Internal sources of capital are those that are
A. generated through outsiders such as suppliers
B. generated through loans from commercial banks
C. generated through issue of shares
D. generated within the business
Select an option to see the answer and solution.
In case the sales or project's investment deviates from expected ones, it needs
A. Optimistic scenario analysis
B. Sensitivity analysis
C. Simulation analysis
D. Financial break-even analysis
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Match the following:
List-I
List-II
a. Capital Budgeting
1. Time adjusted rate of return
b. Profitability Index
2. Irreversible
c. Internal rate of return
3. Benefit/cost
d. Capital investment decisions
4. Planning capital expenditure
A. a-4, b-3, c-2, d-1
B. a-1, b-4, c-2, d-3
C. a-4, b-3, c-1, d-2
D. a-2, b-1, c-3, d-4
Select an option to see the answer and solution.
Which of the following option forbids the future pledging or mortgaging of any of the borrower's assets?
A. Negative pledge clause
B. Covenant
C. Loan agreement
D. General routine provision
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Which of the following lease refers to a short-term lease that is often cancelable? For example, a lease for office space represents this type of lease where the lease life is less than the useful life of the asset.
A. A financial lease
B. An operating lease
C. Net lease
D. None of the above
Select an option to see the answer and solution.
The capital budgeting generally refers to acquiring inputs with longer run returns. This definition is given by
A. R. M. Lynch
B. Charles T. Horngreen
C. Max D. Richards and Paul S. Green Law
D. None of the above
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Which term is used popularly for the situation when a speculator, being dominant in the market, expects a drop in the value of a particular currency, and he begins selling it forward?
A. International Fisher Effect
B. Bandwagon Effect
C. Interest Rate Parity Effect
D. Relative Version Effect
Select an option to see the answer and solution.
Which one is not the source of external finance?
A. WTO Funds
B. World Bank Group
C. Export Credit
D. Foreign Direct Investment
Select an option to see the answer and solution.
The dividend irrelevance argument of MM Model is based on
A. Hedging
B. Issue of Debentures
C. Liquidity
D. Arbitrage
Select an option to see the answer and solution.
Which of the following forms of capital is called 'high risk, high reward capital'?
A. Financial capital
B. Seed capital
C. Venture capital
D. Preferential capital
Select an option to see the answer and solution.
Indicate the cost of equity capital, based on the capital asset pricing model, with the following information:
Beta coefficient - 1.40
Risk-free rate of interest - 9%
Expected Rate of Return on equity in the market - 16%
Select an option to see the answer and solution.
Which of the following is not among the assumptions of the Modigliani-Miller Model?
A. Perfect capital market
B. Equivalent risk classes
C. Unity for a dividend payout ratio
D. Absence of taxes
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A survey of Chief Financial Officers found that the most commonly used hedging technique is
A. swaps
B. options
C. forward contracts
D. future contracts
Select an option to see the answer and solution.
Which of the following statements are true in the context of Special Purpose Vehicles?
A. There are companies or trusts formed for the specific purpose of issuing securities in asset securitization transactions
B. The ownership and management of assets are independent of the originator (original lender)
C. The SPVs are formed to raise funds by collateralizing future receivables
D. All of the above
Select an option to see the answer and solution.
Which of the following would be consistent with a more aggressive approach to financing working capital?
A. Financing short-term needs with short-term funds
B. Financing permanent inventory build up with long-term debt
C. Financing seasonal needs with short-term funds
D. Financing cost long-term needs with short-term funds
Select an option to see the answer and solution.
For calculating the cost of preference shares capital, the dividend of preference share is divided by . . . . . . . . and multiplied by 100.
A. net income
B. net proceeds
C. net sales
D. net expenditure
Select an option to see the answer and solution.
Which of the following statement(s) is/are incorrect?
A. Capital budgeting is not the technique of capital structure analysis
B. The term 'capital structure' includes also the financial structure
C. Both A and B
D. None of the above
Select an option to see the answer and solution.
Which ratio explains how many portions of earning is distributed in the form of a dividend?
A. Dividend - Debt Ratio
B. Equity - Debt Ratio
C. Pay-out Ratio
D. Earning - Yield Ratio
Select an option to see the answer and solution.
The semi-strong form of the efficient markets hypothesis asserts that stock prices
A. Fully reflect all relevant information, including insider information
B. May be predictable
C. Fully reflect all publicly available information
D. Fully reflect all historical price information
Select an option to see the answer and solution.
The Arbitrage Pricing Theory is an equilibrium model developed by
A. Harry Markowitz
B. Stephen Ross
C. Stephen Ross and Richard Roll
D. William Sharpe
Select an option to see the answer and solution.