Part one:
Multiple choices:
1. The approach focused mainly on the financial problems of corporate enterprise

A). Ignored routine problems

2. These are those shares, which can be redeemed or repaid to the holders after a lapse of the stipulated period

A).Redeemable preference shares

3. This type of risk arise from changes in environmental regulations, zoning requirements, fees, licenses and most frequently taxes.

A). Political risk

4. It is the cost of capital that is expected to raise funds to finance a capital budget or investment proposal A). Future cost

5. This concept is helpful in formulating a sound & economical capital structure for a firm

A). Designing optimal corporate capital structure

6. It is the minimum required rate of return needed to justify the use of capital

A). Firms point

7. It arises when there is a conflict of interest among owners, debenture holders and the management

A). Agency costs

8. Some guidelines on shares & debentures issued by the government that are very important for the constitution of the capital structure are

A). Legal requirement

9. It is that portion of an investments total risk that results from change in the financial integrity of the investment

A). Default risk

10. _____________ measure the systematic risk of a security that cannot be avoided through
Diversification

A).Beta

Part Two:
1. What is Annuity kind of cash flow?

A).An annuity is stream of equal cash flows. Annuities involve calculations based upon the regular periodic contribution or receipt of a fixed sum of money.

2. What do understand by Portfolio risk?

A).The portfolio risk not simply measure of its weighted average risk. The securities that a portfolio contains or associated with each other. The portfolio risk also considers the covariance between the returns of the investments.