Financial Management - Study Mode
[#1086] Preferred dividend is divided by preferred stock price multiply by (1-floatation cost) is used to calculate
Correct Answer
(D) component cost of preferred stock
Explanation
Solution: Preferred dividend is divided by preferred stock price multiply by (1-floatation cost) is used to calculate component cost of preferred stock. Cost of preferred stock is the rate of return required by holders of a company's preferred stock. It is calculated by dividing the annual preferred dividend payment by the preferred stock's current market price.
[#1087] Stock selling price is Rs 65, expected dividend is Rs 20 and cost of common stock is 42% then expected growth rate will be
Correct Answer
(B) 11.23%
[#1088] In retention growth model, percent of net income firms usually pay out as shareholders dividends is classified as
Correct Answer
(A) payout ratio
Explanation
Solution: In retention growth model, percent of net income firms usually pay out as shareholders dividends is classified as payout ratio. The dividend payout ratio is the ratio of the total amount of dividends paid out to shareholders relative to the net income of the company.
[#1089] In weighted average cost of capital, rising in interest rate leads to
Correct Answer
(A) increase in cost of debt
Explanation
Solution: In weighted average cost of capital, rising in interest rate leads to increase in cost of debt. Cost of debt is one part of a company's capital structure, which also includes the cost of equity.
[#1090] The amount of current assets that varies with seasonal requirements is referred to as __________ working capital.
Correct Answer
(C) Temporary
Explanation
Solution: The amount of current assets that varies with seasonal requirements is referred to as Temporary working capital. Temporary working capital (TWC) is the temporary fluctuation of networking capital over and above the permanent working capital.