Financial Management Multiple Choice Questions and Answers | Financial Management MCQs
Questions
1
Degree of Combined leverage can be obtained by
Answer: EBIT + Fixed Costs/EBIT - Total Interest Expense
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3
Return on equity ratio is computed as
Answer: Annual Net Income/Average Stock holders Equity
4
The relationship between the financial leverage and firm's required rate of return to equity shareholders with corporate taxes is given by the
Answer: YE = r0 + D/E (1 - TC)(r0 - rB)
5
Cost of Preference Capital can be obtained by
Answer: KP = D + (M.V. - N.P./n)/(M.V. + N.P./2)
6
Assertion (A) : High capital gearing leads to greater speculation.
Reason (R) : Proportion of equity share capital in relation to the total capital comprising the other securities is small leading to capitalisation being highly geared.
Answer: A is false but R is true
7
Capital budgeting actually the process of making investment decisions in
Answer: Fixed Assets
8
According to the concept of financial signaling, management behavior results in new debt issues being regarded as "____ news" by investors.
Answer: good
10
Degree of operating leverage can be computed by
Answer: % change in Operating Income/% change in sales
