Financial Management - Study Mode

[#381] ___________ shifts the weights of securities in the portfolio to take advantage of areas that is expected to do relatively better than other areas.
Correct Answer

(D) sector rotation

Explanation

Solution: Sector rotation shifts the weights of securities in the portfolio to take advantage of areas that is expected to do relatively better than other areas. Sector rotation is a theory of stock market trading patterns. In this context, a sector is understood to mean a group of stocks representing companies in similar lines of business.

[#382] Depreciation is include in costs in case of __________.
Correct Answer

(B) Accounting rate

Explanation

Solution: Depreciation is include in costs in case of Accounting rate. Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value. Businesses depreciate long-term assets for both tax and accounting purposes.

[#383] The central issue of efficient markets concerns______________.
Correct Answer

(B) information

Explanation

Solution: The central issue of efficient markets concerns information.

[#384] What is the most appropriate goal of the firm?
Correct Answer

(A) Shareholder wealth maximization

Explanation

Solution: Shareholder wealth maximization is the most appropriate goal of the firm. Wealth maximization is the concept of increasing the value of a business in order to increase the value of the shares held by stockholders.

[#385] A bond issue is broken up so that some investors will receive only interest payments while others will receive only principal payments, which is an example of ________.
Correct Answer

bundling

Explanation

Solution: A bond issue is broken up so that some investors will receive only interest payments while others will receive only principal payments, which is an example of un-bundling and financial engineering.