Business Finance - Practice Test

[#516] 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

(E) Gross Profit Approach

(F) Net Operating Income Approach

(G) Net Income Approach

(H) Modigliani and Miller Approach

Correct Answer

(A) Gross Profit approach
(E) Gross Profit Approach

[#517] In contrast to the capital asset pricing model, arbitrage pricing theory

(A) Has fewer restrictive assumptions

(B) Uses risk premiums based on micro variables

(C) Specifies the number and identities of specific factors that determine expected returns

(D) Requires normally distributed security returns

Correct Answer

(A) Has fewer restrictive assumptions

[#518] Discounted cash flow criteria for investment appraisal does not include

(A) net present value

(B) benefit cost ratio

(C) accounting rate of return

(D) internal rate of return

Correct Answer

(B) benefit cost ratio

[#519] Match the following. List-I (Measurements of Cost of Capital) List-II (Features) a. Cost of debt 1. Its calculation is relatively difficult task b. Cost of preference share capital 2. The amount of interest payment should be matched with the net cash proceeds of the debt c. Cost of equity share capital 3. The shareholders have to incur some brokerage cost for investing the dividends received d. Cost of retained earnings 4. The rate of dividend payable on these shares is fixed well in advance at the time of their issue

(A) a-4, b-3, c-1, d-2

(B) a-2, b-3, c-4, d-1

(C) a-3, b-4, c-2, d-1

(D) a-2, b-4, c-1, d-3

Correct Answer

(D) a-2, b-4, c-1, d-3

[#520] Once the changeover to the euro was completed by 1 st July, 2002, the legal-tender status of national currencies in the euro zone

(A) was cancelled, leaving the euro as the sole legal tender in the euro zone countries

(B) was affirmed at the fixed exchange rate

(C) was tied to gold

(D) None of the above

Correct Answer

(A) was cancelled, leaving the euro as the sole legal tender in the euro zone countries

Business Finance - Study Mode

[#516] Which of the following is not an approach to the capital structure?

Correct Answer

[#517] In contrast to the capital asset pricing model, arbitrage pricing theory

Correct Answer

[#518] Discounted cash flow criteria for investment appraisal does not include

Correct Answer

Correct Answer

[#520] Once the changeover to the euro was completed by 1 st July, 2002, the legal-tender status of national currencies in the euro zone

Correct Answer