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    FINC521-Corporate Finance - Part1 PDF

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    Ajit Kumar
    This document contains 24 multiple choice questions related to corporate finance topics such as cash flow, dividend policy, risk, capital budgeting, cost of capital, and valuation. The questions cover concepts like depreciation, residual payout policy, systematic and unsystematic risk, terminal cash flows, internal rate of return, weighted average cost of capital, net present value, business risk, and financial leverage.

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    FINC521-Corporate Finance - Part1 PDF

    Uploaded by

    Ajit Kumar
    418 views3 pages
    This document contains 24 multiple choice questions related to corporate finance topics such as cash flow, dividend policy, risk, capital budgeting, cost of capital, and valuation. The questions cover concepts like depreciation, residual payout policy, systematic and unsystematic risk, terminal cash flows, internal rate of return, weighted average cost of capital, net present value, business risk, and financial leverage.

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    FINC521-Corporate Finance_Part1.pdf

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    This document contains 24 multiple choice questions related to corporate finance topics such as cash flow, dividend policy, risk, capital budgeting, cost of capital, and valuation. The questions cover concepts like depreciation, residual payout policy, systematic and unsystematic risk, terminal cash flows, internal rate of return, weighted average cost of capital, net present value, business risk, and financial leverage.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    418 views3 pages

    FINC521-Corporate Finance - Part1 PDF

    Uploaded by

    Ajit Kumar
    This document contains 24 multiple choice questions related to corporate finance topics such as cash flow, dividend policy, risk, capital budgeting, cost of capital, and valuation. The questions cover concepts like depreciation, residual payout policy, systematic and unsystematic risk, terminal cash flows, internal rate of return, weighted average cost of capital, net present value, business risk, and financial leverage.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    FINC 512

    FINC521 Corporate Finance

    1. Why depreciation has to be added back in the calculation of cash-flow as it is a ___ ?

    • manufacturing expense
    • Cash expense
    • Non-cash expense
    • non-operating expense

    2. Dividend payment linked to profits left-out after meeting the expansion needs is based on ____ theory/policy?

    • Signaling Theory
    • Residual payout policy
    • Stable Dividend policy
    • Constant pay-out policy

    3. Brexit, Greece Crises, Chinese Crises, Sub-Prime Crises are the examples of which of the following?

    • Systematic Risk
    • Unsystematic Risk
    • Total Risk
    • Specific Risk

    4. The cash flows forecasted at the end of projection period for capital budgeting decisions are known as___?

    • Initial Cash Flows


    • Operating Cash Flows
    • Terminal Cash Flows
    • Regular Cash Flows

    5. The underlying assumption in IRR method is that all the intermittent cashflows are reinvested at.

    • Cut-off rate
    • required rate of return
    • cost of capital
    • IRR

    6. If the credit period is increased for the customers of the company, operating cycle will___

    • reduce
    • increase
    • remain same
    • unaffected

    7. Calculate the expected return with the help of following data: p=.3 r=30%, p=.4 r= 16%, p=.3 r=8%

    • 17.8
    • 18
    • 5.8
    • 7.35

    8. Cost of preference share is ___


    • Preference Dividend Rate
    • Pref Dividend/Pref. share market price
    • Both of the above
    • None of the above

    9. The internal rate of return generated by an fixed income investment, if held till maturity is known as

    • Current Yield
    • YTM
    • Yield Curve
    • Coupon rate

    10. Current year dividend of Sun Ltd is Rs 5 per share. Expected growth rate is 8% and market capitalization rate
    is 10%. Calculate the intrinsic value of stock?

    • 5.4
    • 67.5
    • 54
    • 270

    11. Market interest rate is 9%. A bond with 10% coupon will sell ____ parvalue?

    • Above
    • Below
    • at
    • None of the above

    12. Which of the following is the spontaneous source of financing the working capital requirements?

    • Commercial Paper
    • Accounts Payable
    • Bank Finance
    • All of the above

    13. Which of the following is ultimate objective of financial management?

    • Profit maximization
    • Shareholder's wealth maximization
    • Leverage Minimization
    • Funding maximization

    14. Sheela needs Rs 500000 at the end of 5 years. How much amount she should invest right now @ 10%.
    Present Value of 1 Rs at 10% for 5 years is .6209

    • 100000
    • 155225
    • 310450
    • 400000

    15. In case of capital budgeting decisions, the projects in which choice of one automatically excludes the another
    are known as ___ ?

    • Dependent Projects
    • Independent Projects
    • Mutually Exclusive Projects
    • Mutually Inclusive Projects

    16. For a firm, weight of equity & debt is 0.6 & 0.4 respectively and cost of equity is 15%, Cost of debt is 9%, tax
    rate is 30%. Calculate the WACC for the firm?
    • 0.126
    • 0.1152
    • 0.12
    • 0.084

    17. Moon Ltd invests Rs 800000 in a paper manufacturing plant This is expected to generate Rs 150000 every
    year for next seven years. Cost of capital for the project is 10%. PVAF for 7 years at 10% is 5.3349. Calculate the
    NPV of the project?

    • 800000
    • 800235
    • 235
    • -235

    18. Growth of the company can be expected to be higher when ______ is high?

    • pay-out ratio
    • distribution ratio
    • dividend rate
    • retention ratio

    19. Ifbusiness risk of a company goes up than price of stock will.____ ?

    • decrease
    • increase
    • remain same
    • fluctuate

    20. Which of the following instrument is riskiest?

    • Shares
    • Preference Shares
    • Debentures
    • Fixed Deposit

    21. As per Bird in hand theory, high dividend pay-out is. _____ to low pay-out?

    • Preferred
    • not preferred
    • irrelevant for investor
    • None of the above

    22. 1/ 10,30 credit term means?

    • 1% discount
    • 0.1% discount
    • 1% discount for payment within 10 days
    • 0.1% discount for payment within 30 days

    23. Which of the following AAA debentures will have highest price if YTM is___?

    • 0.07
    • 0.08
    • 0.075
    • 0.085

    24. Increased financial leverage gives rise to ____ volatile EPS?

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