Financial management

1. Formula written as market risk premium divided by standard deviations of returns on market portfolio is used to calculate

capital market line
security market line
fixed market line
variable market line

Detailed SolutionFormula written as market risk premium divided by standard deviations of returns on market portfolio is used to calculate

2. Value of stock is Rs 250 and call option obligation is Rs 100 then current value of portfolio would be

Rs 125.00
Rs 150.00
Rs 350.00
Rs 2.50

Detailed SolutionValue of stock is Rs 250 and call option obligation is Rs 100 then current value of portfolio would be

3. Cost of common stock is 13% and bond risk premium is 5% then bond yield would be

20.00%
2.60%
8.00%
18.00%

Detailed SolutionCost of common stock is 13% and bond risk premium is 5% then bond yield would be

4. Cost of equity which is raised by reinvesting earnings internally must be higher than the

cost of initial offering
cost of new common equity
cost of preferred equity
cost of floatation

Detailed SolutionCost of equity which is raised by reinvesting earnings internally must be higher than the

5. An earning before interest, taxes, depreciation and amortization are calculated by

subtracting operating cost from net sales
subtracting net sales from operating costs
adding operating cost and net sales
adding interest and taxes

Detailed SolutionAn earning before interest, taxes, depreciation and amortization are calculated by

6. Beta reflects stock risk for investors which is usually

individual
collective
weighted
linear

Detailed SolutionBeta reflects stock risk for investors which is usually

7. All assets are perfectly divisible and liquid in

tax free pricing model
cost free pricing model
capital asset pricing model
stock pricing model

Detailed SolutionAll assets are perfectly divisible and liquid in

8. Which of the following is true?

Under Traditional Approach, overall cost of capital remains same
Under NI Approach, overall cost of capital remains same
Under NOI Approach, overall cost of capital remains same
None of the above

Detailed SolutionWhich of the following is true?

9. A group of mutual funds with a common management are known as______________.

fund syndicates
fund conglomerates
fund families
fund complexes

Detailed SolutionA group of mutual funds with a common management are known as______________.

10. The underwriter has to take up ________________.

the fixed portions of the issue capital
the unsubscribed part of the agreed portion
the agreed portion or can refuse if
the unfixed portions of the issue capital

Detailed SolutionThe underwriter has to take up ________________.

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