do liquid assets frequently have lower rates of return than fixed assets?

Q: What happens if economic engineers invest too much in assets?

A: Economic engineers always combine finance with engineering and develop various models to deal with…

Q: benefit results from holding a portfolio of assets rather than a single asset?

A: A portfolio is a combination of various financial instruments

Q: Why are fixed assets reported on the balance sheet at a price that may not be accurate

A: Fixed assets are those that are not subject to change. Fixed assets are retained for an extended…

Q: Why do most assets of the same type show positive covariances of returns with each other?

A: Covariance is a way of measuring the directional relationship between the returns on two assets and…

Q: Which current asset is typically the least liquid?

A: Introduction: Current assets are those assets with a high liquidity and that can normally be…

Q: Critically discuss over-investment and under-investment problems due to debt usage. What kinds of…

A: Capital structure means the amount of debt and equity which the firm has as its capital. The company…

Q: Must two assets with the same fundamental characteristics (e.g. same payment stream, same credit…

A: Assets are valued on the basis of profit,cash flow and associated risk.But there value may not be…

Q: what are usefulness and weakness of discounted cash flow method?

A: Discounted Cashflow Method is the Method in which we compare Initial Project cost with expected…

Q: What is the causes of the financial risk?

A: financial risk - financial risk is the possible danger of losing money from an investment made by…

Q: the Capital Asset Pricing M

A: Explanation : In simple words, Capital asset pricing model for valuing the cost of capital contains…

Q: What is capital rationing, what conditions lead toit, and how should it be dealt with?

A: Capital budgeting is a process in which capital projects are assessed in terms of their viability…

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: Describe the Procedures used to determine the rate of return internal to nonsimple investments?

A: Procedure to compute the rate of return internal to non-simple investmentIt is an investment for…

Q: Which of the following statements are true regarding the payback period of an investment? It does…

A: Answer: The correct option is (4) All of the above.

Q: What is the compensation for price risk in finance? How do they arise and what issues arise due to…

A: Price risk: Price risk can be defined as the risk that price of a security may reduce. This risk is…

Q: What are the advantages of matching the maturities of assets and liabilities? What are the…

A: Matching the maturities of assets and liabilities refers to matching the similar category of assets…

Q: The cost of capital is a hurdle rate. Is this statement true? Why or why not?

A: The question is based on the concept of minimum required rate for any project . Hurdle rate is the…

Q: How do economies of scale and lumpy assets affect financialforecasting?

A: Economies of scale are cost advantages reaped by companies when production becomes efficient.…

Q: Should short-term

A: The cost of capital is the rate of return that is expected by the firm to earn from its investment…

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

A: Long term investments are the investment or assets that are beneficial for the firm for a number of…

Q: Why is profit shown on liabilities side?

A: This is because of separate entity principle of accounting which says that the owner and business…

Q: What does the financial breakeven point shows?

A: A breakeven point is a situation of no loss no profit. The breakeven point is generally calculated…

Q: What makes current liabilities different from long term liabilities?

A: Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: Explain the risk-return trade-off for liquid assets.

A: Risk return trade off tell relationship between the risk and return.

Q: The ___ the expected return from a financial asset, the ____ the risk of not getting the money back…

A: Expected Return of Financial Asset:It is the expected profit or loss that is earned from the…

Q: What are the key factors that can lead to an under/overstatement of the investments balance?

A: Answer: There can always be under statement or overstatement of the investment balances.

Q: What is irregular cash flow stream?

A: Cash Flow has a flow concept. There can either be cash inflow or cash outflow. Generally, for…

Q: What is the process of solving a cash flow for an unknown interest rate?

A: Time Value of Money: According to the concept of TVM, the company always interested to know the PV…

Q: What is off–balance sheet financing?

A: To keep the debt-to-equity and leverage ratios low, companies opt to record certain liabilities and…

Q: The internal rate of return method of evaluating capital investments can be used with uneven cash…

A: Uneven cash flows is a series where the cash flows are not the same throughout the project's life.…

Q: why is there a trade-off between liquidity and solvency?

A: A firm may raise capital through different sources, including equity shares, preference shares,…

Q: Why is the compressed adjusted present value approachappropriate for situations with a changing…

A: Compresses Adjusted Present Value shows Net Present Value(NPV) of a project after considering the…

Q: The average duration of its assets is longer than that of its liabilities.   There is a…

A: Risk is the uncertainty associated with an investment. Higher the risk more is the return and lower…

Q: hy sometimes soft assets can be more important that hard assets?

A: Soft assets are those generally differentiated from hard assets such as plant and machinery,…

Q: How can we invest in two assets with dissimilar return characteristics?

A: Diversification is one of the tactics to keep in mind while forming a portfolio. Investing all the…

Q: Why is the fixed asset riskier than current asset?

A: In financial accounting, the company's financial statements assets are classified into two…

Q: Why is it more reasonable to assume, as the NPV rule does, that the intermediate cash flows are…

A: Before investing in new assets or projects, profitability is evaluated by using various methods like…

Q: How can we invest in multiple assets with dissimilar return characteristics?

A: Diversification is one of the tactics to keep in mind while forming a portfolio. Investing all the…

Q: The term expense represents a decrease in asset that always results in decrease in equity

A: The income statement records the revenues and expenses incurred during the period.

Q: Why is it favorable to invest in different investable assets?

A: Diversification is very important in investment to achieve the consistency.

Q: Why do the payback period analysis fail to recognize the difference between the present and future…

A: Pay-Back (PB) Period is time in which Initial outlay related to proposed investment is completely…

Q: What is the cost of accrued liabilities? If accruals have such a low cost, why don’tfirms use them…

A: An accrued liability refers to an expense a business has incurred during a specific period but has…

Q: Capital Asset Pricing Model  a) describe the model b) what are the assumptions in the model c)…

A: The capital asset pricing model describes the relationship between the expected return and the risk…