An investment is a current commitment of money for a period of time, in order to derive future payments that will compensate for, the time the funds are committed, expected rate of inflation and uncertainty of future flow of funds Select one: True False

Q: When do the funds earn interest at the MARR?

A: The MARR (Minimum Acceptable Rate of Return), generally referred to as hurdle rate is the lowest or…

Q: An inflation hedge is an asset that increases in value at a rate equal to or greater than the rate…

A: Hedging is technique of reducing risk. This reduction in risk also results typically in a decrease…

Q: The goal of immunization is to A. make the effective duration of the portfolio zero В. generate a…

A: Portfolio immunization is a strategy that matches the duration of assets and liabilities to mitigate…

Q: Which of the following statements about payback (payback period) is most correct?   a.  Payback…

A: Payback period is a financial metric that measures the length of time it takes for an investment to…

Q: The payback method measures: The profitability of an investment. The net cash inflow from an…

A: Pay back period is most popular method of capital budgeting decisions and is quite simple to use and…

Q: The desired rate of return on an investment should reflect the degree of risk involved. A.   True…

A: Riskier investments may give higher returns to the investors as they provide favorable ratio of risk…

Q: The Capital Asset Pricing Model (CAPM) asserts that an asset’s expected return is equal to the…

A: Based on CAPM, Expected return on security = Risk free rate + Beta * Market risk premium

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

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

Q: Discounting an investment’s cash flows using the internal rate of return will result in which of the…

A: Introduction: The internal rate of return (IRR) is a research and consulting metric used to assess…

Q: TRUE / FALSE The discount rate used to discount the value of future dollars can generally be…

A: The present value of an investment is the value of all future cash flows that have been discounted…

Q: Which of the following is a true statement regarding the future worth of a single investment…

A: Introduction: This question is related to the concept of time value of money. The time value of…

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: Combining two assets having perfectly negatively correlated returns will result in the creation of a…

A: Correlation refers to relationship between variables of two asset of the portfolio. Negative…

Q: sk is the potential for an investment to generate more than one return. A security that will produce…

A: While investment there are potential risk to the investment due to which return realized vary…

Q: The static GAP focuses on monitoring net interest income in the long term.   Select one: True…

A: The Static GAP focuses on monitoring net interest income in the short term but it can be calculated…

Q: Expected return and standard deviation a.  What is the expected return of asset​ b?

A: The expected return is the return that an investor expects on its investment under various…

Q: Assets are priced such that _____________________ increase with the riskiness of future payoffs. A)…

A: Solution:- Payoff means the amount which is receivable on maturity.

Q: The maximum rate of return needed to induce an investor to purchase or hold a security is referred…

A: The statement is TRUE.Explanation:Step 1:An investor's required rate of return is the lowest…

Q: When valuing a short-term security, we commonly use:

A: Introduction: Short-term securities refer to securities that have a life tenure of less than one…

Q: Consider the following two statements concerning risk analysis: 1. Sensitivity analysis provides…

A: Risk analysis is defined as the identification as well as analysis process of the potential issues,…

Q: Which of the following methods consider the time value of money? A. payback and accounting rate of…

A: Time Value of Money The time value of money is the concept that money you have now is worth more…

Q: Consider the following two statements concerning risk analysis: 1. Sensitivity analysis provides…

A: Risk analysis is referred as the process of analyzing as well as identifying the potential issues,…