Business finance
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Business finance questions with answers

97 multiple-choice questions. Open any question for its answer and explanation.

  1. Positive NPV in project appraised by a firm may not occur an account of
  2. Match List-I with List-II and select the correct answer: List-I List-II a. Realised 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
  3. Which of the following statement(s) is/are false? 1. Capital profits can never be distributed as dividends to the shareholders. 2. Dividends are paid out of profits and, therefore, do not affect the liquidity position of the firm. 3. Every company should follow the policy of low dividend payment. 4. Walter's model suggests that dividend payment dose not affect the market price of the share. Choose the correct answer
  4. Operational techniques include
  5. Which of the following statement is false?
  6. Which of the following is an assumption of the APT?
  7. Which of the following are the examples of systematical risk. 1. Elimination of Government Subsidy 2. Increase in bank rate 3. Labour problem 4. High levered fund Select the correct answer:
  8. A company has issued 10% perpetual debt of Rs. 1,00,000 at 5% premium. If tax rate is 30%, then the cost of debt will be
  9. Which one of the following is the most popular method for estimating the cost of equity?
  10. Assertion (A): A furores contract specifies in advance the exchange rate to be used, but it is not as flexible as a forward contract. Reason (R): A futures contract is for a specific currency amount and a specific marurity date.
  11. The issues in international capital budgeting include 1. Exchange rate risk 2. Political risk 3. Geographical risk 4. Parent vs project cash flow
  12. Which of the following sources of finance has an implicit cost ofcapital?
  13. Negative net working capital means assets are not being used effectively, and a company may face a liquidity crisis. This implies
  14. When assessing economic exposure, financial managers should consider how variations in exchange rates influence . . . . . . . .
  15. Dividend irrelevance argument of MM model is based on
  16. Negative net working capital implies that
  17. Which of the following is not true with reference to capital budgeting?
  18. The conflicts in project ranking in capital budgeting as per NPV and IRR may arise because of
  19. What are the main objectives of financing decision? 1. To get optimal working capital figure. 2. To get optimal capital structure. 3. To make the company exposed to high risk. 4. To keep the cost of capital lowest. 5. To make the value of share highest.
  20. 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.
  21. Who proposed a model to apply economic order quantity concept of inventory mangement to determine the optimum cash holding in a firm?
  22. The cost of capital from all the sources of funds is called
  23. Which of the following concepts deals with discounted cash flows?
  24. Which of the following are the main features of Zero Coupon Bonds? 1. They are called deep discount bonds. 2. The price paid by investors is less than their face value. 3. The bonds are redeemed at par.
  25. Which combination of the following represents the assumptions of the Walter's dividend model? 1.The company has a very long or perpetual life. 2. All earnings are either reinvested intemally or distributed as dividend. 3. There is no floatation cost for the company. 4. Cost of capital of the company is constant. Select the correct one: