Financial Management - Practice Test

[#236] Stock split is a form of:

(A) Dividend payment

(B) Bonus issue

(C) Financial restructuring

(D) Dividend in kind

Correct Answer

(C) Financial restructuring

[#237] If the Real rate of return is 10% and Inflation rate is 40%, then Money Discount Rate is:

(A) 14.4%

(B) 2.5%

(C) 25%

(D) 14%

Correct Answer

(A) 14.4%

[#238] Cost of capital may be defined as:

(A) Weighted Average cost of all debts

(B) Rate of Return expected by Equity Shareholders

(C) Average IRR of the Projects of the firm

(D) Minimum Rate of Return that the firm should earn

Correct Answer

(D) Minimum Rate of Return that the firm should earn

[#239] For a constant EBIT, if the debt level is further increased then:

(A) EPS will always increase

(B) EPS may increase

(C) EPS will never increase

(D) None of the above

Correct Answer

(B) EPS may increase

[#240] Rate on debt that increases as soon market rises is classified as

(A) rising bet rate

(B) floating rate debt

(C) market rate debt

(D) stable debt rate

Correct Answer

(B) floating rate debt

Explanation

Solution: Rate on debt that increases as soon market rises is classified as floating rate debt. A bond or other type of debt whose coupon rate changes with market conditions (short-term interest rates).

Financial Management - Study Mode

[#236] Stock split is a form of:

Correct Answer

[#237] If the Real rate of return is 10% and Inflation rate is 40%, then Money Discount Rate is:

Correct Answer

[#238] Cost of capital may be defined as:

Correct Answer

[#239] For a constant EBIT, if the debt level is further increased then:

Correct Answer

[#240] Rate on debt that increases as soon market rises is classified as

Correct Answer

Explanation