Financial management

11. Money market funds were a financial innovation partly inspired to circumvent __________.

Regulation Q, which is no longer in existence
Regulation M
Regulation D
Regulation B, which is still in existence

Detailed SolutionMoney market funds were a financial innovation partly inspired to circumvent __________.

12. Which of the following is not true with reference capital budgeting?

Capital budgeting is related to asset replacement decisions
Cost of capital is equal to minimum required return
Existing investment in a project is not treated as sunk cost
Timing of cash flows is relevant

Detailed SolutionWhich of the following is not true with reference capital budgeting?

13. Securitization is related to conversion of:

Receivables
Stock
Investments
Creditors

Detailed SolutionSecuritization is related to conversion of:

14. Retention ratio is 0.55 and return on equity is 12.5% then growth retention model would be

11.95%
6.88%
13.05%
22.72%

Detailed SolutionRetention ratio is 0.55 and return on equity is 12.5% then growth retention model would be

15. In weighted average cost of capital, cost of capital which is risk adjusted and developed for each category of

”long-term
”industry
projects” option3=”divisional projects” option4=”short-term projects” correct=”option1″]

Detailed SolutionIn weighted average cost of capital, cost of capital which is risk adjusted and developed for each category of

16. Which of the following is not normally one of the reasons for a change in an investor’s circumstances?

Change in market conditions
Change in legal considerations
Change in time horizon
Change in tax circumstances

Detailed SolutionWhich of the following is not normally one of the reasons for a change in an investor’s circumstances?

17. According to top rating agencies S&P triple-A and double-A rating bonds are classified as an

extremely discounted
extremely safe
extremely risky
extremely inflated

Detailed SolutionAccording to top rating agencies S&P triple-A and double-A rating bonds are classified as an

18. Which element of the basic NPV equation is adjusted by the RADR?

Denominator
Numerator
Both A and B
None of these

Detailed SolutionWhich element of the basic NPV equation is adjusted by the RADR?

19. Noncash revenues and noncash charges if it subtracted from net income is equal to

free cash flow
retained cash flow
net cash flow
financing cash flow

Detailed SolutionNoncash revenues and noncash charges if it subtracted from net income is equal to

20. To whom does the Treasurer most likely report?

Chief Financial Officer
Vice President of Operations
Chief Executive Officer
Board of Directors

Detailed SolutionTo whom does the Treasurer most likely report?

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