Questions

Dividend Distribution Tax is payable by

Which of the following is not true for MM Model
In order to calculate the proportion of equity financing used by the company, the following should be used:
Which of the following sources of funds has an Implicit Cost of Capital?
In case the firm is all-equity financed, WACC would be equal to:
Cost of Capital for Government securities is also known as:
Cost of Capital for Bonds and Debentures is calculated on
Weighted Average Cost of Capital is generally denoted by:
Which of the following cost of capital require tax adjustment?
Which is the most expensive source of funds?
.Marginal cost of capital is the cost of:
Relationship between change in Sales and Operating Profit is known as
In case of partially debt-financed firm, k0 is less
In order to calculate Weighted Average Cost of weights may be based on:
Firm's Cost of Capital is the average cost of:
An implicit cost of increasing proportion of debt is:
Combined leverage can be used to measure the relationship between:
Which of the following is true?
Cost of capital may be defined as:
Minimum Rate of Return that a firm must earn in order to satisfy its investors, is also known as:
Cost of Capital for Equity Share Capital does not imply that:
Higher FL is related the use of:
The term capital structure denotes:
Debt Financing is a cheaper source of finance because of:
In order to find out cost of equity capital under CAPM, which of the following is not required:
Tax-rate is relevant and important for calculation of specific cost of capital of:
Advantage of Debt financing is:
Cost of issuing new shares to the public is known as:
Cost of Equity Share Capital is more than cost of debt because:
Which of the following is not a generally accepted approach for Calculation of Cost of Equity?
Operating leverage helps in analysis of:
Which of the following is studied with the help of financial leverage?
Combined Leverage is obtained from OL and FL by their:
High degree of financial leverage means:
Operating leverage arises because of:
Financial Leverage arises because of:
Operating Leverage is calculated as:
Financial Leverage is calculated as:
Which combination is generally good for firms
Which of the following has the highest cost of capital?
FL is zero if:
Business risk can be measured by:
Financial Leverage measures relationship between
Use of Preference Share Capital in Capital structure
Relationship between change in sales and change m is measured by:
Operating leverage works when:
Which of the following is correct?
If the fixed cost of production is zero, which one of the following is correct?
If a firm has no debt, which one is correct?
If a company issues new share capital to redeem debentures, then:
If a firm has a DOL of 2.8, it means:
Higher OL is related to the use of higher:
Cost of Capital refers to:
In order to calculate EPS, Profit after Tax and Preference Dividend is divided by:
Trading on Equity is :
Benefit of 'Trading on Equity' is available only if:
Indifference Level of EBIT is one at which:
Financial Break-even level of EBIT is one at which:
Cost of Redeemable Preference Share Capital is:
Finance function includes
Capital structure means
Over capitalisation means
Huge promotion expense leads to
A business established during depression period can be
A high geared company…
Optimum capital structure….
FRICT analysis includes
Financial leverage is..
Degree of financial leverage
Financial break even point in the level of activity where
The appropriate objective of an enterprise is
The job of a finance manager is..
Financial decision involves
According to traditional approach finance fnction refers to
Business finance is a part of ..
Ploughing back of profit means
Capital budgeting means
What is financial plan+
Fixed capital requirement refers to
Optimum capital structure is the combination of debt and equity which
Floatation cost means
Financial leverage and trading on equity are
Indifference point in the level of activity where
Financial break even point is
Operating leverage refers to use of ..
All constituencies with a stake in the fortunes of the company are known as
Which of the following is a financial statement that states items on a cash basis?
The ability of a firm to convert an asset to cash is called
One major disadvantage of the sole proprietorship is
Which of the following is not a government agency?
Which of the following shows the details of the company's activities involving cash during a period of time?
