Detailed SolutionIt is very difficult to interpret news in foreign exchange markets because
Business finance
Very little information is publicly available
It is difficult to know which news is relevant to future exchange rates
It is difficult to know whether the news has been obtained legally
All of the above
Answer is Right!
Answer is Wrong!
2. For the computation of cost of equity, arrange the following measures in the ascending order of accuracy 1. Capital Asset Pricing Model 2. Dividend-Price Ratio 3. Earning-Price Ratio 4. Dividend-Price Plus Growth Ratio
1, 3, 2, 4
4, 1, 3, 2
3, 2, 4, 1
2, 4, 1, 3
Answer is Right!
Answer is Wrong!
3. Assertion (A): The management of working capital refers to the management of current assets and current liabilities. Reason (R): The major thrust is on the management of current assets; because current liabilities arise in the context of current assets.
Both (A) and (R) are incorrect
(A) is correct, but (R) is incorrect
Both (A) and (R) are correct
(A) is incorrect, but (R) is correct
Answer is Right!
Answer is Wrong!
4. Which one of the following is an internal hedging technique?
Leading
Netting
Both A and B
Swap
Answer is Right!
Answer is Wrong!
Detailed SolutionWhich one of the following is an internal hedging technique?
5. Cost of equity share capital is more than cost of debt because
Equity shares are not easily saleable
Equity shares do not provide the fixed dividend rate
Generally the face value of equity shares is less than the face value of debentures
Equity shares have high risk than debts
Answer is Right!
Answer is Wrong!
Detailed SolutionCost of equity share capital is more than cost of debt because
6. Which of the following facts are true in the context of forfaiting? 1. Forfaiting enables exporters to receive immediate cash by selling their medium and long-term receivables – the amount an importer owes the exporterat a discount through an intermediary. 2. Banks never function as forfaiters. 3. Forfaiting protects against credit risk, transfer risk, and the risks posed by foreign exchange rate or interest rate changes.
1 and 2
2 and 3
1 and 3
1, 2 and 3
Answer is Right!
Answer is Wrong!
7. Formula for net cash inflow of a project is
Sales - Operating expenses - Interest - Tax
Sales - Operating expenses
Net profit after tax + Depreciation
Gross profit + Depreciation
Answer is Right!
Answer is Wrong!
Detailed SolutionFormula for net cash inflow of a project is
8. Which one of the following equates the present value of cash out flows and the present value of expected cash inflows from a project?
Net Present Value
Internal Rate of Return
Payback Period
Accounting Rate of Return
Answer is Right!
Answer is Wrong!
9. Cash flow management involves 1. Lock-box system 2. Marketable securities 3. Playing the float 4. Concentration bank account Select the correct answer:
1, 2 and 3
2, 3 and 4
1, 3 and 4
1, 2 and 4
Answer is Right!
Answer is Wrong!
10. Assertion (A): Arbitrage keeps the cost of capital constant despite change in the capital structure. Reason (R): It ensures compensating inverse change in cost of equity capital with a change in the cost of debt capital.
(A) and (R) both are true and (R) is the correct explanation of (A)
(A) and (R) both are true, but (R) is not the correct explanation of (A)
(A) is true, but (R) is false
(A) is not true, but (R) is true
Answer is Right!
Answer is Wrong!