Financial Management
501. The Real Cashflows must be discounted to get the present value at a rate equal to:
- Money Discount Rate
- Inflation Rate
- Real Discount Rate
- Risk free rate of interest
Correct answer: (C)
Real Discount Rate
502. Risk in Capital budgeting is same as:
- Uncertainty of Cash flows
- Probability of Cash flows
- Certainty of Cash flows
- Variability of Cash flows
Correct answer: (D)
Variability of Cash flows
503. NPV of a proposal, as calculated by RADR real CE Approach will be:
- Same
- Unequal
- Both (a) and
- (d) None of (a) and (b)
Correct answer: (B)
Unequal
504. Cost of Capital for Bonds and Debentures is calculated on:
- Before Tax basis
- After Tax basis
- Risk-free Rate of Interest basis
- None of the above
Correct answer: (B)
After Tax basis
505. In order to calculate Weighted Average Cost of weights may be based on:
- Market Values
- Target Values
- Book Values
- All of the above
Correct answer: (D)
All of the above
506. In order to find out cost of equity capital under CAPM, which of the following is not required:
- Beta Factor
- Market Rate of Return
- Market Price of Equity Share
- Risk-free Rate of Interest
Correct answer: (C)
Market Price of Equity Share
507. Which of the following is not a generally accepted approach for Calculation of Cost of Equity?
- CAPM
- Dividend Discount Model
- Rate of Pref. Dividend Plus Risk
- Price-Earnings Ratio
Correct answer: (C)
Rate of Pref. Dividend Plus Risk
508. Operating Leverage is calculated as:
- Contribution ÷ EBIT
- EBIT÷PBT
- EBIT ÷Interest
- EBIT ÷Tax
Correct answer: (A)
Contribution ÷ EBIT
509. Relationship between change in sales and change m is measured by:
- Financial leverage
- Combined leverage
- Operating leverage
- None of the above
Correct answer: (B)
Combined leverage
510. Higher FL is related the use of:
- Higher Equity
- Higher Debt
- Lower Debt
- None of the above
Correct answer: (B)
Higher Debt