Financial Management Final Exam
8 Questions
2 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

The major benefit of diversification is to:

  • Increase the expected return
  • Reduce the portfolio's systematic risk (correct)
  • Reduce the expected risk
  • Remove negative risk assets from the portfolio

Stocks that have high financial rewards are generally accompanied by:

  • All of the given choices
  • Low dividend payments because of internally generated growth
  • High dividend payments
  • High risk (correct)

A measure that describes the risk of an investment project relative to other investments in general is the:

  • Expected return
  • Coefficient of variation
  • Beta coefficient (correct)
  • Standard deviation

A firm with a higher degree of operating leverage when compared to the industry average implies that the:

<p>Firm's profits are more sensitive to changes in sales volume (C)</p> Signup and view all the answers

The major benefit of diversification is to:

<p>Reduce the portfolio's systematic risk (C)</p> Signup and view all the answers

Stocks that have high financial rewards are generally accompanied by:

<p>High risk (A)</p> Signup and view all the answers

A measure that describes the risk of an investment project relative to other investments in general is the:

<p>Beta coefficient (A)</p> Signup and view all the answers

A firm with a higher degree of operating leverage when compared to the industry average implies that the:

<p>Firm's profits are more sensitive to changes in sales volume (A)</p> Signup and view all the answers

Study Notes

Financial Management

Diversification

  • The major benefit of diversification is to reduce the portfolio's systematic risk.

Investment Risk and Return

  • Stocks with high financial rewards are generally accompanied by high risk.
  • High dividend payments are not necessarily a characteristic of high-reward stocks.

Investment Risk Measures

  • The beta coefficient is a measure that describes the risk of an investment project relative to other investments in general.
  • The coefficient of variation and standard deviation are alternative measures of risk.
  • The expected return is a measure of investment performance, not risk.

Operating Leverage

  • A firm with a higher degree of operating leverage has profits that are more sensitive to changes in sales volume.
  • This implies that the firm's profits are more volatile.
  • A higher degree of operating leverage is not necessarily indicative of a more profitable or less risky firm.

Financial Management

Diversification

  • The major benefit of diversification is to reduce the portfolio's systematic risk.

Investment Risk and Return

  • Stocks with high financial rewards are generally accompanied by high risk.
  • High dividend payments are not necessarily a characteristic of high-reward stocks.

Investment Risk Measures

  • The beta coefficient is a measure that describes the risk of an investment project relative to other investments in general.
  • The coefficient of variation and standard deviation are alternative measures of risk.
  • The expected return is a measure of investment performance, not risk.

Operating Leverage

  • A firm with a higher degree of operating leverage has profits that are more sensitive to changes in sales volume.
  • This implies that the firm's profits are more volatile.
  • A higher degree of operating leverage is not necessarily indicative of a more profitable or less risky firm.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

Description

A comprehensive multiple-choice quiz covering financial management concepts, including diversification, risk, and portfolio management.

More Like This

Gestion de portefeuille - Chapitre I
40 questions
Inversiones y Objetivos
10 questions
Use Quizgecko on...
Browser
Browser