Options
A B
Shareholders to Government Shareholders to Company
Share price goes up if dividend is paid Share price goes down if dividend is not paid
Authorised Share Capital, Equity Share Capital plus Reserves and Surplus,
Equity Share Capital, Preference Share Capital,
Cost of Debt Cost of Equity
Risk-free Rate of Interest, Maximum Rate of Return
Before Tax basis After Tax basis
kA, kw,
Cost of Equity Shares, Cost of Preference Shares,
New Equity Shares, New Preference Shares,
Additional Sales, Additional Funds,
Financial Leverage, Operating Leverage
Kd Ke
Market Values Target Values
All sources All borrowings
Tax should would not be available on new debt, P.E. Ratio would increase,
EBIT and EPS PAT and EPS
Retained earnings are cost free, External Equity is cheaper than Internal Equity,
Weighted Average cost of all debts, Rate of Return expected by Equity Shareholders,
Average Return on Investment, (c) Weighted Average Cost of Capital,
Market Price is equal to Book Value of share, Shareholders are ready to subscribe to right issue,
Higher Equity, Higher Debt,
Total of Liability side of Balance Sheet, Equity Funds, Preference Capital and Long term De
Time Value of Money, Rate of Interest,
Beta Factor Market Rate of Return
Equity Share Capital Preference Share Capital,
Interest is tax-deductible It reduces WACC,
Cost of Equity, Cost of Capital,
Face value of debentures is more than face valueEquity shares have higher risk than debt,
CAPM Dividend Discount Model
Business Risk Financing Risk,
Marketing Risk, Interest Rate Risk,
Addition, Multiplication,
High debt proportion, Lower debt proportion,
Fixed Cost of Production, Fixed Interest Cost,
Fixed cost of production, Variable Cost,
Contribution ÷ EBIT, EBIT÷PBT,
EBIT÷ Contribution, EBIT÷ PBT,
High OL, High FL Low OL, Low FL,
Equity shares Loans,
EBIT = Interest, EBIT = Zero,
Financial leverage, Operating leverage,
EBIT and PBT, EBIT and EPS,
Increases OL Increases FL
Financial leverage Combined leverage
Sales Increases, Sales Decreases
CL= OL + FL, CL=OL-FL,
OL is zero, FL is zero,
OL is one FL is one
OL will increase FL will increase
If sales increase by 2.8%, the EBIT will increase If EBIT increase by 2.896, the EPS will increase by
Debt, Equity,
Flotation Cost, Dividend
MP of Equity Shares Number of Equity Shares
Always beneficial, May be beneficial,
Rate of Interest < Rate of Return, Rate of Interest > Rate of Return,
EPS is zero, EPS is Minimum,
EPS is one EPS is zero
Rate of Dividend, After Tax Rate of Dividend,
Executive and incidental finance function Routine and auxilary finance function
Financial structure Capitalisation
Excess capital Earnings are not justified by th institution
Under capitalisation Over capitalisation
Under capitalised Over Capitalised
Equity will be more than debt Debt will be more than Equity
Maximum cost of capital Maximum market value of shares
fund, risk, interest, control and time flexibilty, risk, income, control and time
EBIT/EBT EBT/EBIT
% change in EPS/% change in EBIT % change in EBT/% change in ebt
EBIT will be zero EBTwill ne zero
Maximisation of sales Maximisation of profit
Raising of funds Management of Cash
investment,financing and divident decision investment, sales and financing decision
Utilisation of fund Procurement of funds
Personal finance Public finance
Proper utilisation of profits Raising profit by using debt funds
Preparation of budgets for raising capital Making investment decision in long term expenditu
Statement of deficiency of total amount of capitalA statement showing total amount of capital to be r
Working capital Long term capital
Maximise the market value of the firm Minimise cost of capital
Csot of raising funds Cost of utilising funds
Same different terms
EBIT will be the same for alternative financial pla EPS will be the same for alternaive financial plan
Equel to interest Interest+(DP/1-T)
Fixed cost Variqble cost
Share holders stake holders
income statement balance sheet
liquidity solvency
Simplicity of decision- making Unlimited liability
Internal Revenue Service (IRS) Security and Exchange Commission
Income statement Statement of financial position
C D
Company to Government Holding to Subsidiary Company
Market value is unaffected by Dividend policy All of the above
Equity Share Capital plus Preference Share Capital, Equity Share Capital plus Long-term Debt.
Debentures, Retained earnings.
Neither (a) nor (b) Both (a) and (b).
Rate of Interest on Fixed Deposits None of the above
Risk-free Rate of Interest basis,. None of the above
k0, kc,
Cost of Debentures, Cost of Retained Earnings.
New Debts, Retained Earnings.
Additional Interests, None of the above.
Net Profit Ratio Gross Profit Ratio
Both (a) and (b None of the above.
Book Values All of the above
Share capital Share Bonds & Debentures.
Equity shareholders would demand higher return, Rate of Return of the company would decrease
Sales and EPS Sales and EBIT
Retained Earnings are cheaper than External Equity, Retained Earnings are costlier than External Equity.
Average IRR of the Projects of the firm, Minimum Rate of Return that the firm should earn.
Net Profit Ratio Average Cost of borrowing.
Market Price is more than Issue Price, Any of the three options.
Lower Debt, None of the above
Total Shareholders Equity, Types of Capital Issued by a Company.
