Financial Management Set 9
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This set of Financial Management Multiple Choice Questions & Answers (MCQs) focuses on Financial Management Set 9
Q1 | Which of the following appearing in the balance! generates tax advantage and henceaffects the c, structure decision ?
- Reserves and Surplus
- Long-term debt
- Preference Share Capital
- Equity Share Capital
Q2 | In MM Model with taxes, where 'r' is the interest rate, ‘D’ is the total debt and 't' is taxrate, then present valued shields would be:
- r×D×t
- r×D
- D×t
- (D× r)/(l-t).
Q3 | ‘Bird in hand' argument is given by
- Walker's Model
- Gordon's Model
- MM Mode
- Residuals Theory
Q4 | Residuals Theory argues that dividend is a
- Relevant Decision
- Active Decision
- Passive Decision
- Irrelevant Decision
Q5 | Dividend irrelevance argument of MM Model is based on:
- Issue of Debentures
- Issue of Bonus Share,
- Arbitrage
- Hedging
Q6 | Which of the following is not true for MM Model?
- Share price goes up if dividend is paid
- Share price goes down if dividend is not paid,
- Market value is unaffected by Dividend policy,
- All of the above
Q7 | Which of the following stresses on investor's preference reorient dividend than higherfuture capital gains ?
- Walter's Model
- Residuals Theory
- Gordon's Model
- MM Model
Q8 | MM Model of Dividend irrelevance uses arbitrage between
- Dividend and Bonus
- Dividend and Capital Issue
- Profit and Investment
- None of the above
Q9 | If ke = r, then under Walter's Model, which of the following is irrelevant?
- Earnings per share
- Dividend per share
- DP Ratio
- None of the above
Q10 | MM Model argues that dividend is irrelevant as
- the value of the firm depends upon earning power
- the investors buy shares for capital gain,
- dividend is payable after deciding the retained earnings,
- dividend is a small amount
Q11 | Which of the following represents passive dividend policy ?
- that dividend is paid as a % of EPS,
- that dividend is paid as a constant amount,
- that dividend is paid after retaining profits for reinvestment,
- all of the above
Q12 | In case of Gordon's Model, the MP for zero payout is zero. It means that
- Shares are not traded
- Shares available free of cost
- Investors are not ready to offer any price
- None of the above
Q13 | Gordon's Model of dividend relevance is same as
- No-growth Model of equity valuation,
- Constant growth Model of equity valuation,
- Price-Earning Ratio
- Inverse of Price Earnings Ratio
Q14 | If 'r' = 'ke', than MP by Walter's Model and Gordon's Model for different payout ratioswould be
- Unequal
- Zero
- Equal
- Negative
Q15 | Dividend declared by a company must be paid in
- 20 days
- 30 days
- 32 days
- 42 days
Q16 | Dividend Distribution Tax is payable by
- Shareholders to Government
- Shareholders to Company,
- Company to Government,
- Holding to Subsidiary Company
Q17 | Shares of face value of 10 are 80% paid up. The company declares a dividend of50%. Amount of dividend per share is
- 5
- 4
- 80
- 50
Q18 | Which of the following generally not result in increase in total dividend liability ?
- Share-split
- Right Issue
- Bonus Issue
- All of the above
Q19 | Dividends are paid out of
- Accumulated Profits
- Gross Profit
- Profit after Tax
- General Reserve
Q20 | In India, Dividend Distribution tax is paid on
- Equity Share
- Preference Share
- Debenture
- Both (a) and (b)
Q21 | Every company should follow
- High Dividend Payment
- Low Dividend Payment
- Stable Dividend Payment
- Fixed Dividend Payment
Q22 | 'Constant Dividend Per Share' Policy is considered as:
- Increasing Dividend Policy
- Decreasing Dividend Policy
- Stable Dividend Policy
- None of the above
Q23 | Which of the following is not a type of dividend payment?
- Bonus Issue
- Right Issue
- Share Split
- Both (b) and (c)
Q24 | If the following is an element of dividend policy?
- Production capacity,
- Change in Management,
- Informational content,
- Debt service capacity
Q25 | Stock split is a form of
- Dividend Payment,
- Bonus Issue,
- Financial restructuring,
- Dividend in kind