Which one of the following is not a method of calculating the cost of equity capital?
A. Dividend Yield Method
B. Dividend Yieldplus Growth Method
C. Yield to Maturity Method
D. Earnings Yield Method
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The process of allocation or distribution of available capital funds over various capital projects according to their ranks and profitability is called
A. capital rationing
B. capital budgeting
C. capital planning
D. None of these
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Share capital is
A. money given to a company by shareholders in return for a stake in the business
B. business borrowing capital from a financial institution
C. capital shared amongst owners
D. capital shared with shareholders
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Match the items given in the two lists.
List-I
List-II
a. Debt securities
1. Floating Rate Bonds without any explicit interest rate
b. Company issuing such bonds experiences less financial distress
2. Zero-Coupon Bonds
c. Coupon rate quoted as a mark-up on the given rate
3. Income Bonds
A. a-1, b-2, c-3
B. a-1, b-3, c-2
C. a-2, b-3, c-1
D. a-3, b-1, c-2
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Assertion (A): The risk condition exists when decision-makers have absolutely no idea of what the results of an implemented alternative would be.
Reason (R): When operating under complete uncertainty condition, decision-makers usually find that sound decisions are a matter of chance. In the context of the two statements, which one of the following is correct?
A. Both (A) and (R) are correct
B. Both (A) and (R) are incorrect
C. (A) is correct, but (R) is incorrect
D. (A) is incorrect, but (R) is correct
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When there is acceleration of payment of strengthening currencies, and speeding up the receipt of weakening currencies, then there is
A. Lagging
B. Leading
C. Leading or lagging
D. Matching
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Which is the following is not a method of issuing ordinary shares?
A. Issue by tender
B. Auction
C. Intermediary offer
D. Placing
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The forms of discounted cash flow technique for the appraisal of capital investments include
A. TAR
B. NPV
C. Both A and B
D. None of these
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Who gave the concept of monetarism?
A. Milton Friedman
B. J. M. Keynes
C. Harry Dexter White
D. Raghuram Rajan
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Which of the following is not true with reference to capital budgeting?
A. Capital budgeting is related to asset replacement decisions
B. Cost of capital is equal to the minimum required rate of return
C. Timing of cash flows is relevant
D. Existing investment in a project is not treated as a sunk cost
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Personal saving
1. is that part of personal income, i.e. is not consumed.
2. equals income minus consumption.
A. Only 1
B. Only 2
C. Both 1 and 2
D. Neither 1 nor 2
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Assertion (A): The primary motive of a company in using financial leverage is to magnity shareholder's return under favourable economic conditions.
Reason (R): To magnify shareholder's return fixed charges, funds can be obtained at a cost higher than the firm's rate of return on net assets.
A. (A) is correct, and (R) is the correct explanation of (A)
B. (A) is correct, but (R) is incorrect
C. (R) is correct, but (A) is incorrect
D. Both (A) and (R) are incorrect
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The financial analysts says, working capital means the same things as
A. current assets - current liabilities
B. fixed assets
C. total assets
D. current assets
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Match the following.
List-I
List-II
a. Shares
1. Fixed capital
b. Land and building
2. Period of medium-term finance
c. Public deposits
3. Source of long-term finance
d. 1-5 years
4. Short-term finance
e. Meeting day-to-day requirements
5. Source of medium-term finance
A. a-4, b-2, c-3, d-1, e-5
B. a-4, b-1, c-5, d-2, e-4
C. a-2, b-3, c-5, d-1, e-4
D. a-5, b-3, c-2, d-4, e-1
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From the following information of ABC Ltd, determine the market price of a share using Gordon's model.
Total investment in assets = Rs. 10,00,000
Number of shares = 50,000
Total earnings = Rs. 2,00,000
Cost of capital = 16%
Payout ratio = 40%
A. Rs. 20
B. Rs. 40
C. Rs. 60
D. Rs. 80
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Financing a long lived assets with short-term financing would be
A. an example of 'moderate risk-moderate (potential) profitability' assets financing
B. an example of 'low risk-low (potential) profitability' assets financing
C. an example of 'high risk-high (potential) profitability' assets financing
D. an example of the 'hedging approach' for financing
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In a land lease, if title does not pass at the end of a lease to the lessee, it is normally treated as
A. finance lease
B. operating lease
C. mixed lease
D. accounting lease
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Match the following.
List-I (Source of Fund)
List-II (Example)
a. Commercial Bank
1. IFCT
b. International Capital Market
2. SBI
c. International Commercial Bank
3. GDR
d. Financial Institution
4. Standard Chartered Bank (SCB)
A. a-1, b-3, c-4, d-2
B. a-2, b-3, c-1, d-4
C. a-3, b-4, c-1, d-2
D. a-2, b-3, c-4, d-1
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Which of the following statements is most correct?
A. The future value of an annuity due to greater than an otherwise identical ordinary annuity
B. A reduction in the discount rate will increase the future value of an otherwise identical cash flow stream
C. Continuous compounding will result in a higher present value relative to an otherwise identical investment compounded monthly at the same nominal rate
D. The FVIFA (i%, N periods) equals the sum of the PVIF (i%, n) for n = 1 to N periods
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In which of the following terms, the quotas are denominated in IMF?
A. Special Drawing Rights
B. US dollars
C. Chinese renminbi
D. British pound
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