Financial management

41. Variable cost in an organization

be fixed according to the rate of growth
changes with the volume of production
does not change with volume of production
remains constant

Detailed SolutionVariable cost in an organization

42. Which of the following approaches advocates that the costs of equity capital and debt capital remain unaltered when the degree of leverage varies?

Net Income Approach
Traditional Approach
Modigliani-Miller Approach
Net operating Income

Detailed SolutionWhich of the following approaches advocates that the costs of equity capital and debt capital remain unaltered when the degree of leverage varies?

43. The decision to invest a substantial sum in any business venture expecting to earn a minimum return is called ____________.

working capital decision
an investment decision
a production decision
a sales decision

Detailed SolutionThe decision to invest a substantial sum in any business venture expecting to earn a minimum return is called ____________.

44. Value of future dividends after horizon date is classified as

hypothesis value
horizon value
terminal value
Both B and C

Detailed SolutionValue of future dividends after horizon date is classified as

45. Financial security kept by non-financial corporations is

deposit cheque
distribution cost
short term treasury bills
short term capital cost

Detailed SolutionFinancial security kept by non-financial corporations is

46. In retention growth model, percent of net income firms usually pay out as shareholders dividends is classified as

payout ratio
payback ratio
growth retention ratio
present value of ratio

Detailed SolutionIn retention growth model, percent of net income firms usually pay out as shareholders dividends is classified as

47. Corporations that buy financial instruments with money accepted from savers are classified as

debit funds
credit funds
mutual funds
insurance funds

Detailed SolutionCorporations that buy financial instruments with money accepted from savers are classified as

48. Corporations such as Citigroup, American Express and Fidelity are classified as

financial services corporations
common service corporations
preferred service corporations
commercial service corporations

Detailed SolutionCorporations such as Citigroup, American Express and Fidelity are classified as

49. Which of the following is not a feature of an optimal capital structure?

Safety
Flexibility
Control
Solvency

Detailed SolutionWhich of the following is not a feature of an optimal capital structure?

50. The Markowitz model identifies the efficient set of portfolios, which offers the ____________.

highest return for any given level of risk or the lowest risk for any given level of return
least-risk portfolio for a conservative, middle-aged investor
long-run approach to wealth accumulation for a young investor
risk-free alternative for risk-averse investors

Detailed SolutionThe Markowitz model identifies the efficient set of portfolios, which offers the ____________.

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