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MCQ On Cost of
MCQ On Cost of
MCQ: During planning period, a marginal cost for raising a new debt is classified as
debt cost
relevant cost
borrowing cost
embedded cost
Answer
MCQ: Cost of common stock is 14% and bond risk premium is 9% then bond yield will be
1.56%
5%
23%
64.28%
Answer
MCQ: In weighted average cost of capital, a company can affect its capital cost through
policy of dividends
policy of investment
Answer
MCQ: A risk associated with project and way considered by well diversified stockholder is classified as
expected risk
beta risk
industry risk
returning risk
Answer
MCQ: Cost of common stock is 13% and bond risk premium is 5% then bond yield would be
$18
2.60%
8%
18%
Answer
expected risk
stand-alone risk
variable risk
returning risk
Answer
MCQ: Cost of common stock is 16% and bond yield is 9% then bond risk premium would be
7%
$7
1.78%
25%
Answer
MCQ: If future return on common stock is 14% and rate on T-bonds is 5% then current market risk
premium will be
19%
9%
$9
$19
Answer
MCQ: Cost of capital is equal to required return rate on equity in case if investors are only
valuation manager
common stockholders
asset seller
equity dealer
Answer
MCQ: Interest rate is 12% and tax savings (1-0.40) then after-tax component cost of debt will be
7.20%
7.2 times
17.14 times
$17.14
Answer
MCQ: Retention ratio is 0.60 and return on equity is 15.5% then growth retention model would be
14.90%
25.84%
16.10%
9.30%
Answer
Answer
MCQ: An attempt to make correction by adjusting historical beta to make it closer to an average beta is
classified as
adjusted stock
adjusted beta
adjusted coefficient
adjusted risk
Answer
MCQ: Method in which company finds other companies considered in same line of business to evaluate
divisions is classified as
Answer
Answer
Stock selling price is $45, an expected dividend is $10 and an expected growth rate is 8% then cost of
common stock would be
$55
$58
$53
30.22%
Answer
MCQ: A type of beta which incorporates about company such as changes in capital structure is classified
as
industry beta
market beta
subtracted beta
fundamental beta
Answer
MCQ: Dividend per share is $18 and sell it for $122 and floatation cost is $4 then component cost of
preferred stock will be
15.25%
0.1525 times
$15.25
0.15%
Answer
MCQ: In weighted average capital, capital structure weights estimation does not rely on value of
investors equity
stock equity
Answer
MCQ: Interest rates, tax rates and market risk premium are factors which an/a
component cost
evaluating cost
asset cost
Answer
0.55
1.45
1.82
0.45
Answer
MCQ: Stock selling price is $35, expected dividend is $5 and expected growth rate is 8% then cost of
common stock would be
$40
22.29%
0.1428
$80
Answer
MCQ: Retention ratio is 0.55 and return on equity is 12.5% then growth retention model would be
11.95%
6.88%
13.05%
22.72%
Answer
MCQ: Preferred dividend is divided by preferred stock price multiply by (1-floatation cost) is used to
calculate
Answer
MCQ: Stock selling price is $65, expected dividend is $20 and cost of common stock is 42% then
expected growth rate will be
0.1123 times
11.23%
11.23 times
$11.23
Answer
MCQ: In retention growth model, percent of net income firms usually pay out as shareholders dividends,
is classified as
payout ratio
payback ratio
Answer
Answer
MCQ: Bond risk premium is 3% and bond yield is 10.2% then cost of common stock will be
3.40%
13.20%
7.20%
30.60%
Answer
embedded rate
marginal rate
Both A and B
Answer
MCQ: Bond yield is 12% and bond risk premium is 4.5% then cost of common stock would be
37.50%
7.50%
15.50%
2.67 times
Answer
MCQ: Forecast by analysts, retention growth model and historical growth rates are methods used for an
Answer
MCQ: Premium which is considered as difference of expected return on common stock and current yield
on Treasury bonds is called
expected premium
Answer
MCQ: An interest rate which is paid by firm as soon as it issues debt is classified as pre-tax
term structure
market premium
risk premium
cost of debt
Answer
historical beta
market beta
coefficient beta
riskier beta
Answer
MCQ: In weighted average cost of capital, capital components are funds that are usually offered by
stock market
investors
capitalist
exchange index
Answer
MCQ: Cost which is used to calculate weighted average cost of capital is classified as
Answer
MCQ: Special situation in which large projects are financed by with and securities claims on project's
cashflow is classified as
claimed securities
project financing
stock financing
interest cost
Answer
MCQ: Type of cost which is used to raise common equity by reinvesting internal earnings is classified as
cost of mortgage
cost of stocks
Answer
MCQ: If future return on common stock is 19% and rate on T-bonds is 11% then current market risk
premium will be
$30
30%
8%
$8
Answer
MCQ: Historical growth rates, analysis forecasts and retention growth model are approaches to estimate
growth rate
growth gain
discounted gain
Answer
MCQ: In weighted average cost of capital, cost of capital which is risk adjusted and developed for each
category of
long-term projects
divisional projects
short-term projects
Answer
MCQ: In retention growth model, payout ratio is subtracted from one to calculate
retention ratio
growth ratio
Answer
1.47%
1.68
0.32
0.68
Answer
MCQ: Cost of common stock is 15% and bond yield is 10.5% then bond risk premium will be
1.43%
$70
25.50%
4.50%
Answer
MCQ: Cost of equity which is raised by reinvesting earnings internally must be higher than the
cost of initial offering
cost of floatation
Answer
MCQ: Dividend per share is $15 and sell it for $120 and floatation cost is $3.0 then component cost of
preferred stock will be
12.82 times
0.1282 times
12.82%
$12.82
Answer
MCQ: In pure play method, a company can calculate its own cost of capital with help of averaging an
Answer
MCQ: Capital budgeting decisions are analyzed with help of weighted average and for this purpose
Answer
Answer
country risk
diversifiable risk
Answer
variable risk
corporate risk
Both B and C
Answer
cost of debt
cost of equity