Financial management

41. In cash flow estimation, depreciation shelters company’s income from

expansion
salvages
taxation
discounts

Detailed SolutionIn cash flow estimation, depreciation shelters company’s income from

42. Type of relationship exists between an expected return and risk of portfolio is classified as

non-linear
linear
fixed and aggregate
non-fixed and non-aggregate

Detailed SolutionType of relationship exists between an expected return and risk of portfolio is classified as

43. Free cash flow is Rs 15000 and net investment in operating capital is Rs 9000 then net operating profit after taxes will be

Rs 24,000.00
Rs 6,000.00
-Rs 6,000.00
-Rs 24,000.00

Detailed SolutionFree cash flow is Rs 15000 and net investment in operating capital is Rs 9000 then net operating profit after taxes will be

44. According to top rating agencies S&P double-B and other lower grade bonds are classified as

development bonds
junk bonds
compounded bonds
discounted bonds

Detailed SolutionAccording to top rating agencies S&P double-B and other lower grade bonds are classified as

45. Which of the following ratios is not affected by the financial structure and the tax rate of a company?

Net profit margin
Earning power
Earnings per share
Capitalization rate

Detailed SolutionWhich of the following ratios is not affected by the financial structure and the tax rate of a company?

46. Financial intermediaries exist because small investors cannot efficiently ________.

diversify their portfolios
gather all relevant information
assess credit risk of borrowers
advertise for needed investments E. all of above

Detailed SolutionFinancial intermediaries exist because small investors cannot efficiently ________.

47. The formula for cost of debt is __________.

I x ( 1 - t)
I+p
I-P
Ixp

Detailed SolutionThe formula for cost of debt is __________.

48. The relationship between potential unsystematic risk and reward is given by ___________.

Excess return to beta ratio
Excess return to security
Excess return to security
Excess return to beta square ratio

Detailed SolutionThe relationship between potential unsystematic risk and reward is given by ___________.

49. Financial Leverage measures relationship between:

EBIT and PBT
EBIT and EPS
Sales and PBT
Sales and EPS

Detailed SolutionFinancial Leverage measures relationship between:

50. Profit margin = 4.5%, assets turnover = 2.2 times, equity multiplier = 2.7 times then return on equity will be

26.73%
25.73%
9.40%
9.00%

Detailed SolutionProfit margin = 4.5%, assets turnover = 2.2 times, equity multiplier = 2.7 times then return on equity will be

Page 1Page 2Page 3Page 4Page 5
Test 1Test 2Test 3Test 4Test 5Test 6Test 7Test 8Test 9Test 10Test 11Test 12Test 13Test 14Test 15Test 16Test 17Test 18Test 19Test 20Test 21Test 22Test 23