Financial Management - Study Mode

[#951] This type of risk is avoidable through proper diversification.
Correct Answer

(C) unsystematic risk

Explanation

Solution: Unsystematic type of risk is avoidable through proper diversification. Unsystematic risk, also known as specific risk or idiosyncratic risk, is a category of risk that only affects an industry or a particular company. Unsystematic risk is the risk of losing an investment due to company or industry-specific hazard.

[#952] Financial analysts, working capital means the same thing as __________.
Correct Answer

(D) current assets minus current Liabilities

Explanation

Solution: Financial analysts, working capital means the same thing as current assets minus current Liabilities. Financial analyst is one of the most coveted roles in the financial services industry.

[#953] Which of the following is a basic principle of finance as it relates to the management of working capital?
Correct Answer

(C) Profitability moves together with risk

Explanation

Solution: Profitability moves together with risk is a basic principle of finance as it relates to the management of working capital. Profitability is ability of a company to use its resources to generate revenues in excess of its expenses.

[#954] The return relative solves the problem of______________.
Correct Answer

(B) negative returns

Explanation

Solution: The return relative solves the problem of negative returns. A negative return occurs when a company or business has a financial loss or lackluster returns on an investment during a specific period of time.

[#955] Shareholder wealth in a firm is represented by___________.
Correct Answer

(D) the market price per share of the firms common stock

Explanation

Solution: Shareholder wealth in a firm is represented by the market price per share of the firms common stock. Shareholder wealth is defined as the present value of the expected future returns to the owners (that is, shareholders) of the firm.