Three forms of trade credit include
A. purchase on open account
B. purchasing on furnishing a promote for specified period
C. purchase on trade acceptance
D. All of the above
Select an option to see the answer and solution.
What are the main benefits given to participating preference shareholders?
A. They are first paid a variable rate of dividend
B. They may be paid surplus profits
C. Their mode of payment of a dividend is never mentioned in the Articles of Association
D. All of the above
Select an option to see the answer and solution.
. . . . . . . . varies inversely with profitability.
A. Liquidity
B. Risk
C. Return
D. Loss
Select an option to see the answer and solution.
Assertion (A): When two or more investment proposals are mutually exclusive, ranking the proposals on the basis of IRR, NPV, and PI methods may give contradictory results.
Reason (R): The contradictory results in the ranking are due to differing dimensions relating to the scale of investments, cash flow patterns, and project lives.
Indicate the correct answer.
A. Both (A) and (R) are true
B. (A) is true, (R) is a necessary condition, but not a sufficient condition
C. Both (A) and (R) are false
D. Both (A) and (R) are true, and (R) explains the reason sufficiently
Select an option to see the answer and solution.
Operating cycle can be shortened by increasing
A. manufacturing time
B. duration of credit available
C. stock held in stores shares
D. credit period to the customers
Select an option to see the answer and solution.
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 is not the major objectives of the International Monetary Fund?
A. Promoting co-operation among countries on international monetary issues
B. Giving loans to countries for the purpose of economic development
C. Promoting stability in the exchange rates
D. Promoting free mobility of capital across countries
Select an option to see the answer and solution.
Which of the following assumptions is not covered in Walter's Model of the dividend policy?
A. All financing is through retained earnings
B. The firm's business risk does not change due to additional investments
C. The firm has an infinite life
D. The key variables like EPS and DPS keep on changing
Select an option to see the answer and solution.
To say that the forward market lacks liquidity means that
A. forward contracts usually result in losses
B. forward contracts cannot be turned into cash
C. it may be difficult to make the transaction
D. forward contracts cannot be sold for cash
Select an option to see the answer and solution.
The immediate (two days) exchange of one currency for another is a
A. forward transaction
B. spot transaction
C. money transaction
D. exchange transaction
Select an option to see the answer and solution.
Which of the following methods does not consider the profitability of the whole life of the project?
A. Payback period method
B. Internal rate of return method
C. Present value index method
D. Net present value method
Select an option to see the answer and solution.
Which of the following is not an indication a lease is a finance lease?
A. The lease transfers ownership ofthe asset to the lessee at the end of the lease
B. The lease term is for a short part of the economic life of the asset
C. The leased assets are specialised in nature
D. The present value of minimum lease payment amounts to substantially all of the fair value of the asset
Select an option to see the answer and solution.
Dividends are earnings for shareholders and they expect reasonable earnings from their
A. profit
B. investments
C. property
D. All of these
Select an option to see the answer and solution.
Which of the following combination is suitably attributed to the statement that stakeholders should expect a fair return on their investment?
(i) Optimization of Profit
(ii) Social Responsibility of Business
(iii) Competition Theory of Business
(iv) Walter's Theory
A. (i), (ii) and (iii)
B. (ii), (iii) and (iv)
C. Only (i) and (ii)
D. Only (iii) and (iv)
Select an option to see the answer and solution.
Which of the following statements is not correct?
A. The cost of capital is the required rate of return to ascertain the value of the firm
B. Different sources of funds have a specific cost of capital related to that source only
C. Cost of capital does not comprise any risk premium
D. Cost of capital is basic data for NPV technique
Select an option to see the answer and solution.
Match the following.
List-I
List-II
a. Net income approach
1. Also known as 'Intermediate Approach'
b. Net operating income approach
2. Change in the capital structure of a company does not affect the market value of the company and overall cost of capital
c. Traditional approach
3. It provide analytical sound and logically consistent behavioural justification for their hypothesis
d. Modigliani Miller approach
4. A firm can minimise the overall cost of capital by using debt financing to the maximum extent
A. a-4, b-2, c-1, d-3
B. a-2, b-1, c-4, d-3
C. a-3, b-4, c-1, d-2
D. a-2, b-1, c-3, d-4
Select an option to see the answer and solution.
Dividend policy of a company mainly concerns with
1. Dividend payout and/or
2. Stability of dividend
Select the correct answer using the options given below
A. Only 1
B. Only 2
C. Both 1 and 2
D. None of the above
Select an option to see the answer and solution.
The risks that cannot be eliminated by diversification are
A. Relevant
B. Irrelevant
C. Both A and B
D. Both A and B do not apply in the answers
Select an option to see the answer and solution.
If NPV is positive, the IRR will be
A. positive
B. K = R
C. K < R
D. None of these
Select an option to see the answer and solution.
Efficient portfolios can be defined as those portfolios which for a given level of risk provides
A. maximum return
B. minimum return
C. average return
D. None of these
Select an option to see the answer and solution.