Which of the following committees has given the concept of core current assets, and also suggested three alternatives for working out the maximum permissible of bank funding?
A. Tandon Committee
B. Chore Committee
C. Chakraborty Committee
D. Marathe Committee
Select an option to see the answer and solution.
For a foreign exchange of specific currency, the non-hedged position is classified as
A. open position
B. close position
C. currency long position
D. currency short position
Select an option to see the answer and solution.
The term 'capital structure' implies
A. Share Capital + Reserves + Long-Term Debts
B. Share Capital + Long and Short-Term Debts
C. Share Capital + Long-Term Debts
D. Equity and Preference Share Capital
Select an option to see the answer and solution.
Arrange the following stages of securitisation in series.
1. To find out a Spy or new SPY is formed.
2. To determine which assets are to be securitised.
3. To acquire the receivables under an agreement at their discounted value.
4. To collect the fund from investors and issue securities in return.
A. 1, 2, 3, 4
B. 2, 1, 4, 3
C. 4, 2, 3, 1
D. 3, 2, 1, 4
Select an option to see the answer and solution.
Under a conservative financing policy, a firm would use long-term financing to finance some of the temporary current assets. What should the firm do when a 'dip' in temporary current assets causes total assets to fall below the total long-term financing?
A. Use the excess funds to pay down long-term debt
B. Invest the excess long-term financing in marketable securities
C. Use the excess funds to repurchase common stock
D. Purchase additional plant and equipment
Select an option to see the answer and solution.
Dividend is the share of profit of company dividend amongst its
A. shareholders
B. brokers
C. debenture holders
D. None of these
Select an option to see the answer and solution.
When creditors of an enterprise have claim only on the assets owned by the enterprise, and not on the assets of the owners of the enterprise, that enterprise is
A. A sole tradership
B. A partnership
C. An unlimited liability company
D. A limited liability company
Select an option to see the answer and solution.
Match the following.
List-I (Forms of Dividend Payment)
List-II (Features)
a. Cash dividend
1. The fair value of the additional shares issued is based on their fair market value when the dividend is declared
b. Stock dividend
2. On the date of payment, the company issues dividend payments
c. Property dividend
3. It creates a note payable
d. Scrip dividend
4. You record this distribution at the fair market value of the assets distributed
A. a-4, b-3, c-1, d-2
B. a-2, b-1, c-4, d-3
C. a-2, b-3, c-4, d-1
D. a-3, b-2, c-4, d-1
Select an option to see the answer and solution.
Which of the following agencies define the market value of shares?
A. The respective companies
B. The investment market
C. The government
D. Shareholders
Select an option to see the answer and solution.
The main reasons for adjustments in capital structures include
A. to reduce the cost burden
B. to capitalise the retained earnings
C. to simplify the capital structure
D. All of the above
Select an option to see the answer and solution.
"The cost of capital declines when the degree of financial leverage increases." Who advocated it?
A. Net Operating Income Approach
B. Net Income Approach
C. Modigliani-Miller Approach
D. Traditional Approach
Select an option to see the answer and solution.
Which of the following factor(s) is/are responsible for overcapitalisation?
A. High promotion expenses
B. Liberal dividend policy
C. Both A and B
D. None of the above
Select an option to see the answer and solution.
In case cost of capital is 10%, EPS is Rs. 10, IRR is 8%, and Retention Ratio is 60%, then the value of equity share as per Gordon's Model will be
A. Rs. 100
B. Rs. 87
C. Rs. 90
D. Rs. 77
Select an option to see the answer and solution.
Trading on equity refers to the following situation
A. Optimum capital structure
B. Appropriate capitalization
C. Capital gearing
D. Watered capital
Select an option to see the answer and solution.
In capital budgeting, the term capital rationing implies
A. No retained earnings are available
B. Limited funds are available for investment
C. No external funds can be raised
D. No fresh investment is required in the current year
Select an option to see the answer and solution.
Which of the following is not an application of working capital?
A. Day-to-day expenditure of business
B. Current obligations for payment
C. Expenditure in the usual course of business
D. Expenditure to acquire capital
Select an option to see the answer and solution.
Positive NPV in project appraised by a firm may not occur an account of
A. Economics of scale
B. Market reach
C. Product differentiation
D. Intangible benefits
Select an option to see the answer and solution.
A firm wants to know the Degree of Operating Leverage (DOL). They have the following information
Current level of sales: 6,000 units
Break-even point sales: 4,000 units
What would be the DOL?
A. 1.50
B. 0.67
C. 3.00
D. None of the above
Select an option to see the answer and solution.
Financial leverage is measured by:
A. EAT EBIT
B. EBT EBIT
C. EBT EAIT
D. EBIT C
Select an option to see the answer and solution.
The concepts of cost of capital is/are very important from which point of view?
A. Capital expenditure decisions
B. Capital structure decisions
C. Both A and B
D. None of the above
Select an option to see the answer and solution.