Financial Management

551. Residuals Theory argues that dividend is a

  1. Relevant Decision
  2. Active Decision
  3. Passive Decision
  4. Irrelevant Decision
Correct answer: (C)
Passive Decision

552. MM Model argues that dividend is irrelevant as

  1. the value of the firm depends upon earning power
  2. the investors buy shares for capital gain
  3. dividend is payable after deciding the retained earnings
  4. dividend is a small amount
Correct answer: (A)
the value of the firm depends upon earning power

553. Dividend Payout Ratio is

  1. PAT÷ Capital
  2. DPS ÷ EPS
  3. Pref. Dividend ÷ PAT
  4. Pref. Dividend ÷ Equity Dividend
Correct answer: (B)
DPS ÷ EPS

554. Every company should follow

  1. High Dividend Payment
  2. Low Dividend Payment
  3. Stable Dividend Payment
  4. Fixed Dividend Payment
Correct answer: (C)
Stable Dividend Payment

555. Cash Budget does not include

  1. Dividend Payable
  2. Postal Expenditure
  3. Issue of Capital
  4. Total Sales Figure
Correct answer: (D)
Total Sales Figure

556. Miller-Orr Model deals with

  1. Optimum Cash Balance
  2. Optimum Finished goods
  3. Optimum Receivables
  4. All of the above
Correct answer: (A)
Optimum Cash Balance

557. Marketable securities are primarily

  1. Equity shares,'
  2. Preference shares
  3. Fixed deposits with companies
  4. Short-term debt investments
Correct answer: (D)
Short-term debt investments

558. Bad debt cost is not borne by factor in case of

  1. Pure Factoring
  2. Without Recourse Factoring
  3. With Recourse Factoring
  4. None of the above
Correct answer: (C)
With Recourse Factoring

559. Payment to creditors is a manifestation of cash held for:

  1. Transactionery Motive
  2. Precautionary Motive
  3. Speculative Motive
  4. All of the above
Correct answer: (A)
Transactionery Motive

560. If a company sells its receivable to another party to raise funds, it is known as

  1. Securitization
  2. Factoring
  3. Pledging
  4. None of the above
Correct answer: (B)
Factoring
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