All of the following points are true regarding the key principles of forecasting except: Select one: a. Financial statement forecasts must rely on assumptions that have external validity b. Financial statement forecasts must be internally consistent c. Financial statement forecasts need not be comprehensive d. Forecasts should not manifest wishful thinking

Q: Why is it critical to have a consistent foundation for financial statement preparation

A: Here is the Answer :

Q: Although most financial statements forecasting models are structurally similar, they have to be…

A: Financial statements forecasting models are made in spreadsheets in which all relevant cells are…

Q: Financial information that is capable of making a difference in a decision is a) relevat b)…

A: Fundamental qualities of financial information should be: 1. Relevance 2. Faithful representative.

Q: Explain the difference between systematic and unsystematic risk. Also explain why one of these types…

A: Financial markets are full of financial risks because these markets are related to the trade of…

Q: What advantages does the forecasted financial statement method have over theAFN equation for…

A: Answer: AFN stands for “Additional funds needed” which is used to measure the amount of external…

Q: Capital Asset Pricing Model is based on certain assumptions, which have been criticized after…

A: Asset pricing is a linear function of the beta value of market return: When the market returns…

Q: Which is least likely?  A. For the risk-seeking manager, no change in return would be required for…

A: Risk and return both are related to each other and depending upon the nature of managers or…

Q: Financial analysis does not include assessing future performance and risk because financial…

A: Introduction: Financial statements are a set of summaries of an organization's financial results,…

Q: What are trend percentages and how are they calculated? What pitfalls must financial statement users…

A: Trend percentages: Method of examining financial information attained over an extended period…

Q: Financial analysts are aware of the many limitations of ratio analysis as a technique of financial…

A: Ratio analysis is a method to analyze the financial statements based on certain metrics calculated…

Q: The unbiased expectations theory assumes investors are: A. Risk seeking В. Risk neutral C. Risk…

A: The theory assumes that the investors are risk neutral

Q: 1. Which of the following statements is false? a. Risk neutrality means that an investor are not…

A: When making investments the concerned investor is looking for a desired rate of return. Risks are…

Q: Which of the following should financial information not be? Group of answer choices a.…

A: Financial information should be reliable, accurate, timely and substantiated.

Q: 2. Discuss the difference between book values and market values and explain which one is more…

A: The book value is the value of an asset or liability as per the books of accounts of a company. It…

Q: A sound risk mitigation plan improves the DCF, as it lowers the risk premium in the discount factor.

A: Discounted cashflow:Discounted Cash Flow (DCF) analysis is a valuation method that calculates the…

Q: what basic criteria are commonly used in evaluating credit risk?

A: Credit risk is the risk of facing a loss due to a counterpart's failure to repay the debt in part or…

Q: What are some common red flags in financial statement analysis?

A: Red flags are the situation that persists where stocks are potentially insecure or undesirable.

Q: Explain why financial statements are important to the decision-making process in financial analysis.…

A: Accounting is defined as a system of finding, measuring, reporting, evaluating, and documenting the…

Q: What is the likely limitation of “general-purpose financial statements”?

A: Financial statements: Financial statements are condensed summary of transactions communicated in the…

Q: valuate three commonly used approaches to quantifying financial risks. Not satisfied with the first…

A: Risk management is the process of assessing risk and based upon the assessment, develop strategies…

Q: Which of the following statements is true for compensation of risk? a. Higher the risk, lower is the…

A: The Statement for compensation of risk is as under-

Q: Behavioural finance deals with two main issues: Information processing areas & behavioural biases.…

A:

Q: 1. a. Prove rigorously "Constant relative risk aversion CRRA implies decreasing absolute risk…

A: The Constant Relative Risk Aversion (CRRA) utility function is provided by W, where W signifies…

Q: Computerized financial planning models may be classified as any of the following EXCEPT…

A: 1. Computerized financial planning models may be classified as any of the following EXCEPT…

Q: Market risk is referred to as:   systematic risk. total risk. diversifiable risk. asset specific…

A: Answer 1. Market risk is referred to as? Market Risk: When an investor might lose money because of…

Q: Risk designates any uncertainty that might trigger losses. These risks include all except:

A: Risk in finance refers to the vulnerability with regard to speculation that may have an adverse…

Q: Finaancial risk is not directly associate with..    a) ROE b) EBIT c) EPS d) EAT

A: The Financial risk is a risk of loosing money on am investment or investment opportunities.…

Q: Anticipate TWO (2) drawbacks from the adverse selection on financial safety nets.

A: Financial Safety Nets- A financial safety net is not one savings account or an insurance guideline.…

Q: By use of practical examples, discuss the following types of information processing errors in…

A: Behavioral finance looks at the reason as to why investors behave in an irrational manner when they…

Q: Is the WACC set by investors or by managers and how (with theoretical concepts)?  Please provide…

A: The Weighted average cost of capital (WACC), which includes common stock, preferred stock, bonds,…

Q: Discuss the importance of hedging to the financial risk manager Are there any downside to hedging?

A: Hedging in money alludes to ensuring speculations. Support is a speculation status, which targets…

Q: Identity and explain the three ways to cope with uncertainty in financial forecasts?

A: Financial Forecasting Financial forecasting refers to the process of estimating the performance of…

Q: an efficient portolio ...... 1) minimise return for a given level of risk 2) minimise risk for a…

A: The chances or probability for investment including portfolio and real assets that they will lose…

Q: What are the fundamental elements of an adequate financial planning process. What are the…

A: Answer: Financial planning is nothing but an on-going mechanism for the advancement of the course…

Q: Why investors will rely on nonfinancial statement forms of information to facilitate the efficient…

A: Unlike financial information, non-financial information can not be represented in monetary values.…

Q: When it comes to financial instruments, what distinguishes one from another? Please give us a…

A: Introduction: The money market is the market in which buyers and sellers engage to buy and sell…

Q: Creating pro forma financial statements is both an art and a science. What are the “science”…

A: Pro forma financial statements are prepared by an organisation to project the future financial…

Q: What are some of the problems is using AFN equation to estimate AFN rather than the pro-forma…

A: AFN (Additional funds needed)=Projected increase in assets-spontaneous increase in liabilities-any…

Q: Using common-size balance sheet percentages to project individual assets, liabilities, or…

A: In a common size balance sheet we show all different line items as a percentage of total assets.…

Q: Conservatism means: a)not underestimating asset values, when faced with uncertainty about the value…

A: Accounting principles means the fundamental upon which the whole accounting is based. Every entity…