Financial management

21. Securities with less predictable prices and have longer maturity time is considered as

cash equivalents
long-term investments
inventories
short-term investments

Detailed SolutionSecurities with less predictable prices and have longer maturity time is considered as

22. Degree of financial leverage is a measure of relationship between ___________.

EPS and EBIT
EBIT and quantity produced
EPS and quantity produced
EPS and sales

Detailed SolutionDegree of financial leverage is a measure of relationship between ___________.

23. One way to obtain earnings forecasts is the mechanical procedure known as___________.

cross-reference analysis
exponential trending
time series analysis
data mining

Detailed SolutionOne way to obtain earnings forecasts is the mechanical procedure known as___________.

24. Cost of Equity Share Capital is more than cost of debt because:

Face value of debentures is more than face value of shares
Equity shares have higher risk than debt
Equity shares are easily saleable
All of the three above

Detailed SolutionCost of Equity Share Capital is more than cost of debt because:

25. Slope coefficient of beta is classified statistically significant if its probability is

greater than 5%
equal to 5%
less than 5%
less than 2%

Detailed SolutionSlope coefficient of beta is classified statistically significant if its probability is

26. Variability of stock price, option term to maturity and risk free rate are dependents of

price of an option
expiry of an option
exercise of an option
estimation of an option

Detailed SolutionVariability of stock price, option term to maturity and risk free rate are dependents of

27. In alternative investments, constant cash flow stream is equal to initial cash flow stream in approach which is classified as

greater annual annuity method
equivalent annual annuity
lesser annual annuity method
zero annual annuity method

Detailed SolutionIn alternative investments, constant cash flow stream is equal to initial cash flow stream in approach which is classified as

28. If no information is available, the General Rule for valuation of stock for balance sheet is:

Replacement Cost
Realizable Value
Historical Cost
Standard Cost

Detailed SolutionIf no information is available, the General Rule for valuation of stock for balance sheet is:

29. According to Black Scholes model, rate which is constant and known is classified as

short term return rate
long term return rate
risk free interest rate
risky rate of return

Detailed SolutionAccording to Black Scholes model, rate which is constant and known is classified as

30. An increase in marginal cost of capital and capital rationing are two arising complications of

maximum capital budget
greater capital budget
optimal capital budget
minimum capital budget

Detailed SolutionAn increase in marginal cost of capital and capital rationing are two arising complications of

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