The financial market offers the investors a means to sell their financial asset thereby a. Increasing the wealth of investor b. Offering liquidity to such assets c. Decreasing the wealth of investor d. Diluting the liquidity of such assets
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- Buying assets that yield a return greater than the minimum acceptable hurdle rate is a part of which core principles of Finance. a. Financing principle b. Investment principle c. Dividend principle d. Cost principle1) Buying assets that yield a return greater than the minimum acceptable hurdle rate is a part of which core principles of Finance. a. Financing principle b. Cost principle c. Dividend principle d. Investment principleCapital account transactions are not affected by Select one: a. Investment diversification b. Risk c. Rate of return d. All the answers are correct e. Speculation
- Based on the wealth maximization goal, the financial manager would A. choose Asset A. B. choose Asset B. C. choose Asset C D. be indifferent between Asset A and Asset B.Creditors 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 safetyThe risk-return trade-off from investing in current assets refers to an increased risk of: a. Liquidity versus decreased profitability. b. liquidity versus increased leverage. c. Liquidity versus increased profitability. d. Liquidity versus increased profitability.
- Balance Sheet Insolvency occurs when Liabilities are greater than the Assets resulting in negative capital equity. For a Financial Institution, Insolvency Risk can be defined as the risk that there is insufficient capital to offset either a decrease in the market value of assets relative to liabilities or an increase in liabilities relative to the market value of assets. A. Describe a situation where Insolvency Risk could be caused one of the many risks that a Financial Institution may face. B. Describe the best protection against insolvency risk at a Financial Institution.Which of the following is false regarding the secondary market? a) Secondary markets provide the necessary liquidity to the market b) transactions in the secondary market affect the total component of financial assets that exist in the economy c) The secondary market represents trading in already existing financial claims d) secondary markets reduce the risk of investing in financial claims(a. investment banking b. insurance firms c. commercial banking d. mutual fund e. pension fund) is a transformer of short term liabilities to long term assets. e d b c a
- Financial market offers the borrowers funds they need to a. Increasing the productivity b. Decreasing the productivity c. Decreasing the loan of the borrowers d. Increasing the assets of the borrowersThe primary goal of financial management is Select one: a. Increasing the owners wealth b. Reducing risk c. None of these d. Increasing profitWhich statement is not correct? A. The main objective (role) of financial intermediaries is to convert savings of SSU’s into investments. B. Financial intermediaries purchase financial claims with a set of characteristics from DSU’s and sell financial claims with characteristics tailored to the desires of the SSU’s. C. Financial intermediaries normally absorb the risks from SSU’s and manage the risks by investing the funds received from SSU’s into various securities. D. Financial intermediaries serve solely as intermediaries with the financial markets and never serve as investors. E. none of the above