CHAPTER 1 - FIN242

The primary goal of the firm is

• Minimize the shareholders value

• Maximize profit

• Maximize the shareholders wealth

• Minimize profit

Relationship between risk and return

• Higher risk, lower return

• Higher return, lower risk

• Higher return, higher risk

• Lower risk, higher return

Securities involved in financial market except,

• Bond

• Common stock

• Preferred stock

• Gold

Example of systematic risk except,

• Inflation

• Worker strike

• Covid-19

• Political instability

Types of risk that can be minimize through diversification are

• Financial risk

• Non-business risk

• Business risk

• Systematic risk

The capital market involved with

• lower risk

• short term maturity

• long term maturity

• lower return

The risk is also known as market risk, is uncontrollable, and cannot be reduced risk through diversification. This statement refers to

• Systematic risk

• Unsystematic risk

What is financial market?

• Market for investors only to buy securities

• Market for financial institutions to sell securities only

• Market for both investors and financial institutions to buy and sell securities

• The market that involve higher risk and higher return

This are the example of financial risk except,

• Stock price movement

• Currency risk

• Interest rate risk

• Environment risk

Choose the right answer for money market.

• long term securities issued in this market

• involve higher risk and higher return

• NCD and commercial papers are examples of money market

• Issued by government only