Business Finance - Practice Test

(A) 1 : 1

(B) 2 : 3

(C) 3 : 2

(D) 3 : 4

(A) 1 : 1

(A) Should think cautiously before reducing dividend, as they may be removed from the lists

(B) Do not have to worry as the overall wealth maximization is much more important

(C) Try to follow a strictly passive dividend policy

(D) Are legally authorized to substitute stock dividends for cash dividends

(B) Do not have to worry as the overall wealth maximization is much more important

(A) Is irrelevant as the value of the firm is based on the earning power of its assets

(B) Is relevant as the value of the firm is not based just on the earning power of its assets

(C) Is irrelevant as the dividends represent cash leaving the firm to shareholders, who own the firm

(D) Is relevant as cash outflow always influences other firm decisions

(A) Is irrelevant as the value of the firm is based on the earning power of its assets

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

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

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

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

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

(A) The overall capitalization rate holds constant with changesin financial leverage

(B) There is an optimum capital structure

(C) The total risk is not altered by changes in the capital structure

(D) Markets are perfect

(A) The overall capitalization rate holds constant with changesin financial leverage

Business Finance - Study Mode