The Statement Concerning Shares That Is not True Is

question 44

Multiple Choice

The statement concerning shares that is not true is:

• A)Sometimes shares can be bought back by the company from its shareholders
• B)The directors can issue shares at any price,the limiting factor is what the market will pay
• C)Under changes to the Corporations Act shares can no longer be issued payable in instalments
• D)Directors may decide to issue ordinary shares,preference shares or both

Calculate and interpret the expected rate of return and standard deviation of an investment.

Comprehend the risk-return trade-off and the rationale behind higher returns for small-firm stocks in efficient markets.

Differentiate between the certainty of returns in various financial instruments (e.g., Treasury bills versus risky assets).

Recognize the distinction between investors and gamblers in terms of risk premium requirements.

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Definitions:

WACC

Weighted Average Cost of Capital; a calculation of a firm's capital costs, weighted according to the proportion of equity and debt in the firm's capital structure.

Negative Net Present Value

An indication that the projected earnings (discounted back to present value) of an investment will be less than the initial investment cost.

Competitor's Cost

The expenses incurred by industry rivals, which can influence competitive pricing strategies.

Required Return

The smallest annual percent yield necessary to convince people or corporations to allocate funds towards a certain security or project.