In: Finance
.Answer 1.
C. 75 %
Explanation
Many experts recommend that when making a savings plan, you should
aim for a replacement rate equal to 75% of your income.
Answer 2.
False
Explanation
The cost of capital of particular project of a firm should depends
on the mode of financing used in that particular project of a firm.
It not always same as risk of firm existing assets.
It refers to the cost of equity if the business is financed solely
through equity, or to the cost of debt if it is financed solely
through debt.
Answer 3
A Sensitivity analysis tests whether a project Will still be
worthwhile if some of the variables are changed
Explanation
Sensitivity analysis is a technique for investigating the impact of
changes in base case variables of project and is also known as a
what-if analysis.
Answer 4
b. The Law of One Price
Explanation:
It is the most fundamental valuation principal in finance because
it says that in identical markets, goods must have the same price
and thus helps in valuation of assets.
Answer 5
C. Both a & b
Explanation:
In competitive market, If the observed prices violate the law, we
should suspect that something is interfering in the operations of
the competitive market. Another possible reason is that there may
be some differences, even if subtle and understated, between the
assets.