Financial Management

471. If a firm has no debt, which one is correct?

  1. OL is one
  2. FL is one
  3. OL is zero
  4. FL is zero
Correct answer: (B)
FL is one

472. If a firm has no Preference share capital, Financial Break even level is defined as equal to -

  1. EBIT
  2. Interest liability
  3. Equity Dividend
  4. Tax Liability
Correct answer: (B)
Interest liability

473. In case of Net Income Approach, the Cost of equity is:

  1. Constant
  2. Increasing
  3. Decreasing
  4. None of the above
Correct answer: (A)
Constant

474. Which one is true for Net Operating Income Approach?

  1. VD = VF - VE
  2. VE = VF + VD
  3. VE = VF - VD
  4. VD = VF + VE
Correct answer: (C)
VE = VF - VD

475. Which of the following assumes constant kd and ke?

  1. Net Income Approach
  2. Net Operating Income Approach
  3. Traditional Approach
  4. MM Model
Correct answer: (A)
Net Income Approach

476. Which of the following is incorrect for NOI?

  1. k0 is constant
  2. kd is constant
  3. ke is constant
  4. kd & k0 are constant
Correct answer: (C)
ke is constant

477. Dividend irrelevance argument of MM Model is based on:

  1. Issue of Debentures
  2. Issue of Bonus Share
  3. Arbitrage
  4. Hedging
Correct answer: (C)
Arbitrage

478. In case of Gordon's Model, the MP for zero payout is zero. It means that

  1. Shares are not traded
  2. Shares available free of cost
  3. Investors are not ready to offer any price
  4. None of the above
Correct answer: (C)
Investors are not ready to offer any price

479. Which of the following generally not result in increase in total dividend liability ?

  1. Share-split
  2. Right Issue
  3. Bonus Issue
  4. All of the above
Correct answer: (A)
Share-split

480. Stock split is a form of

  1. Dividend Payment
  2. Bonus Issue
  3. Financial restructuring
  4. Dividend in kind
Correct answer: (C)
Financial restructuring
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