In conducting a sensitivity analysis, the only parameter that represents a measure of worth is:a. the future worth.b. the breakeven point.c. a cost index.d. a sinking fund equation.

Q: What is a benchmark and why is there a need to compare the fund's return vis-a-vis a benchmark?

A: Benchmark is considered as a standard against which the actual performances of the securities are…

Q: An ideal value-relevant attribute is one for which the correlation coefficient of the values of the…

A: +1 correlation indicates positive correlation whereas -1 indicates negative correlation.

Q: What does a failed net-investment test indicate?

A: Answer: Net investment test: The company will not overdraw at any stage on its return, and is thus…

Q: standard deviation of historical returns Market beta Tracking error risk Discuss in what scenario…

A: In financial terms, risk can be defined as the possibility that the real profits from an outcome or…

Q: When using present worth to evaluate the attractiveness of a single investment alternative, what…

A: To calculate the attractiveness of investment there is need to calculate the present worth is…

Q: Beta measures the sensitivity of the asset's return to variation in the market return.    What is…

A: Beta of a stock measures the sensitivity of assets return to variation in market return It means…

Q: Use the following information to answer the questions.       State of   Economy Probability of State…

A: Given : State of Economy Probability Return on Asset D Return on Asset E Return on Asset F Boom…

Q: which of the following quantifies how closely a manager's return pattern follows that of a benchmark…

A: Managers' performance is evaluated on the basis of pattern that follows with benchmark index.

Q: Morningstar's Risk-Adjusted Rating most closely resembles which measure? The Treynor Index Jensen's…

A: Financial statements are statements which states the business activities performed by the company .…

Q: When comparing NPV and IRR, which is incorrect? * . With NPV, the discount rate can be adjusted to…

A: Net present value is the difference between the present value of cash inflows and cash outflows.…

Q: The desired rate of return on an investment should reflect the degree of risk involved. A.   True…

A: Riskier investments may give higher returns to the investors as they provide favorable ratio of risk…

Q: (Net income ∕ Total assets)

A: Operating Profit Margin: It shows the performance of the firm in generating operating profit from…

Q: Another name for the expected value of an investment would be: a. The mean value b. The risk-free…

A: The expected value (EV) is an anticipated value for investment at some point in the future. In…

Q: Critically evaluate the importance of the standard deviation factor in comparing investments.

A: Standard deviation helps the investor to measure the volatility of the market. It helps an investor…

Q: Which of the following statements is correct?   Select one: a.   Assuming a correlation…

A: The combination of stock will reduce the overall risk of the portfolio but it it depends on the…

Q: What are the consequences of using a poor benchmark to evaluate a fund manager?

A: Benchmark is the standard used for the comparison by the company to know the current performance…

Q: The potential percent gain or loss in changes of variable is taken into account by: A present worth…

A: Percent increase or decrease is such a measure of of change of percent which to extent measures…

Q: What does the term “risk” mean in the context of capital budgeting; to what extent can risk be…

A: Capital budgeting is a process whereby a firm or an investor evaluates all the long-term…

Q: Some financial theorists consider the variance of the distribution of expected rates of return to be…

A: The variance of expected rates of returns describes a measure of the dispersion of real/actual…

Q: Which of the following should not be included as an application of the rate of return concept? rate…

A: As per the guidelines, only one question is allowed to be answered so, I am answering question no.…

Q: The greater the variability of the possible returns on an investment, _________. a. the lesser the…

A: Variability is a measure of how much variation each return exhibits to the mean return. It is also…

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

A: The present value of an asset or project is computed to determine which investment must be selected.…

Q: The effects of financial choices can be understood by performing which of these? Check two. O Micro…

A: Financial choices involves the financial, credit, and debt management information required to make…

Q: The time weighted return is a method of measuring performance. Which of the following statements…

A: The time-weighted return method is a method to compute the compound rate of interest in portfolio…

Q: In the capital asset pricing model, the general risk preferences of investors in the marketplace are…

A: Capital asset pricing model is used to calculate the expected returns on the investment made by the…

Q: Which of the following statements about the mean-variance criterion is correct?   The mean return…

A: Analysis of amount of risk taken for a given asset's expected return with another asset's variance…

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

A: Limitations of classifying performance using raw returns: Raw data may be incomplete and may not…

Q: __________ considers the impact of changing one or more inputs or assumptions on the resulting…

A: Capital budgeting is one of the important process of financial management. By this procedure,…

Q: Given the following probability distribution for assets X and Y, compute the expected rate of…

A: Average Return, variance and standard deviation of a security is calculated using the below formula…

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: Calculate the expected cost of investment and the standard deviation

A: The cost of investment can be defined as capital requirement for an investment. Expected cost f an…

Q: When using the benefit-cost ratio measure of worth (B/C), what benchmark is the calculated ratio…

A: Benefit Cost Ratio :— Benefit Cost Ratio are mostly Used in Capital Budgeting to analyse the Overall…

Q: In general, the the correlation between asset returns, the the risk reduction that investors can…

A: Correlation measures the extent to which two variables are interrelated. The correlation coefficient…

Q: The minimum acceptable rate of return for an investment decision is called the a. Hurdle rate of…

A:

Q: What are the advantages of evaluating fund performance based on Internal Rate of Return (IRR)? Why…

A: The internal rate of return is the expected annual growth rate from an investment. Whenever the IRR…

Q: Identify the one true statement. a. The B/C method determines the ratio of the present worth of…

A: Capital Budgeting involves long-term planning and monitoring of capital expenditure, besides…

Q: In the context of the capital asset pricing model, the systematic measure of risk is captured by…

A: Risk can be both systematic and unsystematic

Q: The risk of a portfolio is the variance of its return. However, the variance of the returns of an…

A: The risk of a security or portfolio is measured in terms of variance. Variance is the measure of…

Q: Risk means, in today's language, the probability of something bad happening or an unfortunate…

A: investors invest money in the market to earn some profit if they don't earn profit They will not…

Q: Which method does not consider the time value of money? Choose the correct. A. Net present value…

A: Net Present Value or NPV is a technique which determines the net present value of the project and it…

Q: In computing the WACC, what is the difference between using the current market value weights rather…

A: WACC A computation of an entity’s cost of capital in which every capital’s category is apportioned…