Financial management

21. If book value is greater than market value comparison with investors for future stock are considered as

pessimistic
optimistic
experienced
inexperienced

Detailed SolutionIf book value is greater than market value comparison with investors for future stock are considered as

22. Between two capital plans, if expected EBIT is more than indifference level of EBIT, then:

Both plans be rejected
Both plans are good
One is better than other
None of the above

Detailed SolutionBetween two capital plans, if expected EBIT is more than indifference level of EBIT, then:

23. Bonds with deferred call have protection which is classified as

provision protection
provision protection
deferred protection
call protection

Detailed SolutionBonds with deferred call have protection which is classified as

24. Cost of common stock is 16% and bond yield is 9% then bond risk premium would be

7.00%
9.00%
1.78%
25.00%

Detailed SolutionCost of common stock is 16% and bond yield is 9% then bond risk premium would be

25. Constant growth rate is 6.5% and an expected dividend yield is 3.4% then an expected rate of return would be

9.90%
10.00%
3.10%
19.12%

Detailed SolutionConstant growth rate is 6.5% and an expected dividend yield is 3.4% then an expected rate of return would be

26. A formula of after-tax component cost of debt is

interest rate-tax savings
marginal tax-required return
interest rate + tax savings
borrowing cost + embedded cost

Detailed SolutionA formula of after-tax component cost of debt is

27. Combined leverage can be used to measure the relationship between:

EBIT and EPS
PAT and EPS
Sales and EPS
Sales and EBIT

Detailed SolutionCombined leverage can be used to measure the relationship between:

28. The available capital funds are to be carefully allocated among competing projects by careful prioritization. This is called ____________.

capital positioning
capital structuring
capital rationing
capital budgeting

Detailed SolutionThe available capital funds are to be carefully allocated among competing projects by careful prioritization. This is called ____________.

29. Constant growth rate is 7.2% and an expected rate of return is 12.5% then expected dividend yield will be

5.30%
19.70%
-5.30%
17.36%

Detailed SolutionConstant growth rate is 7.2% and an expected rate of return is 12.5% then expected dividend yield will be

30. A type of security payment in which payments are made at equal intervals of time and each payment amount is same is classified as

fixed interval investment
fixed payment investment
annuity
lump sum amount

Detailed SolutionA type of security payment in which payments are made at equal intervals of time and each payment amount is same is classified as

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