Which of the following statement is correct?

Group of answer choices

How successfully diversification increases non-diversifiable risk depends on the degree of correlation between beta and coefficient of variation.

A correlation coefficient of -1.00 indicates perfect positive association, while a coefficient of +1.00 indicates perfect negative association.

The beta term in the CAPM reflects only the nondiversifiable risk of an asset, not its diversifiable risk.

Financial risk refers to the uncertainty a company has with regard to its operating income (EBIT).

All the answers are incorrect.

Which of the following statement is correct?

Group of answer choices

All the answers are incorrect.

Annuities due is the payments are made/received at the end of the period.

An annuity due is best defined as a series of equal payments occurring at equal intervals for a specified number of periods at the beginning of each period.

Perpetuities contain a limited number of annuity payments.

As the interest rate increases, future value decreases.

Which of the following statement is correct?

Group of answer choices

Microsoft Corporation or other corporations can legally create their own money.

All the answers are incorrect.

The U.S. government has the power to create the money needed to pay off its own obligations.

Callability provision gives the bondholder the option to exchange the bond for a given number of shares of stock.

A bond that is backed by some collateral is called a debenture.

Which of the following statement is correct?

Group of answer choices

In order to use the DCF model to estimate the value of a complete business, we must use historical cash flows of the business and multiply them by the required rate of return appropriate for the business.

A bonds market price and its YTM vary positively and therefore when the YTM rises, the market price rises also, and vice versa.

The value of the debt is nothing to do with the present value of the future cash flows that would accrue to the owner of the debt.

The financial managers primary goal is to maximize the market value of their firm and raise capital as necessary.

All the answers are incorrect.

Which of the following statement is correct?

Group of answer choices

The graphical depiction of the risk-return relationship according to the CAPM is called the security market line.

A standard deviation measures the sensitivity of a stock's returns (or a project's returns) relative to general stock market movements.

All the answers are incorrect.

The more widely dispersed a distribution is, the smaller the standard deviation, and the greater the probability that an actual value will be different than the expected value.

The diversification increases risk because we are combining two assets that have returns that are negatively correlated (r = -1.0)

Which of the following statement is correct?

Group of answer choices

With the ordinary annuities, the annuity payments occur at the beginning of each period.

As the discount rate decreases, the present value of a positive cash flow to be received at a particular time in the future gets closer to zero.

All the answers are incorrect.

The higher the number of periods, the higher the future value.

When we calculate the present value of a future promised or expected cash payment, we compound it because the same amount of money is worth more if it is to be received later rather than now.

Which of the following statement is correct?

Group of answer choices

With cumulative common stock, if a dividend is missed, it must be paid at a later date before dividends may resume to preferred stockholders.

When bond with a call provision is called, convention is that the call price the issuer must pay is generally more than the face value and this excess of the call price over the face value is known as the call premium.

If a debenture were to go into default, the bondholders would be secured creditors secured by the specific assets of the firm.

An unsecured bond is backed by specific assets pledged by the issuing corporation.

All the answers are incorrect.