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- Short Q/Ans: Answer shortly by just giving reasons Q: Indirect transfer through investment bankers is a major flow of funds in a financial market.Explain it? Q: Bonds are considered as less riskier instrument as compared to debentures. Being a rational investor do you support this statement or not? Provide logical arguments to support your verdictQuestion 1 Part A. What are the two key assumptions of the efficient market hypothesis?I. Rational investors collect information and compete for profitsII. Any temporary mispricing would be arbitraged away III. Irrationality: Investors make mistakes when forming expectations or making investment decisionsIV. The mispricing might not be quickly eliminated because of limits to arbitrage a) I and II b) II and IV c) III and IV d) I and III Part B. What are the two key assumptions of behavioral asset pricing theory?I. Rational investors collect information and compete for profitsII. Any temporary mispricing would be arbitraged away III. Irrationality: Investors make mistakes when forming expectations or making investment decisionsIV. The mispricing might not be quickly eliminated because of limits to arbitrage a) II and IV b) I and III c) III and IV d) I and IIThe commitment of funds in a business with an objective of earning a return in the future can be termed as: O Exchange O Transfer None of the options listed O Investment
- Q.Regarding the concept of opportunity cost, one affirmation is false. Which one is it? a. is not relevant in fundamental analysis b. is the rate of return given up by an investor, in order to gain another rate of return c. can play both the role of a discount rate or a capitalizing rate d. is relevant in determining the fair value of derivatives and corporate bonds e. is always computed as a percentage indicatorCreditors look for Select one: a. Net working capital for their safety b. Balance net working capital for their safety c. None of the options d. High net working capital for their safety e. Less net working capital for their safetyQUESTION 22 1. What is risk in commercial real estate? a. Events that cannot be mitigated by the investor b. Occurrences the investment community hasn't considered c. None of the answer choices d. Occurrences that impact the variability in an investment's expected return
- Debt financing is likely to appeal most strongly to organizations that have predictable profits and cash-flow patterns. Question 22 options: True FalseA. Briefly explain the problem of moral hazard in: (i) Equity financing (ii) Debt financingB. What is the adverse selection problem in financial markets and how can it be solved?A disadvantage of equity financing Group of answer choices Both of the choices given Equity financing can give more troubles in securing payback of funds Equity financing can result to give enormous control to shareholders
- Q 1. What are the important considerations in the investment decision process for today’s investors?QUESTION 6 Which of the following statements is true? O A. Companies look for investments with payback periods that are larger than their maximum accepted payback period O B. An investment with a profatibility index less than 1 is profitable and desirable O C.A projected is accepted if the IRR is less than the cost of capital O D. None of the above are trueWhich of the following is a constrain for the investors? a. The mentality tontake the high risk b. Tax exemption on security trading c. Getting high income d. Liquidity needs