Financial Management - Study Mode
[#1111] Marketable securities are primarily________.
Correct Answer
(A) short-term debt instruments
Explanation
Solution: Marketable securities are primarily short-term debt instruments. Marketable securities are securities or debts that are to be sold or redeemed within a year. These are financial instruments that can be easily converted to cash such as government bonds, common stock or certificates of deposit.
[#1112] The arbitrary process is the behavioral foundation for the ____________.
Correct Answer
(A) MM approach
Explanation
Solution: The arbitrary process is the behavioral foundation for the MM approach. The MM approach favors the Net operating income approach and agrees with the fact that the cost of capital is independent of the degree of leverage and at any mix of debt-equity proportions.
[#1113] Which of the following generally traded on stock exchanges?
Correct Answer
(D) All trade on stock exchanges
Explanation
Solution: Unit investment trusts, Closed-end investment companies and Open-end investment companies generally traded on stock exchanges.
[#1114] A group of mutual funds with a common management are known as______________.
Correct Answer
(C) fund families
Explanation
Solution: A group of mutual funds with a common management are known as fund families. A mutual fund family is a group of mutual funds that share the same mutual fund sponsor.
[#1115] Financial leverage is also known as.
Correct Answer
(A) Trading on equity
Explanation
Solution: Financial leverage is also known as Trading on equity. It is the balance between the cost financing operations with equity or debt and the income earned from the operations. In other words, it's a gamble.