Financial management

21. Company specific risk is also known as ________.

Market risk
Systematic risk
Non-diversifiable risk
Idiosyncratic risk

Detailed SolutionCompany specific risk is also known as ________.

22. Risk free rate is subtracted from expected market return is considered as

country risk
diversifiable risk
equity risk premium
market risk premium

Detailed SolutionRisk free rate is subtracted from expected market return is considered as

23. Type of variability in which a project contributes in return of company is considered as

variable risk
within firm risk
corporate risk
Both B and C

Detailed SolutionType of variability in which a project contributes in return of company is considered as

24. A point where profile of net present value crosses horizontal axis at plotted graph indicates project

costs
cash flows
internal rate of return
external rate of return

Detailed SolutionA point where profile of net present value crosses horizontal axis at plotted graph indicates project

25. Stockholders having right to elect directors and in smaller firms have high post are classified as

public stocks
inactive stocks
special stockholders
common stockholders

Detailed SolutionStockholders having right to elect directors and in smaller firms have high post are classified as

26. In capital budgeting, positive net present value results in

negative economic value added
positive economic value added
zero economic value added
percent economic value added

Detailed SolutionIn capital budgeting, positive net present value results in

27. The long-run objective of financial management is to________.

maximize earnings per share
maximize the value of the firm's common stock
maximize return on investment
maximize market share

Detailed SolutionThe long-run objective of financial management is to________.

28. Savings accounts are___________ but are not__________.

negotiable; liquid
marketable; liquid
liquid; personal
liquid; marketable

Detailed SolutionSavings accounts are___________ but are not__________.

29. Baumol’s Model of Cash Management attempts to:

Minimise the holding cost
Minimization of transaction cost
Minimization of total cost
Minimization of cash balance

Detailed SolutionBaumol’s Model of Cash Management attempts to:

30. Use of Preference Share Capital in Capital structure:

Increases OL
Increases FL
Decreases OL
Decreases FL

Detailed SolutionUse of Preference Share Capital in Capital structure:

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