Financial Management - Study Mode

[#956] In order to determine the compound growth rate of an investment over some period, an investor would calculate the_____________.
Correct Answer

(B) geometric mean

Explanation

Solution: In order to determine the compound growth rate of an investment over some period, an investor would calculate the geometric mean. The geometric mean is the average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio.

[#957] Net present value is a popular method which falls
Correct Answer

(B) With in discount cash flow method

Explanation

Solution: Net present value is a popular method which falls with in discount cash flow method. Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its future cash flows.

[#958] A major difference between real and nominal returns is that_______________.
Correct Answer

(A) real returns adjust for inflation and nominal returns do not

Explanation

Solution: A major difference between real and nominal returns is that real returns adjust for inflation and nominal returns do not.

[#959] When most people refer to the mean, they are referring to the______________.
Correct Answer

(B) arithmetic mean

Explanation

Solution: When most people refer to the mean, they are referring to the arithmetic mean. The arithmetic mean is the simplest and most widely used measure of a mean, or average.

[#960] Present value of future cash flows is divided by an initial cost of project to calculate
Correct Answer

(D) profitability index

Explanation

Solution: Present value of future cash flows is divided by an initial cost of project to calculate profitability index.