Financial Management - Study Mode

[#846] The ___________ is a window through which the investor can see the company.
Correct Answer

(C) Prospectus

Explanation

Solution: The Prospectus is a window through which the investor can see the company. A prospectus is a formal document that is required by and filed with the Securities and Exchange Commission (SEC) that provides details about an investment offering for sale to the public.

[#847] According to the traditional approach cost of capital affected by?
Correct Answer

(A) debt-equity mix

Explanation

Solution: The traditional approach to capital structure advocates that there is a right combination of equity and debt in the capital structure, at which the market value of a firm is maximum. As per this approach, debt should exist in the capital structure only up to a specific point, beyond which, any increase in leverage would result in the reduction in value of the firm.

[#848] For which of the following factors are the debentures more attractive to the investors?
Correct Answer

(D) All the above.

Explanation

Solution: The principal is redeemable at maturity, A debenture-holder enjoys prior claim on the assets of the company over its shareholders in the event of liquidation and trustee is appointed to preserve the interest of the debenture holders are the factors why the debentures more attractive to the investors.

[#849] The formula of EBIT = ________
Correct Answer

(B) Contribution - Fixed cost

Explanation

Solution: The formula of EBIT = Contribution - Fixed cost.

[#850] Investment bankers operate in the______________.
Correct Answer

(A) primary market

Explanation

Solution: Investment bankers operate in the primary market. An investment banker is an individual who often works as part of a financial institution and is primarily concerned with raising capital for corporations, governments, or other entities.