Financial management

21. Residuals Theory argues that dividend is a:

Relevant Decision
Active Decision
Passive Decision
Irrelevant Decision

Detailed SolutionResiduals Theory argues that dividend is a:

22. Third step in calculating value of stock with non-constant growth rate is to find

PV of expected dividends
FV of expected dividends
PV of intrinsic rate
FV of intrinsic rate

Detailed SolutionThird step in calculating value of stock with non-constant growth rate is to find

23. Bond which is issued in market and few days are passed of its issuance is classified as

instable bond
outstanding bond
standing bond
stable bond

Detailed SolutionBond which is issued in market and few days are passed of its issuance is classified as

24. Type of bond which pays interest payment only when it earns is classified as

income bond
interest bond
payment bond
earning bond

Detailed SolutionType of bond which pays interest payment only when it earns is classified as

25. Markets in which corporations raise capital for creating market transaction which are classified as

commercial markets
residential markets
primary markets
consumer credit loans

Detailed SolutionMarkets in which corporations raise capital for creating market transaction which are classified as

26. The market price of a share of common stock is determined by ___________.

the board of directors of the firm
the stock exchange on which the stock is listed
the president of the company
individuals buying and selling the stock

Detailed SolutionThe market price of a share of common stock is determined by ___________.

27. Diversification reduces _________.

Interest rate risk
Market risk
Unique risk
Inflation risk

Detailed SolutionDiversification reduces _________.

28. Inventory Turnover measures the relationship of inventory with:

Average Sales
Cost of Goods Sold
Total Purchases
Total Assets

Detailed SolutionInventory Turnover measures the relationship of inventory with:

29. Which of the following argues that the value of levered firm is higher than that of the unlevered firm?

Net Income Approach
Net Operating Income Approach
MM Model with Taxes
Both A and C

Detailed SolutionWhich of the following argues that the value of levered firm is higher than that of the unlevered firm?

30. Type of provision which allows an orderly retirement of an issued bond which is classified as

whole call provision
super fund provision
floating fund provision
sinking fund provision

Detailed SolutionType of provision which allows an orderly retirement of an issued bond which is classified as

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