As per Section 62(1) of Companies Act, 2013, the mechanism by which companies can raise additional capital from existing shareholders is
A. Bonus shares
B. Rights shares
C. Sweat equity shares
D. Differential Voting Rights shares
Select an option to see the answer and solution.
A debenture mostly
A. Does not require security
B. Receives dividend payments
C. Is a long-term loan
D. Is a short-term loan
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Factors that are considered to solve the financial problems of business organisations are
1. cost of capital supply
2. importance and objectives of capital
3. different types of benefits
Select the correct answer by using the options given below
A. Both 1 and 2
B. Both 1 and 3
C. Both 2 and 3
D. All of the above
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Which of the following is/are not a current asset?
A. Land and building
B. B/R
C. Debtors
D. All of these
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The rate of discount at which NPV of a project becomes zero is also known as
A. Average Rate of Return
B. Internal Rate of Return
C. Alternate Rate of Return
D. None of the above
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Assertion (A): The important aspect of dividend policy is to determine the amount of earnings to be distributed to shareholders, and the amount to be retained in the firm.
Reason (R): Dividend policy of the firm has its effect on both the long-term financing and the wealth of shareholders.
A. Both (A) and (R) are correct, and (R) is the correct explanation of (A)
B. Both (A) and (R) are correct, but (R) is not the correct explanation of (A)
C. (A) is correct, but (R) is incorrect
D. (R) is correct, but (A) is incorrect
Select an option to see the answer and solution.
Which of the following examples best represents a passive dividend policy?
A. The proportion of dividends paid from net income remains constant
B. The firm pays dividends with the remains of net income after taking acceptable investment projects
C. The quantity (rupee amount per share) of dividends paid from net income remains constant
D. All of the above examples indicate passive dividend policies
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Match the following.
List-I (Concepts)
List-II (Meanings)
a. Regular dividend policy
1. Part of divisible profits of a company, which is distributed among its shareholders
b. Dividend
2. Application of planning and control functions to the finance function
c. Capitalisation
3. Payment of dividend at usual rate
d. Financial management
4. Refers to the process of determining the quantum of funds required for a firm
A. a-4, b-3, c-2, d-1
B. a-2, b-3, c-4, d-1
C. a-3, b-1, c-4, d-2
D. a-4, b-1, b-2, d-3
Select an option to see the answer and solution.
Arrange the following steps involved in capital budgeting in order of their occurrence
i. Project selection
ii. Project appraisal
iii. Project generation
iv. Follow up
v. Project execution
A. ii, iii, i, v, iv
B. iii, ii, i, v, iv
C. i, iii, ii, v, iv
D. i, ii, iii, v, iv
Select an option to see the answer and solution.
Which of the following can be taken as the core principles of finance?
(i) There is time value of money.
(ii) There are risks and returns involved in financial decisions.
(iii) Lower risk asks for higher returns.
(iv) Risk is not volatile.
(v) The market has increasingly become a more determining factor of finance decisions.
A. (i), (ii), (iv) and (v)
B. (i), (ii) and (v)
C. (ii), (iii) and (v)
D. (i), (ii) and (iv)
Select an option to see the answer and solution.
The total return on a security is equal to the following
A. Purchase Price of the security Periodic cash receipts + Capital gains
B. Current Market Price of the security Periodic cash receipts + Capital gains
C. Current Market Price of the security Periodic cash receipts
D. Purchase Price of the security Periodic cash receipts − Capital gains
Select an option to see the answer and solution.
An example of Euro currency is
A. a dollar deposit outside the US
B. a pound sterling deposit within UK
C. a mark deposit with Germany
D. All of the above
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Long-term sources of finance are also required for
A. permanent part of working capital
B. temporary part of working capital
C. Both A and B
D. None of the above
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A leased asset should be depreciated over the
A. shorter of the lease term and the asset's useful life
B. longer of the lease term and the asset's useful life
C. entire lease term
D. useful life ofthe asset
Select an option to see the answer and solution.
Match the following.
List-I
List-II
a. Payback method
1. Give due weightage to the profitability of project
b. Unadjusted rate of return method
2. Predetermination of earnings is not necessary
c. NPV method
3. It avoids in calculable risk and uncertainty
d. IRR method
4. Its calculation is much simpler
A. a-4, b-3, c-2, d-1
B. a-2, b-3, c-4, d-1
C. a-3, b-1, c-4, d-2
D. a-4, b-1, b-2, d-3
Select an option to see the answer and solution.
Advantages of adequate working capital funds include
A. cash discount
B. liquidity and solvency
C. high morale
D. All of these
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Some equity schemes take opposite positions in different market segments, such that a return is earned while remaining risk neutral. They are called
A. positional funds
B. arbitrage funds
C. directional funds
D. speculative funds
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Select the correct answer regarding the motives for holding inventories by firms.
1. Transaction motive
2. Environmental motive
3. Precautionary motive
4. Speculative motive
5. Competitive motive
A. 1, 2, 3, 4
B. 1, 2, 4, 5
C. 1, 4, 5
D. 1, 3, 4
Select an option to see the answer and solution.
Which of the following is not an approach to the capital structure?
A. Gross Profit Approach
B. Net Operating Income Approach
C. Net Income Approach
D. Modigliani and Miller Approach
Select an option to see the answer and solution.
"Capital budgeting is concerned with designing and carrying through a systematic investment programme." Who said it?
A. Charles T. Horngreen
B. T. G. Tokhey
C. R. M. Lynch
D. None of these
Select an option to see the answer and solution.