIT means _____________.
Correct Answer

(D) All of the above

Explanation

Solution: EBIT means Operating Income, Operating Profit and Earnings before interest and tax. It is a calculation commonly used to measure the profitability of a company.