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Financial Management Practice Set

101. A company may rise capital from the primary market through
(A) Public issue.
(B) Rights issue.
(C) Bought out deals.
(D) All of the above
102. Which of the following approaches advocates that the costs of equity capital and debt capital remain unaltered when the degree of leverage varies?
(A) Net Income Approach
(B) Traditional Approach.
(C) Modigliani-Miller Approach.
(D) Net operating Income.
103. Which of the following is not a feature of an optimal capital structure?
(A) Safety
(B) Flexibility
(C) Control
(D) Solvency
104. The overall capitalization rate and the cost of debt remain constant for all degrees of leverage. This is pronounced by
(A) Traditional approach
(B) Net operating income approach
(C) Net income approach
(D) MM approach
105. While calculating weighted average cost of capital
(A) Retained earnings are exclude
(D)
(B) Cost of issues are include
(D)
(C) Weights are based on market value or on book value.
(D) Equity shares are given more weights.