Financial management

11. The method of raising equity capital from existing members by offering securities on pro rata basis is referred to as __________.

Public issue
Right Issue
Private placement
Bought-Out-Deal

Detailed SolutionThe method of raising equity capital from existing members by offering securities on pro rata basis is referred to as __________.

12. For which of the following factors are the debentures more attractive to the investors?

The principal is redeemable at maturity
A debenture-holder enjoys prior claim on the assets of the company over its shareholders in the event of liquidation
trustee is appointed to preserve the interest of the debenture holders
All the above.

Detailed SolutionFor which of the following factors are the debentures more attractive to the investors?

13. MM Model argues that dividend is irrelevant as:

the value of the firm depends upon earning power
the investors buy shares for capital gain
dividend is payable after deciding the retained earnings
dividend is a small amount

Detailed SolutionMM Model argues that dividend is irrelevant as:

14. Method of inventory recording gives lower cost of goods sold in income statement is classified as

last in first out
last out receivable
First out receivable
First in first out

Detailed SolutionMethod of inventory recording gives lower cost of goods sold in income statement is classified as

15. Tax free bonds issue for welfare by industrial agencies or pollution control agencies are classified as

agent bonds
development bonds
pollution control bonds
Both B and C

Detailed SolutionTax free bonds issue for welfare by industrial agencies or pollution control agencies are classified as

16. A firm will have favourable leverage if its _____ are more than the debt cost

debt
interest
equity
earnings

Detailed SolutionA firm will have favourable leverage if its _____ are more than the debt cost

17. When a company uses increased fixed cost for production, this is an example of what type of leverage.

operating leverage
financial leverage
variable cost leverage
combined leverage

Detailed SolutionWhen a company uses increased fixed cost for production, this is an example of what type of leverage.

18. Step in initial public offering in which hired agents act on behalf of owners is classified as

hiring problems
agency problems
corporation internal problems
corporation external problems

Detailed SolutionStep in initial public offering in which hired agents act on behalf of owners is classified as

19. If A = Annual Requirement, O = Order Cost and C = Carrying Cost per unit per annum, then EOQ:

$${left( { rac{{2{ ext{AO}}}}{{ ext{C}}}} ight)^2}$$
$$sqrt { rac{{2{ ext{AO}}}}{{ ext{C}}}} $$
2A ÷ OC
2AOC

Detailed SolutionIf A = Annual Requirement, O = Order Cost and C = Carrying Cost per unit per annum, then EOQ:

20. If the intrinsic value of a share is less than the market price, which of the most reasonable?

That shares have lesser degree of risk
That market is over valuing the shares
That the company is high dividend paying
That market is undervaluing the share

Detailed SolutionIf the intrinsic value of a share is less than the market price, which of the most reasonable?

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