Tax-deductibility of Interest, Dividends not Payable to lenders.
Market Price of Equity Share Risk-free Rate of Interest.
Debentures, (a) and (b) above.
Does not dilute owners control, All of the above.
Flotation Cost, Marginal Cost of Capital.
Equity shares are easily saleable, All of the three above.
Rate of Pref. Dividend Plus Risk Price-Earnings Ratio.
Production Risk Credit Risk
Foreign Exchange Risk Financing risk
Subtraction, Any of these
Equal debt and equity, No debt
Variable Cost, None of the above
Interest Cost, None of the above
EBIT ÷Interest, EBIT ÷Tax
EBIT÷ Sales, EBIT ÷ Variable Cost
High OL, Low FL None of these
bonds Preference shares.
EBIT = Fixed Cost, EBIT = Pref. Dividend
Combined leverage, None of the above
Sales and PBT, Sales and EPS
Decreases OL Decreases FL
Operating leverage None of the above
Both (a) and (b) None of the above
OL= OL × FL, OL=OL÷FL
CL is zero, None of the above
OL is zero, FL is zero
OL will decrease FL will decrease
If sales rise by 1%, EBIT will rise by 2.8%, None of the above
Fixed Cost, Variable Cost
Required Rate of Return None of the above
Face Value of Equity Shares None of the above
Never beneficial, None of the above.
Both (a) and (b), None of (d) and (b).
EPS is highest, None of these.
EPS is Infinite EPS is Negative.
Discount Rate that equates PV of inflows and out-flows
None of the above.
Incidential and routine finance function Auxilary and subsidiary finance function
make up of capitalisation Share capital
Capital is more than debt capital is more than assets
Optimum capitalisation High rate of interest
Proper capitalised All of the above
Long term liability more than current liability Assets more than liability
Maximum market value of firm Maximum market value of debt
fund,return,investment,capital and taxation finance,return, investment,control and taxation
EAIT/EBT EAIT/EBIT
% change in EAIT/ % change in EBT % change in EPS/% change in EAIT
EPS will be zero EBIT and EBT will be the same
Maximisation of wealth Maximisation of production
Raising and effective utilisation of funds management of fund utilisation
investment, divident and cash decision investment,finance and cash decision
Procurement and utilisation of fund None of the above
Private finance None of the above
Keeping profit for paying future divident Keeping profit for meeting future finance requirements
Making investment decision in working capital All of the above
A statement showing different sources of finance None of the above
both a and b None of the above
both a and b None of the above
Cost of raising and utilising funds None of the above
don'nt know No Comment
Financial break even point occurs No difference between EBIT and EPS
both a and b None of the above
Total cost All of the above
Creditors customers
statement of cash flows none of the above
return none of the above
Low operational costs None of the above
American Accounting Association Federal Deposit Insurance Corporation
Balance sheet None of the above
Correct Answer Weightage (5 ScalModule
option2 1 2
option3 5 2
option2 2 2
option4 2 2
option2 2 2
option1 2 2
option2 1 2
option3 1 2
option3 2 2
option1 1 2
option2 1 2
option2 3 2
option2 3 2
option4 2 2
option1 2 2
option3 3 2
option3 3 2
option3 4 2
option4 3 2
option2 3 2
option4 4 2
option2 2 2
option2 1 2
option3 1 2
option3 5 2
option3 4 2
option4 1 2
option3 1 2
option2 2 2
option3 2 2
option1 2 2
option4 4 2
option3 1 2
option1 3 2
option1 3 2
option3 2 2
option1 2 2
option2 2 2
option3 2 2
option1 1 2
option2 1 2
option2 1 2
option2 3 2
option2 5 2
option2 2 2
option3 2 2
option3 1 2
option4 4 2
option2 2 2
option4 1 2
option3 5 2
option3 2 1
option3 1 1
option2 2 1
option2 3 1
option1 4 1
option4 1 1
option2 3 1
option3 5 1
option1 2 1
option3 3 1
option2 4 1
option2 3 1
option1 3 1
option2 4 1
option3 3 1
option2 4 1
option1 5 1
option1 3 1
option3 2 1
option3 5 1
option3 1 1
option1 4 1
option2 5 1
option3 4 1
option4 2 1
option4 3 1
option1 4 1
option2 5 1
option3 4 1
option1 5 1
option1 2 1
option2 3 1
option3 4 1
option 1 5 1
option2 1 1
option3 5 1
option1 3 1
option2 2 1
option3 2 1
option4