Financial management Archives - Page 4 of 112 - MCQ and Quiz for Exams

31. Tax-rate is relevant and important for calculation of specific cost of capital of:

Equity Share Capital

Preference Share Capital

Debentures

Both A and B

Detailed SolutionTax-rate is relevant and important for calculation of specific cost of capital of:

32. If future return on common stock is 14% and rate on T-bonds is 5% then current market risk premium will be

19.00%

9.00%

Rs 9

Rs 19

Detailed SolutionIf future return on common stock is 14% and rate on T-bonds is 5% then current market risk premium will be

33. Reinvestment risk of bonds is higher on

short maturity bonds

high maturity bonds

high premium bonds

high inflated bonds

Detailed SolutionReinvestment risk of bonds is higher on

34. Preferred dividend is Rs 50 and required rate of return is 2.5% then value of preferred stock would be

Rs 20.00

Rs 125.00

Rs 2,000.00

Rs 52.50

Detailed SolutionPreferred dividend is Rs 50 and required rate of return is 2.5% then value of preferred stock would be

35. Which of the following is not an objective of cash management?

Maximization of cash balance

Minimization of cash balance

Optimization of cash balance

Zero cash balance

Detailed SolutionWhich of the following is not an objective of cash management?

36. In financial planning, a higher strike price leads to call option

price is higher

rate is lower

price is lower

rate is higher

Detailed SolutionIn financial planning, a higher strike price leads to call option

37. Situation in which firm limits expenditures on capital is classified as

optimal rationing

capital rationing

marginal rationing

transaction rationing

Detailed SolutionSituation in which firm limits expenditures on capital is classified as

38. Present value of future cash flows is Rs 2000 and an initial cost is Rs 1100 then profitability index will be

55.00%

1.82

0.55

1.82%

Detailed SolutionPresent value of future cash flows is Rs 2000 and an initial cost is Rs 1100 then profitability index will be

39. Type of cost which is used to raise common equity by reinvesting internal earnings is classified as

cost of mortgage

cost of common equity

cost of stocks

cost of reserve assets

Detailed SolutionType of cost which is used to raise common equity by reinvesting internal earnings is classified as

40. Profitability Index, when applied to Divisible Projects, impliedly assumes that:

Project cannot be taken in parts

NPV is linearly proportionate to part of the project taken up

NPV is additive in nature

Both B and C

Detailed SolutionProfitability Index, when applied to Divisible Projects, impliedly assumes that:

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