Business Finance - Study Mode

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[#626] Personal saving 1. is that part of personal income, i.e. is not consumed. 2. equals income minus consumption.

(A) Only 1

(B) Only 2

(C) Both 1 and 2

(D) Neither 1 nor 2

Correct Answer

(C) Both 1 and 2

[#627] Assertion (A): The primary motive of a company in using financial leverage is to magnity shareholder's return under favourable economic conditions. Reason (R): To magnify shareholder's return fixed charges, funds can be obtained at a cost higher than the firm's rate of return on net assets.

(A) (A) is correct, and (R) is the correct explanation of (A)

(B) (A) is correct, but (R) is incorrect

(C) (R) is correct, but (A) is incorrect

(D) Both (A) and (R) are incorrect

Correct Answer

(B) (A) is correct, but (R) is incorrect

[#628] The financial analysts says, working capital means the same things as

(A) current assets - current liabilities

(B) fixed assets

(C) total assets

(D) current assets

Correct Answer

(A) current assets - current liabilities

[#629] Match the following. List-I List-II a. Shares 1. Fixed capital b. Land and building 2. Period of medium-term finance c. Public deposits 3. Source of long-term finance d. 1-5 years 4. Short-term finance e. Meeting day-to-day requirements 5. Source of medium-term finance

(A) a-4, b-2, c-3, d-1, e-5

(B) a-4, b-1, c-5, d-2, e-4

(C) a-2, b-3, c-5, d-1, e-4

(D) a-5, b-3, c-2, d-4, e-1

Correct Answer

(B) a-4, b-1, c-5, d-2, e-4

[#630] From the following information of ABC Ltd, determine the market price of a share using Gordon's model. Total investment in assets = Rs. 10,00,000 Number of shares = 50,000 Total earnings = Rs. 2,00,000 Cost of capital = 16% Payout ratio = 40%

(A) Rs. 20

(B) Rs. 40

(C) Rs. 60

(D) Rs. 80

Correct Answer

(B) Rs. 40