Financial management

24. According to traditional approach, the average cost of capital _______________.

Remains constant up to a degree of leverage and rises sharply thereafter with every increase in leverage
Rises constantly with increase in leverage
Decrease up to certain point, remains unchanged for moderate increase in leverage and rises beyond a certain point
Decrease at an increasing rate with increase in leverage

Detailed SolutionAccording to traditional approach, the average cost of capital _______________.

25. 80% of sales of Rs. 10,00,000 of a firm are on credit. It has a receivable turnover of 8. What is the average collection period (360 days a year) and average debtors of the firm?

45 days and Rs. 1,00,000
360 days and Rs. 1,00,000
45 days and Rs. 8,00,000
360 days and Rs. 1,25,000

Detailed Solution80% of sales of Rs. 10,00,000 of a firm are on credit. It has a receivable turnover of 8. What is the average collection period (360 days a year) and average debtors of the firm?

30. Owning two securities instead of one will not reduce the risk taken by an investor if the two securities are______________.

perfectly positively correlated with each other
perfectly independent of each other
perfectly negatively correlated with each other
of the same category, eg blue chips

Detailed SolutionOwning two securities instead of one will not reduce the risk taken by an investor if the two securities are______________.

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