Financial Management Set 15

Q1 | The cost of each component of capital is known as

Q2 | ------ refers to that EBIT level at which EPS remains the same irrespective of the debt- equity mix.

Q3 | The use of long term fixed interest bearing debt and preference share capital along with equity shares is called

Q4 | Which of the following factors are considered when a capital structure decision is taken?

Q5 | The combination of debt and equity that leads to the maximum value of the firm is called

Q6 | In optimal capital structure the company’s cost of capital will be

Q7 | The value of a firm on the basis of net operating income approach can be determined bydividing the earnings before interest and taxes by

Q8 | A company should follow the policy of ----- gear during deflation or depression period

Q9 | Which of the following is not a disadvantage of rate of return method of capital budgeting?

Q10 | A project having a profitability index of ------ is accepted

Q11 | The type of debt whose rate of interest changes according to the changes in the rate of interest payable on gilt edged securities or the prime lending rate of the bank is called

Q12 | .Earnings yield method is applied when the dividend pay out ratio is

Q13 | ----- is the rate of return that the company must earn on the net funds raised, in order to satisfy the equity shareholders’ demand for return

Q14 | A project requires an investment of Rs500000and has scrape value of Rs.20000 after five years. It is expected to yield profits after depreciation and taxes during the five years amounting to Rs.40000,Rs60000, Rs.50000,Rs70000 and Rs20000.What is the average rate of return on the investment?

Q15 | Which of the following quantitative aspect of financial planning?

Q16 | Which of the following qualitative aspect of financial planning?

Q17 | Which of the following is/ are the assumptions of net income approach?

Q18 | The overall cost of capital, according to which theory, decreases up to a certain point,remains more or less unchanged for moderate increase in debt thereafter and increases a certain point

Q19 | According to which theory two identical firms in all respect except their capital structure can not have different market value or cost of capital because of arbitrage process

Q20 | XLtd has taken a term loan of Rs12 lakhs at an interest rate of 15% p.a. If the tax rate applicable to the company is 40%, the cost of term loan is

Q21 | Agency cost arises due to

Q22 | What do you mean by NPV?

Q23 | Under NPV method, cash flows are assured to be reinvested at

Q24 | The pay back period shows

Q25 | Capital rationing is applied in a situation where