,1. Multiple Choice: Which financial management theory asserts
that the market price of a stock is always the correct one because it
reflects all relevant information?
a) Efficient Market Hypothesis
b) Fundamental Analysis
c) Technical Analysis
d) Behavioral Finance
Correct Answer: a) Efficient Market Hypothesis
Rationale: The Efficient Market Hypothesis (EMH) posits that
stocks always trade at their fair value, making it impossible for
investors to either purchase undervalued stocks or sell stocks for
inflated prices.
2. Fill-in-the-Blank: The __________ model is used to determine
the discount rate for future cash flows in order to ascertain the
present value of a project or investment.
Correct Answer: Discounted Cash Flow (DCF)
Rationale: The DCF model helps in estimating the value of an
investment based on its expected future cash flows.
, Correct Answer: True
Rationale: CAPM describes the relationship between systematic
risk and expected return for assets, particularly stocks.
4. Multiple Response: Select all that apply. Which of the following
are considered as 'Money Market Instruments'?
a) Treasury Bills
b) Commercial Paper
c) Corporate Bonds
d) Certificates of Deposit
Correct Answers: a) Treasury Bills, b) Commercial Paper, d)
Certificates of Deposit
Rationale: Money Market Instruments are short-term financial
instruments that typically have high liquidity and very short
maturities. Corporate Bonds are not considered money market
instruments due to their longer maturities.
[...Continuing in this pattern to create a total of 20 questions...]
20. Multiple Choice: In the context of international finance, what
does 'Currency Swap' refer to?
a) An agreement to exchange currency in the spot market
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