Working capital(s) is/are also called
A. revolving capital
B. circulating capital
C. Both A and B
D. None of these
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Which of the following statement is incorrect?
A. If the company allows liberal credit to its customers, high amount would be invested in debtors
B. The needs of working capital for a large business is less than these of a small business
C. Working capital requirement will be high only in seasons
D. None of the above
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Match the items of the following two lists and suggest the correct answer:
List-I
List-II
a. Realized Yield Method
1. Cost of equity share capital
b. Taxation
2. Cost of equity capital
c. Cost of total capital employed
3. Cost of debt capital
d. Dividend growth is a consideration
4. Weighted cost of capital
A. a-4, b-3, c-2, d-1
B. a-2, b-4, c-1, d-3
C. a-2, b-3, c-4, d-1
D. a-1, b-2, c-3, d-4
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The weighted average of possible returns, with the weights being the probabilities of occurrence is referred to as . . . . . . . .
A. Probability distribution
B. Expected return
C. Standard deviation
D. Coefficient of variation
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The cost of capital of a firm is
A. The dividend paid on the equity capital
B. The weighted average of the cost of various longterm and short-term sources of finance
C. The average rate of return it must earn on investments to satisfy the investors
D. The minimum rate of return it must earn on investments to keep its investors satisfied
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Which of the following is the variability of return on stocks or portfolios associated with changes in return on the market as a whole?
A. Systematic risk
B. Standard deviation
C. Unsystematic risk
D. Coefficient of variation
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The modern approach to financial management is
(i) The total fund requirement of the firm.
(ii) The asset to be acquired.
(iii) The payment of dividend to the shareholders.
A. (i) only
B. (ii) only
C. (ii) and (iii)
D. (i), (ii) and (iii)
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A Crawling Peg System means
A. Fixed Exchange Rate System
B. Floating Exchange Rate System
C. Hybrid of Fixedand Floating Exchange System
D. None of the above
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The time value of money supports the comparison of cash flows recorded at different time period by
A. Discounting all cash flows to a common point of time
B. Compounding all cash flows to a common point of time
C. Using either A or B
D. None of the above
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Which one of the following is the main objective of IFCI?
A. To offer small and large investors the means of acquiring shares in the widening prosperity resulting from the steady industrial growth of the country
B. To upgrade technology modernization and promote the marketing of products of the small-scale sector
C. To serve as the apex institution for term finance for the industry with coordination, regulation, and supervision of the working of other financial institution
D. To provide medium and long-term financial assistance to industrial undertakings, particularly in those circumstances in which banking accommodation is inappropriate or resource to the capital market is impracticable
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Which combination represents the assumptions of Walter's Dividend Model?
I. The company has a very long or perpetual life.
II. All earnings are either reinvested internally or distributed as dividend.
III. There is no floatation cost for the company.
IV. The cost of capital of the company is constant.
A. I, III, IV
B. III, IV
C. I, II, IV
D. I, III, V
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Identity the incorrect statement from the following:
A. Broken-date contract is a full-month forward contract
B. Currency arbitrage refers to making a profit by buying a currency cheap in one market and selling it dear in the other market at a particular point of time
C. Currency Futures Market refers to organized foreign exchange market where a fixed amount of a currency is exchanged on a fixed maturity date in the pit
D. Currency Options Market refers to the market for the exchange of currency where the option buyer enjoys the privilege of not exercising the option if the rate is not favourable
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Operating leverage and financial leverage of a firm are 3 and 2, respectively. If the sale increases by 6%, then earnings before tax will rise by
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The following is an example of the core principle 'information is the basis for decisions.'
A. Wealthy depositors are the bank's best customers
B. Payment made over time generally add upto more than the original loan amount
C. lenders requires credit scores on individuals who want to take out loans
D. Car insurance is often required by law
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The maturity period of a commercial paper usually ranges from
A. 20 to 40 days
B. 60 to 90 days
C. 120 to 365 days
D. 90 to 364 days
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Which method of stock repurchase occurs when the buyer purchases securities through a brokerage house?
A. Dutch-auction
B. Fixed-price
C. Open-market
D. Fair-warning
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Which of the following is the critical assumption of Walter's Model?
A. All financing is through retained earnings; external sources of funds like debt or new equity capital are not used
B. The retention ratio, once decided upon, is constant. Thus, the growth rate, (g = br) is also constant
C. The capital markets are perfect, and the investors behave rationally
D. All of the above
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A portfolio having two risky securities can be turned risk less, if
A. the correlation ranges between zero and one
B. the securities are completely positively correlated
C. the securities are completely negatively correlated
D. None of the above
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The investors may be willing to pay a premium for stable dividends because of the informational content of . . . . . . . ., the desire of investors for . . . . . . . ., and certain . . . . . . . .
A. Institutional considerations; dividends; current income
B. Dividends; current income; institutional considerations
C. Current income; dividends; institutional considerations
D. Institutional considerations; current income; dividends
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Indicate the correct combination of discounting techniques from the following techniques of capital budgeting decision.
I. Profitability Index
II. Net Present Value
III. Accounting Rate of Return
IV. Internal Rate of Return
A. I, II, III
B. II, III, IV
C. I, II, IV
D. I, III, IV
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