Classical

Advanced Questions - Section 4

21:  

A firm has inventory turnover of 6 and cost of goods sold is Rs. 7,50,000. With better inventory management, the inventory turnover is increased to 10. This would result in

A.

Increase in inventory by Rs. 50,000

B.

Decrease in inventory by Rs. 50,000

C.

Decrease in cost of goods sold

D.

Increase in cost of goods sold.

 
 

Option: B

Explanation :


22:  

Expected Return on the market is 16% and Risk free rate is 6%. Which of the following projects be accepted?

A.

β =0.50, Return = 11.5%

B.

β = 1.25, Return = 18.0%

C.

β = 1, Return = 15.5%

D.

β = 2, return = 25.0%

 
 

Option: A

Explanation :


23:  

Which of the following will cause an increase in bond values?

A.

Decrease in Redemption Amount

B.

Decrease in Coupon Rate

C.

Increase in Redemption Amount

D.

Increase in Redemption Period.

 
 

Option: C

Explanation :


24:  

Which of the following is the variability of the return from a share associated with the market as a whole?

A.

Unsystematic

B.

Avoidable

C.

Systematic

D.

None of the above

 
 

Option: C

Explanation :


25:  

Cost of Equity Share Capital is more than cost of debt because

A.

Face value of debentures is more than face value of shares

B.

Equity shares have higher risk than debt

C.

Equity shares are easily saleable

D.

All of the three above

 
 

Option: B

Explanation :




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