Financial management

1. A company having easy access to the capital markets can follow a ____________ dividend policy

liberal
formal
strict
Varying

Detailed SolutionA company having easy access to the capital markets can follow a ____________ dividend policy

2. In capital budgeting, the term Capital Rationing implies:

That no retained earnings available
That limited funds are available for investment
That no external funds can be raised
That no fresh investment is required in current year

Detailed SolutionIn capital budgeting, the term Capital Rationing implies:

3. Difference between actual return on stock and predicted return is considered as

probability error
actual error
prediction error
random error

Detailed SolutionDifference between actual return on stock and predicted return is considered as

4. Legal entity separation from its legal owners and managers with help of state laws is classified as

controlled corporate business
Corporation
limited corporate business
unlimited corporate business

Detailed SolutionLegal entity separation from its legal owners and managers with help of state laws is classified as

5. __________ is concerned with the maximization of a firm’s stock price.

Shareholder wealth maximization
Profit maximization
Stakeholder welfare maximization
EPS maximization

Detailed Solution__________ is concerned with the maximization of a firm’s stock price.

6. Financial leverage is also known as.

Trading on equity
Trading on debt
Interest on equity
Interest on debt

Detailed SolutionFinancial leverage is also known as.

7. Difference between bond’s yield and any other security yield having same maturities is considered as

maturity spread
bond spread
yield spread
interest spread

Detailed SolutionDifference between bond’s yield and any other security yield having same maturities is considered as

8. Price for debt is called

debt rate
investment return
discount rate
interest rate

Detailed SolutionPrice for debt is called

9. Beta coefficient is used to measure market risk which is an index of

coefficient risk volatility
market risk volatility
stock market volatility
portfolio market portfolio

Detailed SolutionBeta coefficient is used to measure market risk which is an index of

10. Bonds issued by small companies tend to have

high liquidity premium
high inflation premium
high default premium
high yield premium

Detailed SolutionBonds issued by small companies tend to have

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