Financial Management - Study Mode

[#1081] Interest rates, tax rates and market risk premium are factors which an/a
Correct Answer

(C) firm cannot control

Explanation

Solution: Interest rates, tax rates and market risk premium are factors which a firm cannot control.

[#1082] For each component of capital, a required rate of return is considered as
Correct Answer

(A) component cost

Explanation

Solution: For each component of capital, a required rate of return is considered as component cost. Cost components are the most granular representation of item costs.

[#1083] If payout ratio is 0.45 then retention ratio will be
Correct Answer

(A) 0.55

[#1084] Stock selling price is Rs 35, expected dividend is Rs 5 and expected growth rate is 8% then cost of common stock would be
Correct Answer

(B) 22.29%

[#1085] Retention ratio is 0.55 and return on equity is 12.5% then growth retention model would be
Correct Answer

(B) 6.88%

Explanation

Solution: Growth retention model = Return on equity × Retention ratio = 12.5% × 0.55 = 6.88%