Classical

Financial Management - Financial Management Multiple Choice Questions

31:  

Which method of capital budgeting called benefit cash ratio?

A.

Pay back period

B.

Net present value

C.

Pay out period

D.

Profitability Index Number

 
 

Option: D

Explanation :


32:  

If cash inflows are not uniform, the calculation of pay-back period takes a

A.

Common Profit

B.

Favourable Position

C.

Cumulative Form

D.

All of the above

 
 

Option: C

Explanation :


33:  

The investment proposal with the greatest relative risk would have

A.

the highest standard deviation of net present value.

B.

the highest coefficient of variation of net present value.

C.

the highest expected value of net present value.

D.

the lowest opportunity loss likelihood.

 
 

Option: B

Explanation :


34:  

Degree of Financial leverage is

A.

Profit/Sales x Capital

B.

Percentages change in EPS or EBIT/percentage changes in EBIT - Interest

C.

Sales/Fixed Assets

D.

EBIT/100 x Sales

 
 

Option: B

Explanation :


35:  

The "information effect" refers to the notion that

A.

a corporation's actions may convey information about its future prospects.

B.

management is reluctant to provide financial information that is not required by law.

C.

agents incur costs in trying to obtain information.

D.

the financial manager should attempt to manage sensitive information about the firm.

 
 

Option: A

Explanation :




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