Financial management

21. In weighted average cost of capital, a company can affect its capital cost through

policy of capital structure
policy of dividends
policy of investment
all of above

Detailed SolutionIn weighted average cost of capital, a company can affect its capital cost through

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22. Rate denoted as r* is best classified as

real risk-free interest rate
real-risk free nominal rate
real-risk free quoted rate
real-risk free nominal premium

Detailed SolutionRate denoted as r* is best classified as

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23. Process of calculating future value of money from present value is classified as

compounding
discounting
money value
stock value

Detailed SolutionProcess of calculating future value of money from present value is classified as

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24. Pricing model approach in which it is assumed that stock price can have one of two values of stock is classified as

valued approach
marketability approach
stock approach
binomial approach

Detailed SolutionPricing model approach in which it is assumed that stock price can have one of two values of stock is classified as

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25. In MM Model with taxes, where ‘r’ is the interest rate, ‘D’ is the total debt and ‘t’ is tax rate, then present valued shields would be:

r × D × t
r × D
D × t
$$ rac{{ ext{D} imes ext{r}}}{{ ext{l} - ext{t}}}$$

Detailed SolutionIn MM Model with taxes, where ‘r’ is the interest rate, ‘D’ is the total debt and ‘t’ is tax rate, then present valued shields would be:

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26. Marginal cost of capital is the cost of:

Additional Sales
Additional Funds
Additional Interests
None of the above

Detailed SolutionMarginal cost of capital is the cost of:

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27. Student loans, mortgages and car loans are examples of

lump sum amount
deferred annuity
annuity due
payment fixed series

Detailed SolutionStudent loans, mortgages and car loans are examples of

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28. In India, Commercial Papers are issued as per the guidelines issued by:

Securities and Exchange Board of India
Reserve Bank of India
Forward Market Commission
None of the above

Detailed SolutionIn India, Commercial Papers are issued as per the guidelines issued by:

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29. If a company issues new share capital to redeem debentures, then:

OL will increase
FL will increase
OL will decrease
FL will decrease

Detailed SolutionIf a company issues new share capital to redeem debentures, then:

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30. Capital Budgeting is a part of:

Investment Decision
Working Capital Management
Marketing Management
Capital Structure

Detailed SolutionCapital Budgeting is a part of:

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