Financial management

11. Walter’s Model suggests for 100% DP Ratio when:

ke = r
ke > r
ke = 0

Detailed SolutionWalter’s Model suggests for 100% DP Ratio when:

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

Detailed SolutionRate of return which is required to satisfy stockholders and debt holders is classified as

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

Detailed SolutionBook value is_______________.

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

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

Detailed SolutionCapital budgeting decisions are analyzed with help of weighted average and for this purpose

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

Detailed SolutionNet investment in operating capital is Rs 5000 and net operating profit after taxes is Rs 8000 then free cash flow would be

17. For a lesser, a lease is a:

Investment decision
Financing decision
Dividend decision
None of the above

Detailed SolutionFor a lesser, a lease is a:

18. Type of stock which have characteristics of bonds and common stock is classified as

bonds equity
common shares
common stock
preferred stock

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

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

Detailed SolutionWhich of the following generally traded on stock exchanges?

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