2. __________ security is known as variable income security.

A) Debentures.
B) Preference shares.
C) Equity shares.
D) None of these.



3. Risk-return trade off implies_____________.

A) Increasing the portfolio of the firm through increased production.
B) Not taking any loans which increases the risk.
C) Not granting credit to risky customers.
D) Taking decision in such a way which optimizes the balance between risk and return.



4. The major benefit of diversification is to____________.

A) Increase the expected return.
B) Increase the size of the investment portfolio
C) Reduce brokerage commissions.
D) Reduce the expected risk.



5. Which of the following statements is correct regarding profit maximization as the primary goal of the firm?

A) Profit maximization considers the firm's risk level.
B) Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future profits.
C) Profit maximization does consider the impact on individual shareholder's EPS.
D) Profit maximization is concerned more with maximizing net income than the stock price.