Financial Management - Study Mode

[#856] Portfolio weights are found by_________________.
Correct Answer

(B) calculating the percentage each asset is to the total portfolio value

Explanation

Solution: Portfolio weights are found by calculating the percentage each asset is to the total portfolio value. A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds.

[#857] Greater the size of a business unit ________ will be the requirements of working capital.
Correct Answer

(A) larger

Explanation

Solution: Greater the size of a business unit larger will be the requirements of working capital. Working capital, also known as net working capital (NWC), is the difference between a company's current assets, such as cash, accounts receivable (customers' unpaid bills) and inventories of raw materials and finished goods, and its current liabilities, such as accounts payable.

[#858] In order to determine the expected return of a portfolio, all of the following must be known except______________.
Correct Answer

(D) all of the above must be known in order to determine the expected return of a portfolio

Explanation

Solution: In order to determine the expected return of a portfolio, all of the following must be known except all of the above must be known in order to determine the expected return of a portfolio. The expected return for an investment portfolio is the weighted average of the expected return of each of its components.

[#859] The fixed proportion of working capital should be generally financed from the ____ capital sources.
Correct Answer

(D) borrowed

Explanation

Solution: The fixed proportion of working capital should be generally financed from the borrowed capital sources. Borrowed capital consists of money that is borrowed and used to make an investment. It differs from equity capital, which is owned by the company and shareholders. Borrowed capital is also referred to as "loan capital."

[#860] Which of the following is true regarding the expected return of a portfolio?
Correct Answer

(C) It can never be above the highest individual return

Explanation

Solution: It can never be above the highest individual return is true regarding the expected return of a portfolio. The expected return for an investment portfolio is the weighted average of the expected return of each of its components.