When comparing NPV and IRR, which is incorrect? With NPV, the discount rate can be adjusted to take into account increased risk and the uncertainty of cash flows With IRR, cash flows can be adjusted to account for risk NPV can be used to compare investments of various size or magnitude Both NPV and IRR can be used for screening decisions

Q: What is Interest Rate Risk and Cash Flow Risk

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Q: Describe Asset/Liability Models and explain why it is better than Value-at-Risk Models for Portfolio…

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Q: A portfolio consisting of two assets has a correlation coefficient of 0.7. Another two-asset…

A: A portfolio is a collection of financial assets such as stocks, bonds, and cash equivalents, held by…

Q: What is a satisfiable investment? When the present value of benefits surpasses the cost of an…

A: This question explains about the present value of benefits surpasses and the cost of an investment…

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…

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A: Risk is the possibility that the actual return on any investment made might be different from the…

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Q: What is the relationship between correlation and the risk of the portfolio's rate of return? i.…

A: Correlation represents the degree of relationship between the movement of prices of assets in a…

Q: A measure of how the returns of two risky assets move in relation to each other is the:

A: By calculating covariance we can identify in what direction the returns move for two securities.

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A: The portfolio standard deviation is the financial measure which computes the investment risk and…

Q: What is the expected return on a portfolio? How can the expected return on a portfolio be…

A: Expected Return on Portfolio  =( Weights of Stock 1 * Return of Stock 1) + ( Weights of Stock 2 *…

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A: Risk sharing is one of important concepts in insurance where there is sharing of risk is involved.

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

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A: According to the question, the relationship between net present value and internal rate of return

Q: Which of the following is NOT true? You might be better off using elimination approach for this…

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Q: Which of the following decision criteria is the easiest to use and very popular among investors?…

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

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

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

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A: In the given question we need to answer whether the given statement is True or False.

Q: why net present value is considered to be superior to internal rate of return as an investment…

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Q: Q3. Explain the following A) Measure of historical returns (Single Asset) B) Measure of historical…

A: Return= Total gain/loss on an asset over a given period of time.

Q: Under prospect theory, the shape of the utility function implies that investors are

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Q: Describe the relation between Risk and Returns that was introduced by Harry Markowitz

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Q: What strategies are available to eliminate timing problems in investments? Explain Briefly

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

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Q: Which of the following is TRUE about liquidity? a. All assets should be put in liquid asset so that…

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Q: What are the limitations/problems from classifying performance using raw returns? and, What are the…

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Q: In order to benefit from diversification, the returns on assets in a portfolio must: Answer a. Not…

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Q: Identify two disadvantages of using the payback period for comparing investments.

A:

Q: Why may the net-present-value and internal-rate-ofreturn methods yield different rankings for…

A:

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.