Classical

Financial Management - Financial Management Multiple Choice Questions

21:  

Cost of Preference Capital can be obtained by

A.

KP = E – P/2/D – E/100 (1 - Tax)

B.

KP = E – P/2/D + 1/100 x 100

C.

KP = D + 1/2 x 100 

D.

KP = D + (M.V. - N.P./n)/(M.V. + N.P./2)

 
 

Option: D

Explanation :


22:  

Assertion (A) : High capital gearing leads to greater speculation.

Reason (R) : Proportion of equity share capital in relation to the total capital comprising the other securities is small leading to capitalisation being highly geared.

A.

Both A and R are true and R is the correct explanation of A

B.

Both A and R are true but R is not a correct explanation of A

C.

A is true but R is false

D.

A is false but R is true

 
 

Option: D

Explanation :


23:  

Capital budgeting actually the process of making investment decisions in

A.

Sales Planning

B.

Production process and style

C.

Fixed Assets

D.

Current Assets

 
 

Option: C

Explanation :


24:  

According to the concept of financial signaling, management behavior results in new debt issues being regarded as "____ news" by investors.

A.

good

B.

bad

C.

non-event

D.

risk-neutral

 
 

Option: A

Explanation :


25:  

Factoring is a

A.

Financial Planning

B.

Production Plan

C.

Cost of Sales

D.

New Financial Service

 
 

Option: D

Explanation :




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