Detailed SolutionWalter’s Model suggests for 100% DP Ratio when:
Financial management
ke = r
ke > r
ke = 0
Answer is Right!
Answer is Wrong!
12. Rate of return which is required to satisfy stockholders and debt holders is classified as
weighted average cost of interest
weighted average cost of capital
weighted average salvage value
mean cost of capital
Answer is Right!
Answer is Wrong!
13. Book value is_______________.
the same as market value
a more accurate valuation technique than the dividend models
the accounting value of the firm as reflected in the financial statements
the same as liquidation value
Answer is Right!
Answer is Wrong!
14. The cost of capital of a firm is ______________.
The dividend paid on the equity capital
The weighted average of the cost of various long-term and short-term sources of finance
The average rate of return it must earn on its investments to satisfy the various investors
The minimum rate of return it must earn on its investments to keep its investors satisfied
Answer is Right!
Answer is Wrong!
Detailed SolutionThe cost of capital of a firm is ______________.
15. Capital budgeting decisions are analyzed with help of weighted average and for this purpose
component cost is used
common stock value is used
cost of capital is used
asset valuation is used
Answer is Right!
Answer is Wrong!
16. Net investment in operating capital is Rs 5000 and net operating profit after taxes is Rs 8000 then free cash flow would be
Rs 13,000.00
-Rs 3,000.00
Rs 3,000.00
-Rs 13,000.00
Answer is Right!
Answer is Wrong!
17. For a lesser, a lease is a:
Investment decision
Financing decision
Dividend decision
None of the above
Answer is Right!
Answer is Wrong!
18. Type of stock which have characteristics of bonds and common stock is classified as
bonds equity
common shares
common stock
preferred stock
Answer is Right!
Answer is Wrong!
Detailed SolutionType of stock which have characteristics of bonds and common stock is classified as
19. If a company sells its receivable to another party to raise funds, it is known as:
Securitization
Factoring
Pledging
None of the above
Answer is Right!
Answer is Wrong!
Detailed SolutionIf a company sells its receivable to another party to raise funds, it is known as:
20. Which of the following generally traded on stock exchanges?
Unit investment trusts
Closed-end investment companies
Open-end investment companies
All trade on stock exchanges
Answer is Right!
Answer is Wrong!
Detailed SolutionWhich of the following generally traded on stock exchanges?