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State whether true, false or uncertain in each case. You must justify your answer.

(a) Primary market is the market where an investor can buy a security directly from another investor in lieu of the issuer while a secondary market is the market for issuing new securities.

(b) There are two methods of facilitating the transfer of funds from investors to borrowers in particular through financial institutions and financial markets.

(c) If a company makes profit then its cash flow position is favourable and positive.

(d) Ratio analysis is irrelevant for a company in a service industry.

(e) One condition of financial lease is that the lease transfers ownership of the property to the lessor at the end of the lease term.

(f) The decision to lease or buy is an investment decision. (

g) The Black-Scholes option pricing model is a mathematical model that solves the value of a call option as a function of its three variables.

(h) Risk management involves four approaches.

(i) The market rate of return of a company is 20% and the risk-free rate is 15%.If the company expects a return of 30% then the value of the beta portfolio is =2.

(j) Most Mergers and Acquisitions are financed using cash.

(k) Due diligence in Mergers and Acquisitions is simply an audit to be undertaken by the acquirer for reporting purposes.

(l) The only strategy in International Financial Management to enter a foreign market is through licensing.

(m) For Interest Rate Parity Theorem to hold then money hungry traders would not be able to exploit arbitrage opportunities.

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