An investment with a positive total cash flow will always outperform an investment that shows negative cash flow in the first years of operation. A.   True B.   False

Q: The change from a straight to a kinked capital allocation line is a result of: reward-to-volatility…

A: The capital allocation line (CAL) represents the possible combinations of risk and return that an…

Q: Investors will pay a premium to invest in risky assets. OA. True OB. False

A: Risk premium is the extra return  that an investor receives for investing in risky assets.

Q: Portfolio which consists of perfectly positive correlated assets having no effect of A. negativity B…

A: A portfolio is built to accomplish a particular investment objective, whether or not or not it's…

Q: Part A: Choose the correct option for each question (investments) A) increased, increased B)…

A: A loan is money borrowed from an outsider in case of need. A loan comes with a cost that is called…

Q: The claims (losses) incurred insuring against the peril may result in underwriting risk due to? a.…

A: Underwriting risk is the risk faced by an insurance company that it may suffer losses due to the…

Q: As the level of risk increases, the corresponding cost of capital (i.e. the return) must…

A: As there is an increase in the risk level, investors would be demanding a higher return on an…

Q: 3. Answer the following questions based on the information below Proposed credit policy (net 30)…

A: Hey, since there are multiple subpart questions posted, we will answer the first three subpart…

Q: Diversification is good:   Select one: a. To increase the net financial cash flows of your…

A: Introduction : In simple words, diversification refers to the practice in which the investor invest…

Q: nt is more​ liquid, the return you receive will

A: Liquid investments are those investments that can be easily sold for cash.

Q: A company has to select one of the following two projects: Project A 25,000 Project B 23,000 Cost…

A: First cost = C Cash flows in year n = CFn Let r = IRR

Q: Rate of Return (ROR) is an important factor to consider to determine the gain or loss of an…

A: The investor invests to earn profit. The investor generally prefers the investment that offers great…

Q: With a decrease in time preference, the supply of loanable funds will increase.   Select one: True…

A: Loanable funds includes all forms of credit, such as loans, bonds, or savings deposits. There is an…

Q: The amount of time needed to recoup one's initial investment is referred to as the payback period,…

A: The cash payback method is a popular technique used by businesses to evaluate the potential…

Q: A disadvantage of using the payback period to compare investmentalternatives is that it;

A: Payback period: The payback period is the time period required to recover the initial investment of…

Q: Is the value of money affected by time, and if it is, in which direction? O a. It is not affected O…

A: The value of time of money is the idea that the money currently available is worth more than the…

Q: Short-term investments have higher maturity risks as compared to long-term investments.  A. TRUE B.…

A: Short term instruments typically mature within one year and have less maturity risk compared to long…

Q: If short - term rate - sensitivity asset - liability GAP is negative : a)Decrease in Interest Rate…

A: Several statements have been provided explaining the impact of net interest income in case short -…

Q: Instruction: For each statement, begin by answering whether the statement is true or false. If you…

A: Since you have posted the question with multiple sub-parts, we will solve the three first three…

Q: Can free cash flow continue to grow, even if ROIC falls? Explain.

A: If the working capital of the company can be managed free cash flow can grow at a better rate even…

Q: As the discount rate increases A. present value factors decrease B. Present value factors remain…

A: Solution: As the discount rate increases "present value factors decrease".

Q: According to the Capital Asset Pricing Model, higher investment risk, however it is measured,…

A: The CAPM model is being used for finding the required rates of returns of the security for given…

Q: The additional return earned by holding a commodity that is in short supply or a nonpecuniary gain…

A: Answer- The Convenience Yield - A premium that is earned by people who hold a physical commodity.…

Q: 4.32 Investment risk analysis. The risk of a portfolio of financial assets is sometimes called…

A: Expected loss with a probability distributon is calculated using the below formula: Expected…

Q: True or False Investment bankers and other valuation professionals often utilize relative valuation…

A: Long term investments are the investment or assets that are beneficial for the firm for a number of…

Q: The value of money increases with time. A. true B. false

A: Value of Money is the purchasing power of a given amount of money in terms of goods and services it…

Q: apital gain yield (CGY) can be either positive or negative.   Select one: True False

A: Capital gains yield is the percentage increase in the value of an investment. It's calculated by…

Q: As risk aversion increases  A. a firm's beta will increase.  B. investors' required rate of return…

A: Risk aversion is the tendency to avoid risk by the investors. Lower the risk, higher stability for…

Q: Explain your answer assuming that all variables are constant except for the one mentioned:

A: Capital budgeting is a method used for finding the profitability of investment proposals. This…

Q: All else equal, as market interest rates fall, the present value of a future cash flow. the…

A: Present value is the equivalent today based on time value of money of the future cash flow that is…

Q: Discuss why it is advisable to invest in a group of financial assets rather than investing in just…

A: An investment is refer as an asset purchased with intention to earn income at some time in future.…

Q: Speculation tends to have a high risk and high rate of return compared to investment Select one: O…

A: The main target in both the cases are making profit, however there are major differences between the…

Q: Present the internal rate of return criterion and its strengths and weaknesses.

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: Stock prices and stand-alone risk Risk is the potential for an investment to generate more than one…

A: Portfolio risk refers to the overall risk associated with a portfolio of investments rather than…

Q: A. Positive (increase å increase)

A: Risk is an uncertainty of mishappening which is affected by something which human values such as…

Q: Reinvestment risk occurs when a financial institution holds longer-term assets relative to…

A: Reinvesting means putting the profit back into the same scheme.

Q: O a. None of the above Ob. Decrease in Money Supply O C. Increase in Money Supply d. No Change in…

A: Solution: Credit Creation Multiplier is a multiple which shows that how much multiple times the…

Q: Some savings and investment choices have the potential for higher earnings. However, these may also…

A: The problem described in the image refers to the risk of not being able to convert investments into…

Q: appropriate option (i) The rate of return method does not take care of timings of returns. (ii)…

A: Investment appraisal techniques are used to identify whether to invest or not in the project.   Rate…

Q: If the rates of return of two assets tends to move in the same direction, they have a negative…

A: Covariance measures the relationship of direction between the returns on two assets or securities.…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.