Monitoring and Restructuring Your Investments Is Called

question 29

Multiple Choice

Monitoring and restructuring your investments is called

• A) portfolio management.
• B) diversification.
• C) valuation.
• D) financial planning.

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Definitions:

Cost of Equity

The return that investors expect for investing in a company's equity, reflecting the risk of owning equity in the company.

Interest Tax Shield

The tax saving attained by a firm from interest expense.

M&M Proposition II

A theory by Modigliani and Miller that suggests the cost of equity is a linear function of the company's debt/equity ratio, under a no-tax environment.

Financial Risk

The possibility of losing money on an investment or business venture due to various financial factors.