Financial Management - Study Mode
[#446] An operating cash flows is Rs 12000 and gross fixed asset expenditure is Rs 5000 then free cash flow will be
Correct Answer
(B) Rs 7,000.00
Explanation
Solution: Free cash flow = Operating cash flow - Fixed expenditure = 12000 - 5000 = Rs. 7000.
[#447] Cost which has occurred already and not affected by decisions is classified as
Correct Answer
(A) sunk cost
Explanation
Solution: Cost which has occurred already and not affected by decisions is classified as sunk cost. A sunk cost is a cost that has already been incurred and cannot be recovered. A sunk cost differs from future costs that a business may face, such as decisions about inventory purchase costs or product pricing.
[#448] An analysis and estimation of cash flows include
Correct Answer
(D) all of above
Explanation
Solution: An analysis and estimation of cash flows include input data and key output, depreciation schedule and net salvage values.
[#449] Second mortgages pledged against bond's security are referred as
Correct Answer
(D) junior mortgages
Explanation
Solution: Second mortgages pledged against bond's security are referred as junior mortgages. A junior mortgage is a mortgage that is subordinate to a first or prior (senior) mortgage. A junior mortgage often refers to a second mortgage, but it could also be a third or fourth mortgage. In the case of foreclosure, the senior mortgage will be paid down first.
[#450] Long period of bond maturity leads to
Correct Answer
(A) more price change
Explanation
Solution: Long period of bond maturity leads to more price change. With bonds, term to maturity is the time between when the bond is issued and when it matures, known as its maturity date, at which time the issuer must redeem the bond by paying the principal or face value.