Financial management

21. In case of Net Income Approach, when the debt proportion is increased, the cost of debt:

Increases
Decreases
Constant
None of the above

Detailed SolutionIn case of Net Income Approach, when the debt proportion is increased, the cost of debt:

22. The term ‘EVA’ is used for:

Extra Value Analysis
Economic Value Added
Expected Value Analysis
Engineering Value Analysis

Detailed SolutionThe term ‘EVA’ is used for:

23. In capital asset pricing model, characteristic line is classified as

regression line
probability line
scattered points
weighted line

Detailed SolutionIn capital asset pricing model, characteristic line is classified as

24. Type of financial securities that matures in less than a year are classified as

money market securities
capital market securities
saving intermediaries
discounted intermediaries

Detailed SolutionType of financial securities that matures in less than a year are classified as

25. Which of the following factors influence(s) the capital structure of a business entity?

Bargaining power with the suppliers
Demand for the product of the company
Technology adopted
Adequate of the assets to meet any sudden spurt in demand

Detailed SolutionWhich of the following factors influence(s) the capital structure of a business entity?

26. ‘That personal leverage can replace corporate leverage’ is assumed by:

Traditional Approach
MM Model
Net Income Approach
Net Operating Income Approach

Detailed Solution‘That personal leverage can replace corporate leverage’ is assumed by:

27. In situation of bankruptcy, stock which is recorded above common stock and below debt account is

debt liabilities
preferred stock
hybrid stock
common liabilities

Detailed SolutionIn situation of bankruptcy, stock which is recorded above common stock and below debt account is

28. Gross fixed asset expenditures is Rs 6000 and free cash flow is Rs 8000 then operating cash flows will be

-Rs 14,000.00
Rs 2,000.00
Rs 14,000.00
-Rs 2,000.00

Detailed SolutionGross fixed asset expenditures is Rs 6000 and free cash flow is Rs 8000 then operating cash flows will be

29. Paid dividend is Rs 20 and current price is Rs 50 then dividend yield will be

40.00%
20.00%
30.00%
50.00%

Detailed SolutionPaid dividend is Rs 20 and current price is Rs 50 then dividend yield will be

30. Bonds having zero default risk are classified as

U.S bonds
return security
issued security
treasury bonds

Detailed SolutionBonds having zero default risk are classified as

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