_____ is a measure of an investment\'s volatility compared with a broad market i
ID: 2780935 • Letter: #
Question
_____ is a measure of an investment's volatility compared with a broad market index for similar investments.
d. Standard deviation
When a firm earns a profit but chooses not to pay all of the profit out in the form of dividends, the funds not paid out are referred to as
d. managerial earnings.
The most basic form of ownership of a corporation is
d. start-up capital.
If you base your predictions about the likely future success of a stock on the value of the company, the quality of its management, and its expected future earnings, you are using the
a. Alpha b. Beta c. Varianced. Standard deviation
When a firm earns a profit but chooses not to pay all of the profit out in the form of dividends, the funds not paid out are referred to as
a. retained dividends. b. phantom profits. c. retained earnings.d. managerial earnings.
The most basic form of ownership of a corporation is
a. preferred stock. b. common stock. c. bonds.d. start-up capital.
If you base your predictions about the likely future success of a stock on the value of the company, the quality of its management, and its expected future earnings, you are using the
a. random-walk approach. b. technical approach. c. fundamental approach. d. street-wise approach.Explanation / Answer
1. Beta is a measure of an investment's volatility compared with a broad market index for similar investments.
Therefore correct answer is option b. beta
Beta is a measure of volatility or systematic risk of company and its shows that how the value of stock is associated the broad market index.
2. When a firm earns a profit but chooses not to pay all of the profit out in the form of dividends, the funds not paid out are referred to as retained earnings.
Therefore correct answer is option c. retained earnings.
Retained earnings are the earnings which are not paid out as dividends and held with company and recorded under shareholders' equity in the balance sheet of company. The retained earnings are used either to reinvest in the primary business of company or to pay its debt.
3. The most basic form of ownership of a corporation is common stock
Therefore correct answer is option b. common stock
The owners of common stock have voting right of the company and they also share the company’s profits through dividends paid by company.
4. If you base your predictions about the likely future success of a stock on the value of the company, the quality of its management, and its expected future earnings, you are using the fundamental approach.
Therefore correct answer is option c. fundamental approach.
In the fundamental approach the current stock price is derived from the expected future earnings of the company discounted at present value and divided with number of shares outstanding.
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