Let the face value of commercial paper be denoted by F.V., net amount realized from the commercial paper be NAR, maturity period of commercial paper be MP. The effective pre - tax cost of commercial paper shall be:
| A. | F.V. - NAR |
| B. |
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| C. |
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| D. |
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Option: D Explanation : Click on Discuss to view users comments. |
When the target company uses the tactic of divestiture, to defend itself from a hostile takeover, it is said to sell the:
| A. | Crown jewels |
| B. | Green mail |
| C. | Golden parachutes |
| D. | White knight |
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Option: A Explanation : Click on Discuss to view users comments. |
The average spread between the cost of goods sold and the sales revenue is indicated by:
| A. | Operating Expense ratio |
| B. | Gross Profit ratio |
| C. | Net Profit ratio |
| D. | Return on Equity |
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Option: B Explanation : Click on Discuss to view users comments. |
If the rate of return on investment opportunity is likely to be 15 percent, the opportunity cost of capital is 10 percent, the earnings per share is Rs 10 and if the pay-out ratio is 40 percent, the price of share according to Walter Model will be:
| A. | Rs 40 |
| B. | Rs 130 |
| C. | Rs 148 |
| D. | Rs 400 |
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Option: B Explanation : Click on Discuss to view users comments. |
If the total cash requirement of a company is Rs 2 crore next year, the opportunity cost of funds is 15 percent per annum and the cost of conversion from securities to cash per transaction is Rs 150, the optimum cash balance as per Baumol's Model will be :
| A. | Rs 2 lakhs |
| B. | Rs 4 lakhs |
| C. | Rs 20 lakhs |
| D. | Rs 40 lakhs |
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Option: A Explanation : Click on Discuss to view users comments. |
