Financial Management 2018 July 2nd paper

 

Vanijyik Shiksha

1) Which of the following is not an approach to the capital structure?

a) Gross profit approach

b) Net operating income approach

c) Net income approach

d) Modigliani and Miller Approach

2) Which one of the following methods of capital budgeting assume that cash inflow are reinvested at the project rate of return?

a) Net present value

b) According rate of return

c) Internal rate of return

d) Discounted payback period

3) Cost of equity shares capital is more than cost of debt because

a) Equity shares are not easily saleable

b) Equity share do not provide the fixed dividend rate

c) Generally the face value of equity share is less than the face value of debenture.

d) Equity share have high then Dept.

4) Negative net working capital implies that

a) Long term funds have been used for fixed assets

b) Short term funds have been used for fixed assets

c) long term funds have been used for current assets

d) Short term funds have been used for current assets

5) Which of the following is an implicit cost of increasing proportion of Dept of a company?

a) P.E ratio of the company would increase

b) Rate of return of the company would decrease

c) Tax Shield would not be available on new debts.

d) Equity shareholder would demand high return.

6) Profitability Index of a project is the ratio of present value of cash inflow to

a) Total cash inflow

b) Total cash outflows

c) Present value of cash outflows

d) Initial cost minus depreciation

7) Which one of the following statement is false?

a) Effective Dividend policy is an important tool to achieve the goal of wealth maximization.

b) According to Walter the optimal payout ratio for a growth firm is 100%

c) MM model asserts that the value of the firm is not affected whether the firm page dividend or not.

d) Bird in the hand theory in reference to dividend decision has been developed by Myron Gordon.