Financial management

41. Nominal rate which is quoted to consumers on loans is considered as

annual percentage rate
annual rate of return
loan rate of return
local rate of return

Detailed SolutionNominal rate which is quoted to consumers on loans is considered as

42. Trading place where traders meet one another to communicate is classified as

outcry auction system
outcry system
face to face communication
money communication

Detailed SolutionTrading place where traders meet one another to communicate is classified as

43. The value of a derivative security _______.

depends on the value of the related primitive security
can only cause increased risk
is unrelated to the value of the related primitive security
is worthless today

Detailed SolutionThe value of a derivative security _______.

44. Which of the following is incorrect for value of the firm?

In the initial preposition, MM Model argues that value is independent of the financing mix
Total value of levered and unlevered firms is otherwise arbitrage will take place
Total value incorporates borrowings by firm but excludes personal borrowing
Total value does not change because underlying does not change with financing mix

Detailed SolutionWhich of the following is incorrect for value of the firm?

45. A modified internal rate of return is considered as present value of costs and is equal to

PV of hurdle rate
FV of hurdle rate
PV of terminal value
FV of terminal value

Detailed SolutionA modified internal rate of return is considered as present value of costs and is equal to

46. Stocks which has high book for market ratio are considered as

more risky
less risky
pessimistic
optimistic

Detailed SolutionStocks which has high book for market ratio are considered as

47. Physical location exchange or telephone networks are types of

long-term markets
secondary markets
money markets
capital markets

Detailed SolutionPhysical location exchange or telephone networks are types of

48. In balance sheet, sum of retained earnings and common stock are considered as

preferred equity
due equity
common perpetuity
common equity

Detailed SolutionIn balance sheet, sum of retained earnings and common stock are considered as

49. If two independent projects having hurdle rate then both projects should

be accepted
not be accepted
have capital acceptance
have return rate acceptance

Detailed SolutionIf two independent projects having hurdle rate then both projects should

50. Cash inflows are revenues of project and are represented by

hurdle number
relative number
negative numbers
positive numbers

Detailed SolutionCash inflows are revenues of project and are represented by

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