Business Finance - Study Mode

Show All Answers

[#266] Cost of capital from all the sources of funds is called

(A) Specific cost

(B) Composite cost

(C) Implicit cost

(D) Simple average cost

(E) specific cost

(F) composite cost

(G) implicit cost

(H) simple average cost

Correct Answer

(A) Specific cost
(E) specific cost

[#267] The profit made by the Government (or Central Bank) by issuing currency, especially the difference between the face value of coins and their production costs is called

(A) Seigniorage

(B) Profit booking

(C) Government revenue

(D) Central bank securitization

Correct Answer

(A) Seigniorage

[#268] Securitised assets carry a unique form of risk called

(A) default risk

(B) inflation risk

(C) interest rate risk

(D) pre-payment risk

Correct Answer

(D) pre-payment risk

[#269] Match the following. List-I List-II a. Fixed capital 1. . . . . . . . . refers to make-up of a firm's capitalisation b. Normal rate of return 2. . . . . . . . . is the cause of over-capitalisation c. Liberal dividend policy 3. Earnings per share ÷ Market price per share = . . . . . . . . d. Capital structure 4. . . . . . . . . is the funds required for a acquisition of assets that are to be used over and over a long period

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

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

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

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

Correct Answer

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

[#270] Examine the following statements. (i) Payback Period Method measures the true profitability of a project. (ii) Capital Rationing and Capital Budgeting mean the same. (iii) Internal Rate of Return and Time Adjusted Rate of Return are the same. (iv) Rate of Return Method takes into account the time value of money.

(A) (i), (ii) and (iii) are correct

(B) (ii) and (iii) are correct

(C) Only (iii) is correct

(D) All (i), (ii), (iii) and (iv) are false

Correct Answer

(C) Only (iii) is correct