er confirmatory value?

Q: What is the profitability index? When is it used?

A: Capital investment analysis: Capital investment analysis is the process by which management plans,…

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: Consider the advantages and disadvantages of using the accounting rate of return as an investing…

A: This question explains about  the advantages and disadvantages of using the accounting rate of…

Q: How do the DuPont technique helps the firm’s managers to further analyze its returns?

A: DuPont analysis is referred to as the framework regarding the analysis of the fundamental…

Q: " The sale forecast is the cornerstone for profit planning," why?

A: Definition: Operating budget: The operating budget is that budget that is prepared to plan all…

Q: up between owners and managers and how

A: Profit maximization and value maximization are two financial management approaches that define the…

Q: What does this say about the company's profitability?

A: We are provided with three profitability ratios here - net profit margin ratio, ROA and ROE - and we…

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

A: The capital budgeting process uses different methods to analyze the projects. Each method has…

Q: What is return on marketing investment (rOMI)? howdoes considering marketing as an investment…

A: Return on marketing expenditure, or ROMI, is an indicator utilized to evaluate the success of a…

Q: Discuss how market characteristics can influence the profit rate of a perfectly competitive market…

A: Profits When the revenue of an organization is more than the expenses, costs, and taxes then it is…

Q: What is "Basic EPS" and how is it calculated? Is this number a good indicator for future company…

A: Basic EPS: Basic earnings per share show the profit made by the company after all expense…

Q: Why is FCF an important determinant of a firm’s value?

A: The cash available with a firm after paying operating expenses and capital expenditure of the firm…

Q: When calculating a company’s WACC, should book value, market value, or targetweights be used?…

A: A company often raises money from various sources such that it has to provide a return in the form…

Q: Does GAAP distinguish between fair values that are readily determinable from current market prices…

A: Generally Accepted Accounting Principles (GAAP):  A set of accounting principles, practices and…

Q: How do managers, bankers, and security analysts use (a) trend analysis, (b) benchmarking,(c) percent…

A: Introduction: Usually a managers, bankers, and security analysts use financial tools and techniques…

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: Ceteris paribus, current financial market returns will increase as

A: Capital goods are those fixed assets for the company which help in the production process. They are…

Q: Why would a company choose to factor itsreceivables, given that it will get less money than…

A: Sales means delivery of goods and services by the seller. It can be for cash sales or sales made on…

Q: Explain the term Value investing strategies?

A: SOLUTION:-   Benjamin Graham, an American economist, investor, and professor, pioneered a new method…

Q: What might cause a firm’s intrinsic value to be different from its actualmarket value?

A: Intrinsic Value is one of the vital component used in valuation of a particular company. Intrinsic…

Q: What is the normal sequence in performing top down security analysis? A-competition, consumer…

A: INTRODUCTION The top-down approach is a very important approach which is used in the fundamental…

Q: What company is better in short term investment?

A: Answer:-  Investment meaning:- An asset or object purchased with the intention of generating income…

Q: How does a company determine the interest rate it uses in making a netpresent value (NPV) decision?

A: The net worth of the project after the deduction of the current worth of the cash outflows from the…

Q: better the company’s future performance. Do you agree o

A: Operating Leverage Operating leverage measures a company’s fixed costs as a percentage of its total…

Q: Does the successful investment decision increase a company's market value?

A: Meaning of Market Value of a Company The value of a company in connection with the financial markets…

Q: what are the assumptions about market efficiency ?

A: Market efficiency refers to the market situation where stock prices reflect all available &…

Q: on which company that gire lower risk to your company. The recommendation must be ustified by the…

A: Financial Ratios It is important to calculate the financial Ratio which can be helpful to assess the…

Q: How does the risk return trade-off relate to the financial manager's main goal?

A: The main goal for a financial manager is to generate the maximum value of the firm to its owners.…

Q: If a company chooses to minimize WACC, what will be the effect on financial flexibility

A: Basic Terms :- Financial flexibility of the firm is the ability of the firm's capital structure to…

Q: 1) In most cases, book value reasonably approximates the current market value. This will not be the…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: What is the difference between future value and present value? Which approach is generally preferred…

A: Present value and future value are considered while taking investment decisions. The future values…

Q: The DPBP is ideal as a stand-alone measure of economic worth. True or False?

A: Discounted Pay-Back Period or DPBP is period in which discounted value of future cash inflows is…

Q: Does the Profitability Analysis play an important role in decision making? How?

A: Yes, Profitability analysis helps the decision-maker in making decisions as it helps in the…

Q: What does the term “value of an unlevered firm” mean?

A: A firm is an organization that sells or produces something or that offers a service.

Q: What are the advantages/disadvantages of using the market multiples method to estimate the value of…

A: It is a valuation strategy that decides the distinctive market values for similar organizations.…

Q: What is a firm’s fundamental value (which is also called it intrinsic value)? What might cause a…

A: Intrinsic value is a degree of what is the worth of the resource or asset. This gauge is…

Q: What is hedging and how is it different from diversification? If a firm needs to manage its risk,…

A: A hedge is an investment that is made fully intent on diminishing the danger of unfriendly value…

Q: Is the accounting rate of return (ARR) the same thing as the return on investment (ROI)?

A: Yes, Accounting rate of return (ARR) the same thing as the Return on investment (ROI). The…

Q: t are the main hindrances in valuation estimates in business valuation?

A: Knowing how much an asset is worth and what factors influence its value is essential for making…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.