Which of the following statements is true?   Multiple Choice   When NPV is 0, the IRR is equal to the discount rate.   When NPV is 0, the investment is not making a profit.   In calculating IRR, we make the assumption all cash flows are reinvested at the discount rate.   NPV is a good measure to use when comparing investments of different sizes.

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: Investors require a _____ return as compensation for taking ____ risk. A) higher, margin B)…

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

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.

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

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

Q: Select all that are true. The risk-return tradeoff is generally worse for individual assets than for…

A: Risk and return are fundamental concepts in finance and investing, especially in the context of…

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: The higher a security's risk, the higher the return investors demand, and thus the less they are…

A: Risk on security is defined as the risk of not getting actual return as per the expectations of the…

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: According to Capital Asset Pricing theory (CAPM), in a competitive marketplace: Group of answer…

A: Capital Asset Pricing Model(CAPM) is an investment tool used to determine the fair valuation of…

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 break-even value calculation is similar to the calculation we use for theinternal rate of…

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: Let rf be the risk free rate of interest. E[r e ] be the expected return of some risky asset.…

A: CAPM: CAPM is also called as Capital assets pricing model. Factors affecting CAPM return are risk…

Q: What is the Capital Asset Pricing Model (CAPM)? Derive the risk premium when beta is between 0 and…

A: Stock valuation is a quantitative approach that an analyst or management of the company undergoes…

Q: 1.) Which is false concerning standard deviation? a. The smaller the standard deviation is the less…

A: Standard deviation measures the deviations of dataset from the expected mean . In finance, standard…

Q: The interest rate is the IRR for the mixed investment. True or false?

A: Project Balance (PB) is the amount of investment that is made into a project at any given period of…

Q: The pure time value of money is known as the:   Multiple Choice   liquidity effect.   inflation…

A: The pure time value of money is the concept that money available today is worth more than the same…

Q: Is it true that the the wider the risk premium, the lower the price of a expected future cash flow?

A: Risk premium is the return the stock gives over the risk free asset. risk premium = Rs-Rf Wider risk…

Q: Which of the following statements describing the elements of intrinsic valuation is most accurate?…

A: Intrinsic value of any project or any assets is how value being added by asset to value of investors…

Q: 1) Let us start with what is the difference between a real and a financial asset? 2) What is the…

A: Real assets and financial assets are two distinct types of assets owned by businesses and…

Q: The profitability index is another method to evaluate capital investments. If you are trying to…

A: A profitability index is a quantitative tool that can help decide whether to accept or reject an…

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.